Global carbon dioxide (CO2) emissions from energy use and industry could peak as soon as this year, according to Carbon Brief analysis of figures from the International Energy Agency (IEA).
The IEA’s latest World Energy Outlook 2023 says it now expects CO2 emissions to peak “in the mid-2020s” and an accompanying press release says this will happen “by 2025”.
Yet the IEA’s own data shows the peak in global CO2 coming as early as this year, partly due to what the outlook describes as the “legacy” of the global energy crisis triggered by Russia’s invasion of Ukraine.
Other highlights from Carbon Brief’s in-depth examination of the outlook include:
- Global fossil fuel use peaking in 2025, two years earlier than expected last year.
- For the first time, coal, oil and gas each peaking before 2030 under current policies.
- Fossil fuel peaks being driven by the “unstoppable” growth of low-carbon technologies.
- The IEA boosting its outlook for global solar capacity in 2050 by 69% since last year.
- The IEA expecting 20% more electric vehicles on the road in 2030 than it did last year.
- A key focus on slowing economic growth and faster low-carbon uptake in China, where fossil fuel demand is now expected to peak in 2024.
Yet climate policies remain far from sufficient to limit warming to 1.5C, the IEA warns.
The outlook reiterates the IEA’s ideas for five “pillars” to keep the path to 1.5C open at COP28, including targets to triple renewable capacity and double the rate of energy efficiency improvements by 2030.
(See Carbon Brief’s coverage of previous IEA world energy outlooks from 2022, 2021, 2020, 2019, 2018, 2017, 2016 and 2015.)
World energy outlook
The IEA’s annual World Energy Outlook (WEO) is published every autumn. It is widely regarded as one of the most influential annual contributions to the climate and energy debate.
The outlook explores a range of scenarios, representing different possible futures for the global energy system. These are developed using the IEA’s “Global Energy and Climate Model”.
The 1.5C-compatible “net-zero emissions by 2050” (NZE) scenario was introduced in 2021 and updated in September 2023.
The report notes that the path to 1.5C is made more difficult by each year of “high emissions and limited progress”, but adds that the “recent acceleration in clean energy” is keeping a path open.
Alongside the NZE is the “announced pledges scenario” (APS), in which governments are given the benefit of the doubt and assumed to meet all of their climate goals on time and in full.
Finally, the “stated policies scenario” (STEPS) represents “the prevailing direction of energy system progression, based on a detailed review of the current policy landscape”. Here, the IEA looks not at what governments are saying, but what they are actually doing.
Annex B of the report breaks down the policies and targets included in each scenario. In effect, the IEA is judging the seriousness of each target and whether it will be followed through.
For example, the provisions of the US Inflation Reduction Act are included in the STEPS. But the US target to cut emissions to 50-52% below 2005 levels by 2030 is only met under the APS.
Among various new policies included in the STEPS since last year’s outlook are Japan’s “green transformation” programme that aims to raise the share of renewables and nuclear in the country’s electricity mix, as well as ensuring all new car sales are low-emissions from 2035.
The report emphasises that “none of the scenarios…should be considered a forecast”. It says:
“The intention is not to guide the reader towards a single view of the future, but rather to promote a deeper understanding of the way that various levers produce diverse outcomes, and the implications of different courses of action for the security and sustainability of the energy system.”
Indeed, the design of the scenarios means that the STEPS is all but guaranteed to have become more ambitious by the time next year’s outlook is published – notwithstanding recent policy rollbacks in the UK – as governments around the world continue to implement their pledges.
This increase in ambition over time, as announced pledges are converted into stated policies, is clear from the historical record. (See below for charts comparing IEA outlooks over time.)
In 2021, the newly introduced NZE took centre stage in the IEA’s outlook, with the scenario mentioned 201 times per 100 pages against just 115 for the STEPS.
The STEPS returned to prominence last year and that trend continues in 2023’s outlook, which mentions the scenario 247 times per 100 pages, against just 157 mentions for the NZE.
Another notable change in the 2023 outlook is its shorter length, at 356 pages, compared with 524 last year and as many as 810 in 2019. As a result, this year’s report allows just five pages each to look specifically at coal, oil and gas, whereas the 2022 edition gave them 20-44 pages each.
