There’s a 70% chance that 2024 will be the “crucial inflection point” when global climate pollution begins to fall—as long as clean technology growth trends continue and countries follow through on their pledges to cut methane emissions, a new report this week concludes.
“This would make 2023 the year of peak emissions,” say analysts at Berlin-based Climate Analytics, an outcome that would meet a critical deadline for keeping the Paris climate agreement’s 1.5°C warming limit within reach.
It would also add momentum and credibility to emission reduction and climate resilience plans introduced by cities, utilities, and other local players around the world, while intensifying pressure on those that have yet to step up.
“Reaching peak global greenhouse gas emissions—the point at which emissions stop growing and start falling—will be a crucial inflection point for the world,” writes lead author and analyst Claire Fyson. “Instead of speeding in the wrong direction, we could finally say we’re making the turn towards our collective climate goals.”
The Intergovernmental Panel on Climate Change (IPCC) says hitting peak emissions before 2025 is critical to keeping 1.5°C alive. So with emissions set to rise in 2023, the world has “limited time to act,” Fyson adds.
Fossils Face ‘Moment of Truth’
In a separate analysis released this morning, the International Energy Agency reiterates its own past finding that global demand for both oil and gas will peak before 2030, as long as countries follow through on policies they’ve already announced. That amounts to a “moment of truth” for the industry, the IEA concludes.
“If governments deliver in full on their national energy and climate pledges, then oil and gas demand would be 45% below today’s level by 2050 and the temperature rise could be limited to 1.7 °C,” the Paris-based agency writes in the executive summary of a new report on the oil and gas industry in a net-zero transition. “If governments successfully pursue a 1.5 °C trajectory, and emissions from the global energy sector reach net-zero by mid-century, oil and gas use would fall by 75% to 2050.”
“With the world suffering the impacts of a worsening climate crisis, continuing with business as usual is neither socially nor environmentally responsible,” Executive Director Fatih Birol said in a release. “Oil and gas producers around the world need to make profound decisions about their future place in the global energy sector. The industry needs to commit to genuinely helping the world meet its energy needs and climate goals—which means letting go of the illusion that implausibly large amounts of carbon capture are the solution.”
But they have a long way to go. The IEA notes that oil and gas companies currently account for a scant 1% of the world’s clean energy investment, and 60% of that paltry sum comes from just four of the thousands of firms in the industry. That’s partly because energy futures models from the IEA and other agencies indicate some remaining demand for fossil fuels in 2050, prompting too many producers (including expensive, high-carbon producers in Canada) to reassure their shareholders that they’ll be the last ones standing.
“Many producers say they will be the ones to keep producing throughout transitions and beyond,” the IEA writes. “They cannot all be right.”
Even for fossils that can stay in business, the IEA’s calculations once again show no future need for new oil and gas fields, and less reliable profits as the transition off carbon takes hold. “The volatility of fossil fuel prices means that revenues could fluctuate from year to year—but the bottom line is that oil and gas becomes a less profitable and a riskier business as net-zero transitions accelerate,” the agency states. “Prices and output are generally lower and the risk of stranded assets is higher, especially in the midstream sector that includes refineries and facilities for liquefied natural gas.”
The value of those stranded assets will hit US$1.5 trillion if all countries meet their current climate and energy goals, or $3.6 trillion once they align with a 1.5°C pathway.
How to Peak Emissions
Like the IEA’s latest projections, the 70% chance of emissions beginning to fall in 2024 depends on promises kept: It holds true only in a “continued acceleration” scenario where countries maintain current growth trends in wind, solar, and electric vehicles, and if signatories to the Global Methane Pledge can make “adequate progress,” the Climate Analytics report concludes.
Continued “explosive growth” of wind and solar would “push fossil fuels out of the power sector, leading to peak coal in 2023 and peak gas in 2024,” the analysts say, while accelerating EV deployment “could lead to peak oil in 2025.”
The report does not formally include the impacts of rapidly deploying heat pumps and boosting energy efficiency, but the authors note that such efforts “would bring down emissions even faster.”
Achieving the peak before 2025 also means there is no more room for new fossil infrastructure.
“New fossil fuel production plans will need to be axed, with fossil fuel production falling around 40% over the decade on the road to a full, fast, and fair fossil phase out,” the report says. That will be policy-makers’ cue to recognize that “with peak coal, oil, and gas on the near horizon, any expansion of fossil fuel production represents a huge stranded asset risk and could slow the energy transition.”
The report comes just a couple of weeks after Climate Analytics and several other organizations released the 2023 Production Gap Report. It showed the world’s 20 biggest fossil fuel-producing countries on track to extract enough oil, gas, and coal in 2030 to defeat any hope of limiting global heating to 1.5°C. Canada is projecting the fourth-largest increase in oil production.
Fyson and her team are looking to the upcoming COP28 climate summit in the United Arab Emirates for a global commitment to meet the IPCC’s 2025 target. “The race to peak emissions is ours to lose, but it’s also a race we can—and must —win.”
Peaking Is Just the Beginning
But peaking emissions before 2025 is not by itself sufficient to limit warming to 1.5°C, explains Climate Analytics. A “sharp and sustained” emissions reduction must follow.
In the continued acceleration scenario, global emissions fall 10% from 2019 levels by 2030—less than a quarter of the way toward the 43% cut the IPCC says will be needed this decade to keep 1.5°C within reach.
To meet that target, countries must “triple renewables, double energy efficiency, accelerate the electrification of energy demand sectors, halt deforestation, and slash methane emissions by over 30%,” the report says. Global clean energy investments must be “ramped up 2.5-fold,” with emerging economies seeing the greatest increases in financing.
Mobilizing those funds could begin with a 60% income tax on the world’s wealthiest, which on its own would raise $6.4 trillion per year for climate action, Oxfam International writes in a climate equality report released this week. The richest 1% “produced as much carbon pollution in 2019 as the five billion people who made up the poorest two-thirds of humanity,” the UK-based charity says, with a single year of those emissions leading to 1.3 million deaths due to heatwaves alone.
“Meanwhile, people across Canada and around the world are hardest hit by the climate emergency,” Oxfam Canada writes in a blog post on the report. “Our crops are dying and our food is impossibly expensive. Women are taking on more of the care work at home. Fires and floods are ripping apart our homes and communities while our skies fill with wildfire smoke,” with the impacts falling heaviest on “people living in poverty, those experiencing marginalization, and countries across the Global South.”