Lighting the Path: What IPCC energy pathways tell us about Paris-aligned policies and investments

This report from the International Institute for Sustainable Development outlines the course of action governments, companies and investors need to take to align policies and investments within the 1.5°C Paris Agreement target, based on the IPCC’s Sixth Assessment Report 2022 (IPCC’s Report). The report uses the energy pathways from the IPCC’s Report, including the IPCC’s assessment of the ‘feasible and sustainable levels of carbon capture and storage’ and of ‘carbon dioxide removal’ available (Pathway), noting their concern of over reliance on unproven technologies. It focuses on energy system transformation, including oil and gas. 

Based on the Pathway, the report concludes that oil and gas production must decrease by 30% by 2030 and 65% by 2050 (equivalent to an annual reduction of 3% on average for both oil and gas between 2020 and 2030). Production from already-licensed resources would generate emissions beyond the 1.5°C target, indicating that any new fields need to be compensated for by closure of other fields in production/development. However, the risks and costs of stranded assets and lock-in mean it is better not to develop new fields, even where those fields have licenses. The report recommends that governments stop awarding licenses for further expansion, remove fossil fuel subsidies and withdraw from treaties that protect fossil fuel infrastructure/investment. 

Furthermore, under the Pathway, unabated gas power generation falls to almost zero by 2040, meaning no new gas fields should be developed. Rapid phase-out or retrofitting of exiting unabated gas power plants is needed.  

The report advocates for renewable energy sources, canvassing several policy options to support the transition to renewables. It highlights that annual wind and solar capacity additions need to increase by 18-19% in the period 2020-2030, doubling estimates under current policies. This means annual investment of USD 830 billion by 2030 compared to current projected levels of USD 380 billion. Further exploration of fossil fuels should therefore be avoided, freeing up capital in the financial sector that could be deployed towards renewables. 
 

Importantly, the report addresses the energy crisis and the invasion of Ukraine, and suggests energy-efficiency measures in the short-term to address current pressures and more renewable sources in the medium to long term. It notes the problem of stranded assets will be exacerbated if the world develops new fossil fuel infrastructure and Russian supplies come back online. 
 

This article provides a scientific basis for refusing new fossil fuel infrastructure in order to reach the 1.5°C Paris Agreement target, and phasing out existing sources. Importantly, the article maintains its recommendations based on the IPCC’s Report notwithstanding the changes brought about by the invasion of Ukraine. The article can be used to reinforce a carbon budget approach that justifies rejecting fossil fuel projects and rebuts any argument that the invasion of Ukraine alters the strategy needed under the carbon budget.