Emissions peak as soon as 2023
One of the most striking findings in this year’s outlook is that global energy-related CO2 emissions could peak as soon as this year – and by 2025 at the latest.
Carbon Brief understands that the agency did not want to put a firm marker down on 2023, as the expected peak in global emissions will be affected by economic growth, weather and other factors.
However, Figure 1.15 in the report clearly shows CO2 emissions peaking this year under current policy settings in the STEPS scenario.
This curve is reproduced in the figure below, which illustrates the seismic shifts in the global trajectory for CO2 emissions since the signing of the Paris Agreement in 2015.
The thick black line shows how, for much of recent history, global CO2 emissions have marched relentlessly upwards, as growth in populations and energy use have led to higher fossil fuel use.
The pre-Paris policy baseline is shown in grey, illustrating how, on the eve of the COP21 summit where the deal was agreed, the IEA expected emissions to continue rising for decades.
Since that moment in 2015, the adoption of new climate policies and the accelerating spread of low-carbon technologies has seen the growth in global emissions slowing down.
In 2021, the IEA found government policies had advanced sufficiently to bring about a peak in global energy-related CO2 emissions (grey-blue line), with the subsequent decline deepening in the 2022 outlook (light blue).
This year’s outlook (dark blue) sees emissions peaking as soon as 2023 under current policy settings – two years earlier than expected in 2022 – and falling even more steeply after the peak.
Despite the improved outlook for global emissions, the outlook shows that current policies remain massively insufficient to meet governments’ climate pledges – including their long-term net-zero targets. If met, these pledges would see emissions falling along the red line in the figure above.
Moreover, even meeting those climate pledges would fall far short of what would be needed to limit warming to less than 1.5C above pre-industrial temperatures (yellow line).
‘Beginning of the end’ for fossil fuels
The IEA ascribes the changing outlook for global emissions – at least in part – to the global energy crisis. Last year’s report said that Russia’s invasion of Ukraine had “turbo-charged” the shift away from fossil fuels. Contrary to some commentary, the IEA repeats this message again:
“A legacy of the global energy crisis may be to usher in the beginning of the end of the fossil fuel era; the momentum behind clean energy transitions is now sufficient for global demand for coal, oil and natural gas to all reach a high point before 2030 in the STEPS.”
Although the agency does not put precise figures on these “high points” for fossil fuels – presumably due to the uncertainty around the exact timing – Carbon Brief analysis of the IEA’s data shows coal, oil and gas reaching peaks in 2022, 2028 and 2029, respectively.
This would see global demand for all three fossil fuels combined peaking in 2025, as shown by the dark blue line in the figure below. This 2023 policy curve is compared against historical demand for fossil fuels (black), the pre-Paris baseline (grey) and earlier policy settings (shades of blue).
The impact of countries meeting all of their climate pledges as of 2021, 2022 and 2023 are shown by the red curves, while the IEA’s increasingly narrow pathway to 1.5C is shown in yellow.
The IEA’s assertion that coal, oil and gas will each see peaks in demand this decade has been met with strong pushback from the Opec oil producers’ cartel and some US oil majors.
However, the IEA refers to a range of datapoints in support of its findings, with the rate of new fossil fuel infrastructure being built having already peaked in key areas.
Growth in coal-based steel, cement and electricity generation capacity peaked in 2003, 2010 and 2012, respectively, for example.
Similarly, global sales of combustion-engine cars, motorbikes and trucks peaked in 2017, 2018 and 2019, respectively. Additions of gas power plants peaked in 2002 and sales of gas boilers in 2020.
These are all leading indicators that “set the scene” for declines in coal, oil and gas use later this decade, the outlook says.
Yet the report notes that, under current policy settings, demand for oil and gas would enter a prolonged plateau after peaking this decade. As IEA energy analyst Peter Zeniewski notes on Twitter, “[oil and gas would] still hang around, stubbornly, for decades in the STEPS”.
