There is much talk about the Climate Tech sector entering a ‘winter’, but the International Energy Agency (IEA) has diagnosed that now is the optimal time to expand comprehensive investments. In a recent report, the IEA stated, “The outlook for global carbon emissions has fundamentally changed in just a decade,” and noted that “the acceleration of energy transition is already evident in the figures.”
Ten years ago, the IEA predicted that if the world did not take significant actions, carbon emissions would continue to rise. They estimated that by 2040, global carbon emissions would reach 46 gigatons (Gt) annually, and even with reduction commitments by countries, it would still be 38 gigatons.
However, now, a decade later, the IEA states that even without significant actions, emissions will stabilize at 38 gigatons. Moreover, if countries execute their reduction plans, emissions could potentially drop to 33 gigatons by 2040.
The IEA evaluated that although achieving ‘Net Zero’ by 2050 is still far off, the changes achieved over the past decade represent a historically significant shift.
Experts analyze that the recent changes may not just signify an improvement in pace but could be the beginning of an ‘inflection point’. In Germany, even though the government withdrew subsidies for electric vehicles, sales of EVs have reached an all-time high. In developing countries, renewable energy is rapidly replacing major power sources and transforming economic structures.
China, which had previously officially rejected carbon reduction targets, recently announced that it would achieve peak emissions by 2030. The IEA assessed that “such measures could become a turning point in the global carbon emission trend.”
The IEA highlighted that the fundamental reason for the changed climate outlook is technological advancements.
The prices of solar panels and wind turbines have dropped nearly 90% from a decade ago, and battery prices have fallen to less than half. As a result, renewable energy is no longer an expensive technology but the most economical power source.
The report forecasts that geothermal energy and software technology optimizing the electricity grid will create new turning points.
Energy market experts explain, “Until the mid-2010s, the perception that ’emissions are unavoidable’ was dominant, but now technology is overturning that assumption.”
Some evaluate that the climate technology market has entered a ‘cold season’ due to recent political uncertainties and investment contractions. However, the IEA’s analysis suggests a different direction. With faster technology innovations and proven reduction speeds, there is more potential for market growth in the medium to long term.
The IEA forecasts, “If countries maintain consistency in policy and increase the speed of technology commercialization, from the mid-2030s, emissions will definitely enter a downward trend.”
While it remains a challenging period for climate technology investors, the report suggests that the current stagnation may be temporary. Low-cost renewable energy, efficient energy storage technologies, and smart grids are being spotlighted as new investment destinations.
The IEA evaluates that achieving net-zero by 2050 remains difficult under current trends but notes that based on prediction errors over the past decade, the next 10 years could be much faster than now.
Currently, global carbon emissions are around 37-38 gigatons. Although slightly higher than pre-pandemic levels, the rising trend has effectively halted. The IEA forecasts, “If this pace continues, a definite downward trend could be turning by the early 2030s.”
International experts state, “The success or failure of climate response depends on speed,” and remark that “should technological innovation continue, humanity could achieve the 2050 carbon neutrality goal closer than expected.”