Newsletter of the International Energy Agency
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Coal power surged to a record high in 2021, pushing up emissions
The amount of electricity generated worldwide from coal surged by an estimated 9% to a new record high in 2021, undermining efforts to reduce global greenhouse gas emissions. This strong growth potentially puts global coal demand on course for an all-time high this year, according to our latest annual market report on the fuel, which was released last month.
 
Coal use had fallen in 2019 and 2020 – though by less than initially expected – and last year’s rapid economic recovery pushed up electricity demand much faster than low-carbon supplies could keep up. The steep rise in natural gas prices also increased demand for coal power by making it more cost-competitive.
 
Much of last year's increased coal burning took place in India and China, which between them account for two-thirds of global demand, even as they both rolled out impressive amounts of renewable power. These two economies, dependent on coal and with a combined population of almost 3 billion people, hold the key to future coal demand.
 
Depending on weather patterns and economic growth, global coal demand could reach new all-time highs as soon as this year and remain at that level for the following two years. underscoring the need for fast and strong policy action, the report shows. It also looks at the roller-coaster ride that coal prices have been on over the past two years.
 
Read the press release, take a look at the full report, and watch the video of the launch event.
Coming up from the IEA this year ...
Mark your calendars, we have a busy slate of new analysis and high-profile events for the coming months:
  • In early February, our member governments will set the key priorities for the Agency for the years ahead during our Ministerial Meeting. Later that month, we will release a major expansion of our Methane Tracker, providing comprehensive country-by-country estimates of methane emissions to help drive progress towards the goals of the Global Methane Pledge that was signed by over 100 countries at COP26 two months ago.
  • In March and April, we plan to deliver a series of important updates on key energy and climate developments, including an initial assessment of energy-related CO2 emissions for 2021, and the new edition of our annual outlook for electric vehicles.
  • In May, we will publish a special report analysing in depth the contribution that nuclear power can make in efforts to reach net zero emissions by 2050. The report will assess the role nuclear can play in the current market context and in the years ahead, with a particular focus on the potential of small modular reactors.
  • And in June, we will release a major report setting out the practical steps that can bring global emissions from coal in line with a pathway to net zero by 2050 – while at the same time ensuring that the changes this brings are fair and affordable, especially for developing economies.
Record SUVs sales in 2021 highlight need for policy action to tackle emissions
Global sales of SUVs have proven very resilient throughout the Covid-19 pandemic, growing by over 10% in 2021. We estimate that SUVs accounted for more than 45% of global car sales in 2021, setting a new record in terms of both volume and market share, according to our recent commentary.
 
While there are also more and more electric SUVs on the market, the vast majority of SUVs on the world’s roads today – over 98% – still rely on internal combustion engines. SUVs are heavier and consume around 20% more energy than a medium-sized car. They rank among the top causes of energy-related carbon dioxide (CO2) emissions growth over the last decade. In 2021 alone, the global fleet of SUVs increased by over 35 million, driving up annual emissions by 120 million tonnes of CO2.
 
To address these emissions trends, government policies, especially fiscal measures, should support a quicker shift towards electric vehicles while providing incentives for the early replacement of SUVs that run on fossil fuels. Even as SUVs increasingly electrify, policy makers should keep an eye on the average size of vehicles. Some governments have already started introducing relevant measures, such as France and Germany, which have put a tax on large and high-emissions cars like SUVs.
 
Read the commentary by Chief Energy Modeller Laura Cozzi and Energy Modeller Apostolos Petropoulos.
Our Executive Director engages with leaders across Europe on energy markets and climate goals
IEA Executive Director Fatih Birol was the guest of honor and keynote speaker at a breakfast meeting in Brussels of Ministers of Foreign Affairs from across the European Union on 14 December – upon the invitation of Sophie Wilmès, the Belgian Deputy Prime Minister and Minister of Foreign Affairs. With the Ministers, he discussed the situation in European energy markets and the need to increase clean energy policies and investment, as well as the prospects for nuclear, hydrogen and other low-carbon technologies.
 
Later that day, Dr Birol spoke by video conference with COP26 President Alok Sharma to review the outcomes of November's Climate Change Conference in Glasgow. This included the UK COP26 Presidency’s request for the IEA to lead the tracking of global progress towards goals for key clean energy technologies, known as the Glasgow Breakthroughs.
 
On 17 December, our Executive Director met with Patrick Graichen, the State Secretary for Economic Affairs and Climate Action in Germany's newly formed government. Over a video link, they discussed clean energy transitions, the upcoming IEA Ministerial Meeting and cooperation between the IEA and Germany.
A key reason why many developing economies struggle to attract clean energy investment
Transitioning to a net zero future will require massive investments in capital-intensive energy assets such as wind, solar PV, electric vehicles and hydrogen electrolysers. By some estimates, 70% of this investment must come from the private sector, but many private financiers are hesitant to commit money to emerging and developing economies, forcing those countries to pay often cripplingly high interest rates to attract needed investment. One reason for this hesitancy is that decision makers often lack reliable financing metrics, causing them to misprice risk and under-invest in some markets and over-invest in others.
 
In this recent article, we seek to improve the understanding of the role of the cost of capital in clean energy transitions, as well as how it is determined and calculated. There are steps governments can take to reduce the perceived risk of investing in renewables, such as tariff structures that ensure stable revenue. Our aim is to help governments better account for financing costs in policies and to provide indicators that can support private investment decision making.
 
Read the article by analysts from our energy investment team.
Executive Director named in France’s honours list
Dr Birol was a named as a Chevalier in France's Ordre National de la Légion d'Honneur in France’s New Year list, recognising the Agency's work on global energy and climate issues under his leadership.
 
“I would like to thank President Macron of France for this distinction, which I share with my hard-working IEA colleagues,” Dr Birol said in response to the news. “Working together with my colleagues, I will continue to do my utmost to make the Paris Agreement's global energy and climate goals a reality.”
How digital business models can thrive in the new energy economy
The pace of digitalisation in the energy sector has accelerated rapidly in recent years, leading to a transformation of many traditional business models. Thanks to innovative technologies and access to new types of data, new revenue streams and services have emerged, costs have been reduced, and barriers to new market entrants have been lowered. Energy companies continue to find novel ways of doing business and engaging with their customers.
 
This new article highlights the potential of digital business models to facilitate clean energy transitions, with a particular focus on how they can enhance energy efficiency and demand-side flexibility. It also identifies a set of general recommendations for governments to support the scaling up of innovative business models.
 
Read the article by Energy Analyst Emi Bertoli.
ENERGY SNAPSHOT
New registrations of SUVs in key car markets, 2010-2021
Our commentary on global SUV sales shows that what just 10 years ago was a niche corner of the car market has expanded to account for almost half of all new car sales, with major implications for global emissions. This growth could be reversed with government policies to discourage purchases of larger, more polluting vehicles.
WHAT WE'RE READING
COMING UP
  • 13 January: Canada 2022  [Watch live from 18:00 CET]
  • 14 January: Electricity Market Report
  • 19 January: Oil Market Report
  • 27 January: Global Energy Markets 2022
  • 2-3 February: IEA Ministerial Meeting
  • Late February: Global Methane Tracker 2022
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