Even so, the report points to potential for significant “overinvestment” in oil and gas, with current levels of spending “almost double” the amount needed in the IEA’s 1.5C pathway. It says this “creates the clear risk of locking in fossil fuel use and putting the 1.5C goal out of reach”.
The outlook goes on to make a thinly veiled reference to certain countries and oil majors, saying their calls for increased oil and gas investment are at odds with the latest market trends.
It says circumstances have changed in recent years, because oil and gas investment has already grown, whereas the outlook for oil and gas demand has shrunk.
As a result, the IEA says its own warnings of oil and gas “underinvestment”, made in previous editions of the outlook, are no longer valid. The report says:
“[T]he fears expressed by some large resource-holders and certain oil and gas companies that the world is underinvesting in oil and gas supply are no longer based on the latest technology and market trends.”
Despite these warnings, the IEA argues that “simply cutting spending on oil and gas will not get the world on track for [1.5C]”. Instead, it says the “key is to scale up investment in all aspects of a clean energy system to meeting rising demand for energy services in a sustainable way”.
It adds that risks are “weighted more towards overinvestment”:
“Both overinvestment and underinvestment in fossil fuels carry risks for secure and affordable energy transitions…When it comes to the overall adequacy of spending, however, our analysis suggests that the risks are weighted more towards overinvestment than the opposite.”
‘Unstoppable’ clean energy
A major driver of the reduced outlook for fossil fuel growth is the “accelerating” shift to low-carbon technologies, which IEA executive director Dr Fatih Birol says in the report foreword is “moving faster than many people realise”.
This is one of several key distinctions that Birol draws between the current global energy crisis – which is continuing amid heightened geopolitical tensions and conflict in the Middle East – as compared with the 1970s oil crisis 50 years earlier. Birol writes:
“A second difference between the 1970s and today is that we already have the clean energy technologies for the job in hand…Today, solar, wind, efficiency and electric cars are all well established and readily available – and their advantages are only being reinforced by turbulence among the traditional technologies.”
While inflationary pressures have pushed up the cost of low-carbon technologies after many years of rapid decline, the IEA notes that “the prices of all clean energy technologies today are significantly lower than a decade ago [and] they remain competitive with fossil fuel alternatives”.
It adds that there are signs that cost pressures are easing and that technology costs will “continue to trend downward”, although higher borrowing costs “complicate project economics” for now.
Overall, despite all these challenges, the IEA sees a much brighter outlook for low-carbon technologies than it did last year, due to more favourable policies and other factors.
The report lays out the reasons for this brighter outlook, which it says “provides hope for the way forward”. It explains:
“Investment in clean energy has risen by 40% since 2020. The push to bring down emissions is a key reason, but not the only one. The economic case for mature clean energy technologies is strong. Energy security is also an important factor, particularly in fuel-importing countries, as are industrial strategies and the desire to create clean energy jobs.”
As a result, it has once again massively boosted its outlook for global solar growth, with capacity now seen reaching more than 4,000 gigawatts (GW) by 2030 and 12,000GW by 2050, as shown by the red line in the figure below. This is up 56% in 2030 and 69% in 2050 on last year’s outlooks.
Moreover, the IEA’s pre-Paris outlook for global solar capacity of some 1,405GW in 2050 (blue) is set to be passed in 2023, with installations having already reached a total of 1,145GW last year.
This year’s outlook sees global solar capacity growing by some 344GW in 2023 – more than double the 163GW added in 2021 – with additions reaching nearly 500GW in 2030.
These numbers represent significant upgrades to expected solar growth, for which the IEA has been repeatedly criticised in the past. Nevertheless, the numbers remain well short of projections from BloombergNEF, which expects solar additions to reach more than 700GW in 2030.
This year’s WEO looks at what would happen if solar grows even more quickly – a scenario that it says is supported by ample manufacturing capacity.
In this “NZE solar case”, capacity additions would exceed 800GW in 2030, seen in the figure below. Global use of coal and gas to generate electricity would each be 15% lower than expected under current policy settings – and CO2 emissions in the power sector would also be 15% lower.
