The latest edition of the IEA’s World Energy Outlook (WEO report), details the profound changes expected to occur as a result of the global energy crisis. The transition to more sustainable and secure energy systems has hastened, and for the first time the global demand for fossil fuels is beginning to plateau, according to the report.  

ENGIE Impact, a sustainability consulting firm, has weighed in on the impact for corporate sustainability plans as organisations continue to reach for Net Zero targets.  

 ‘’The WEO report highlights many of the geography-based energy dependencies governments and organisations face,” Mathias Lelievre, ENGIE Impact CEO said. “While the energy crisis is front and centre for all of us, now is the time for everyone to better establish those decarbonisation pathways and long-term strategies that will help all of us reduce — or even eliminate — energy risks from any similar future crisis.’’  

The findings in the WEO report are likely to imply some level of tightening of corporations’ interim targets. This is for a couple of reasons:  

  • Emissions rose significantly in 2021 as world economic growth rebounded following the COVID-19 pandemic. This reduces the already shrinking remaining 1.5 degree carbon budget, implying the need to achieve deeper reductions in the interim on the path to net zero by 2050.  
  • An additional reason is that global clean energy related investments are slated to increase dramatically by 2030, according to the WEO, largely driven by the IRA in the US, but also other national/supranational programmes in the EU, Japan, Korea, China and India. These investments are likely to drive down the cost of clean energy technologies, both on the margins and via breakthroughs, leading to potentially steeper sectoral decarbonisation pathways (the basic foundation on which most interim targets are based).  

In addition, the WEO report found that global demand for fossil fuel peaks under policies that are already in force, or the ‘’stated policies’’ scenario.   

‘’This is a significant finding,’’ Lelievre added. ‘’While its realisation is likely to be dependent on the stated policies and investments actually happening, peak fossil fuel demand in 2025 will heighten the risk of creating stranded fossil-based assets if companies — both those who use and produce energy — do not carefully review and are deliberate in their energy-related capital expenditures.’’