IEA Report: Achieving Net-Zero Necessitates Huge Job, Investment Cuts for Fossil Fuels

The creation of 30 million jobs globally by the energy transition will not balance out the 5 million jobs lost in the fossil fuel industry because they are located in different places, the International Energy Agency’s (IEA) chief said May 19 at the Columbia Global Energy Summit.

World governments, including the U.S., would also need to deliver a blunt message to the investment community that putting money into “dirty” fuels is a risky business decision, IEA Executive Director Fatih Birol said.

Speaking just a day after the IEA released its net-zero roadmap, Birol said the clean energy sector will benefit from a presumed huge investment. Based on governments’ commitments to emission reductions, the IEA estimates that 30 million positions will need to be filled for construction of solar panels, electricity grids, electric vehicle manufacturing and other efficiencies.

But it’s not as simple as that.

“Jobs created would not necessarily be in the same area where jobs are lost, plus the skill sets required for the clean energy jobs may not be directly transferable,” the IEA said in its report. “Job losses would be most pronounced in communities that are heavily dependent on fossil energy production or transformation activities. Even where the number of direct energy jobs lost is small, the impact on the local economy may be significant.”

“They are in different places,” Birol said. “So this is an important challenge.”

‘Orderly Transition’

The underlying premise of the roadmap is that countries have already committed to targets for reducing greenhouse gas emissions. The IEA is laying out actions needed to succeed in meeting those targets. If the governments are serious about adhering to the commitments made in the Paris Agreement, then the goals can be achieved before 2050, the agency said.

“If they are not serious, then of course we have a different oil demand and a different oil supply picture,” Birol said.

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Achieving the goals requires a substantial balancing act between supply and demand. One example is the phasing out of internal combustion engine cars. President Joe Biden’s test drive of a Ford F-150 Lightning electric truck on May 18 illustrated the changing perception toward electric vehicles.

If the shift to EVs succeeds, demand for oil will fall. The risk, he said, was in cutting the supply of oil while the buying public decides it isn’t ready to move away from gasoline-powered cars. The opposite risk, he said, was in maintaining the supply of fossil fuels when demand centers, such as consumers and the petrochemical industry, no longer have the need.

“One of the issues that is underlying is, we need an orderly transition of the global energy system,” Birol said.

Three Tasks

The $2 trillion annual investments in coal, oil, renewables, efficiencies and other energy elements will not be sufficient to meet the energy transition goals as they are. By 2030, that total needs to rise to about $5 trillion, he said, and the largest chunk must be devoted to clean energy technologies, not fossil fuels.

Birol summarized the report into three tasks:

• Existing technologies: Over the next 10 years, countries must make the most of technologies already on the market, including solar, wind, EVs and nuclear;

• Innovation: Some sectors need much more effort to decarbonize; technologies such as hydrogen and direct air capture will need to be rapidly developed; and

• Fossil fuels: Substantial reduction in use.

Which is not to say that oil and gas will no longer be used as of next year.

“What we are saying is, its use will go down,” Birol said, particularly in coal, less so in oil and much less in natural gas. “What we are saying is, the investments in older, existing fields will continue. What we are saying is, no new exploration activity.”

Some products are either on the market or nearly ready to go on the market, he said, pointing to solar, hydro-electric, nuclear and electric cars. Others are where solar was 10 years ago. Now, solar no longer needs government support or incentives because it has become a mature technology. Birol said technologies such as hydrogen, carbon capture and storage, and direct air capture need the same level of support.

He expressed some frustration with the reaction from some to comments made by John Kerry, the U.S. Special Envoy for Climate, who told the BBC that about half of the technologies needed to reduce emissions have yet to be developed. His remarks echoed the IEA’s take on the importance of innovation. Swedish climate activist Greta Thunberg expressed her displeasure on Twitter.

“I was shocked by some of the reactions,” he said. “He might choose this word or that word but I understand he wanted to highlight the critical importance of innovation and the critics, I find, to say the least, extremely unfair.”