In order to integrate such large amounts of variable solar generation into electricity networks, the IEA says it would be “crucial” to scale up battery storage capacity to match. It adds:
“Measures to modernise and expand networks, facilitate demand response and boost power system flexibility would also be necessary.”
In a press statement summarising the changed circumstances reflected in this year’s outlook, Birol says the shift to low-carbon technologies is now “unstoppable”:
“The transition to clean energy is happening worldwide and it’s unstoppable. It’s not a question of ‘if’, it’s just a matter of ‘how soon’ – and the sooner the better for all of us.”
Birol goes on to criticise those calling for new investments in oil and gas in the name of energy security, saying such claims “look weaker than ever”. He says:
“Governments, companies and investors need to get behind clean energy transitions rather than hindering them. There are immense benefits on offer, including new industrial opportunities and jobs, greater energy security, cleaner air, universal energy access and a safer climate for everyone. Taking into account the ongoing strains and volatility in traditional energy markets today, claims that oil and gas represent safe or secure choices for the world’s energy and climate future look weaker than ever.”
In addition to boosting the outlook for solar in its main STEPS pathway, the IEA also sees 20% more electric vehicles on the world’s roads and 13% more wind power capacity by 2030.
These changes contribute to the lower fossil fuel demand seen in the preceding section. The IEA sees coal demand in 2050 being 9% lower than expected last year, oil down 6% and gas 3%.
The other major shift since last year’s outlook is the structural changes in China’s economy, where growth is slowing and shifting towards less carbon-intensive sectors.
The outlook gives special attention to this slowdown, which it says is the result of ongoing strains in the Chinese property sector and long-term decline in its working-age population.
The press release accompanying the outlook says these changes will result in a peak and then decline in China’s energy demand and a structural decline for fossil fuels and CO2 emissions:
“China, which has an outsize influence on global energy trends, is undergoing a major shift as its economy slows and undergoes structural changes. China’s total energy demand is set to peak around the middle of this decade, the report projects, with continued dynamic growth in clean energy putting the country’s fossil fuel demand and emissions into decline.”
These changes point to a peak in the nation’s demand for fossil fuels in 2024, as shown by the purple columns turning negative in the chart, below right. After this point, the IEA sees growth in low-carbon sources of energy (green columns) more than covering rising demand.
In addition to this central case, the IEA also looks at what would happen if China’s economic slowdown goes even further, with “slower but ultimately ‘higher quality’ growth”. In this “low” case, China’s emissions would fall an additional 0.8GtCO2 in 2030 to nearly 15% below 2022 levels.
In an alternative “high” case, China’s emissions would still peak by 2030 – in line with the government’s international climate goal – but at a level 0.8GtCO2 higher than in the central STEPS scenario, due in particular to stronger coal demand.
Clean energy outspending fossil fuels
Global investment in “clean energy”, at $1.8tn in 2023, is already nearly twice as high as fossil fuel spending ($1tn), the IEA says, as shown in the leftmost column in the figure below.
The IEA expects this disparity to grow over the coming decades. Clean energy would outspend fossil fuels by 2.5 times in 2030 under current policy settings (STEPS).
If countries get on track to stay below 1.5C (NZE), then clean energy spending would reach $4.3tn in 2030, while fossil fuel investment would fall 60% to just $0.4tn, some 10 times lower.
Although the shift towards net-zero would require significant upfront capital spending, the IEA figures show that the extra investment would only amount to around 1% of global GDP.
Moreover, much of this extra investment would be paid back in lower running costs, with fossil fuel importing countries such as the UK and China also benefiting from lower trade deficits and increasing energy security. The report explains:
“The large increase in capital investment in the NZE scenario is partly compensated for by lower operating costs that follow the shift away from fossil fuels towards capital-intensive clean technologies. For fossil fuel importing countries, the shift towards clean energy also improves trade balances and enhances energy security as the share of energy met through domestically sourced renewables starts to rise.”
‘Very difficult’ path to 1.5C
The IEA says current government policies in the STEPS pathway would peak global CO2 emissions by 2025, sufficient to keep global warming to 2.4C by 2100.
This is a significant improvement on the 3.5C of warming it expected under the policies in place before the Paris Agreement. Moreover, warming would be limited to 1.7C if all countries meet their near- and longer-term climate pledges and net-zero targets, the agency says.
Yet this would still leave a significant gap to staying below 1.5C, a path that the IEA says is “very difficult – but remains open”.
The outlook reiterates the agency’s five ideas for keeping the door to 1.5C open at COP28, which it has been promoting all year – and some of which have been taken up by the COP28 presidency.
Its suggested targets are that by 2030, the world should: triple the capacity of renewable energy sources to 11,000GW; double the annual rate of energy efficiency improvements to 4%; and cut methane emissions from fossil fuel extraction by 75%, as shown in the figure below.
These “mature, tried and tested, and in most cases very cost effective” actions would provide more than 80% of the emissions cuts needed by 2030 to get on track for 1.5C, the IEA says.
In order to achieve these goals, the IEA says there will be a need for “innovative, large-scale financing mechanisms” to support low-carbon investments in emerging and developing countries.
It also calls for “measures to ensure an orderly decline in the use of fossil fuel” such as ending the approval of new unabated coal power plants.
Finally, the IEA notes that there is “noticeably less reliance on early-stage technologies to reach net-zero emissions” in this year’s outlook as compared with 2021. It explains:
“At that time, technologies not available on the market, ie at prototype or demonstration phase, delivered nearly 50% of the emissions reductions needed in 2050 to reach net-zero. Now that number is around 35%.”
Analysis of the WEO was conducted by Carbon Brief’s Simon Evans and Verner Viisainen.
The post Analysis: Global CO2 emissions could peak as soon as 2023, IEA data reveals appeared first on Carbon Brief.
Analysis: Global CO2 emissions could peak as soon as 2023, IEA data reveals
In 2026, the dangers of fossil fuel dependence have been laid bare like never before. The illegal invasion of Iran has brought pain and destruction to millions across the Middle East and triggered a global energy crisis impacting us all. Communities in the Pacific have been hit especially hard by rising fuel prices, and Australians have seen their cost-of-living woes deepen.
Such moments of crisis and upheaval can lead to positive transformation. But only when leaders act with courage and foresight.
There is no clearer statement of a government’s plans and priorities for the nation than its budget — how it plans to raise money, and what services, communities, and industries it will invest in.
As we count down the days to the 2026-27 Federal Budget, will the Albanese Government deliver a budget for our times? One that starts breaking the shackles of fossil fuels, accelerates the shift to clean energy, protects nature, and sees us work together with other countries towards a safer future for all? Or one that doubles down on coal and gas, locks in more climate chaos, and keeps us beholden to the whims of tyrants and billionaires.
Here’s what we think the moment demands, and what we’ll be looking out for when Treasurer Jim Chalmers steps up to the dispatch box on 12 May.
1. Stop fuelling the fire
2. Make big polluters pay
3. Support everyone to be part of the solution
4. Build the industries of the future
5. Build community resilience
6. Be a better neighbour
7. Protect nature
1. Stop fuelling the fire
In mid-April, Pacific governments and civil society met to redouble their efforts towards a Fossil Fuel Free Pacific. Moving beyond coal, oil and gas is fundamental to limiting warming to 1.5°C — a survival line for vulnerable communities and ecosystems. And as our Head of Pacific, Shiva Gounden, explained, it is “also a path of liberation that frees us from expensive, extractive and polluting fossil fuel imports and uplifts our communities”.
Pacific countries are at the forefront of growing global momentum towards a just transition away from fossil fuels, and it is way past time for Australia to get with the program. It is no longer a question of whether fossil fuel extraction will end, but whether that end will be appropriately managed and see communities supported through the transition, or whether it will be chaotic and disruptive.
So will this budget support the transition away from fossil fuels, or will it continue to prop up coal and gas?
When it comes to sensible moves the government can make right now, one stands out as a genuine low hanging fruit. Mining companies get a full rebate of the excise (or tax) that the rest of us pay on diesel fuel. This lowers their operating costs and acts as a large, ongoing subsidy on fossil fuel production — to the tune of $11 billion a year!
Greenpeace has long called for coal and gas companies to be removed from this outdated scheme, and for the billions in savings to be used to support the clean energy transition and to assist communities with adapting to the impacts of climate change. Will we see the government finally make this long overdue change, or will it once again cave to the fossil fuel lobby?
2. Make big polluters pay
While our communities continue to suffer the escalating costs of climate-fuelled disasters, our Government continues to support a massive expansion of Australia’s export gas industry. Gas is a dangerous fossil fuel, with every tonne of Australian gas adding to the global heating that endangers us all.
Moreover, companies like Santos and Woodside pay very little tax for the privilege of digging up and selling Australians’ natural endowment of fossil gas. Remarkably, the Government currently raises more tax from beer than from the Petroleum Resource Rent Tax (PRRT) — the main tax on gas profits.
Momentum has been building to replace or supplement the PRRT with a 25% tax on gas exports. This could raise up to $17 billion a year — funds that, like savings from removing the diesel tax rebate for coal and gas companies, could be spent on supporting the clean energy transition and assisting communities with adapting to worsening fires, floods, heatwaves and other impacts of climate change.
As politicians arrive in Canberra for budget week, they will be confronted by billboards calling for a fair tax on gas exports. The push now has the support of dozens of organisations and a growing number of politicians. Let’s hope the Treasurer seizes this rare window for reform.
3. Support everyone to be part of the solution
As the price of petrol and diesel rises, electric vehicles (EVs) are helping people cut fuel use and save money. However, while EV sales have jumped since the invasion of Iran sent fuel prices rising, they still only make up a fraction of total new car sales. This budget should help more Australians switch to electric vehicles and, even more importantly, enable more Australians to get around by bike, on foot, and on public transport. This means maintaining the EV discount, investing in public and active transport, and removing tax breaks for fuel-hungry utes and vans.
Millions of Australians already enjoy the cost-saving benefits of rooftop solar, batteries, and getting off gas. This budget should enable more households, and in particular those on lower incomes, to access these benefits. This means maintaining the Cheaper Home Batteries Program, and building on the Household Energy Upgrades Fund.
4. Build the industries of the future
If we’re to transition away from fossil fuels, we need to be building the clean industries of the future.
No state is more pivotal to Australia’s energy and industrial transformation than Western Australia. The state has unrivaled potential for renewable energy development and for replacing fossil fuel exports with clean exports like green iron. Such industries offer Western Australia the promise of a vibrant economic future, and for Australia to play an outsized positive role in the world’s efforts to reduce emissions.
However, realising this potential will require focussed support from the Federal Government. Among other measures, Greenpeace has recommended establishing the Australasian Green Iron Corporation as a joint venture between the Australian and Western Australian governments, a key trading partner, a major iron ore miner and steel makers. This would unite these central players around the complex task of building a large-scale green iron industry, and unleash Western Australia’s potential as a green industrial powerhouse.
5. Build community resilience
Believe it or not, our Government continues to spend far more on subsidising fossil fuel production — and on clearing up after climate-fuelled disasters — than it does on helping communities and industries reduce disaster costs through practical, proven methods for building their resilience.
Last year, the Government estimated that the cost of recovery from disasters like the devastating 2022 east coast floods on 2019-20 fires will rise to $13.5 billion. For contrast, the Government’s Disaster Ready Fund – the main national source of funding for disaster resilience – invests just $200 million a year in grants to support disaster preparedness and resilience building. This is despite the Government’s own National Emergency Management Agency (NEMA) estimating that for every dollar spent on disaster risk reduction, there is a $9.60 return on investment.
By redirecting funds currently spent on subsidising fossil fuel production, the Government can both stop incentivising climate destruction in the first place, and ensure that Australian communities and industries are better protected from worsening climate extremes.
No communities have more to lose from climate damage, or carry more knowledge of practical solutions, than Aboriginal and Torres Strait Islander peoples. The budget should include a dedicated First Nations climate adaptation fund, ensuring First Nations communities can develop solutions on their own terms, and access the support they need with adapting to extreme heat, coastal erosion and other escalating challenges.
6. Be a better neighbour
The global response to climate change depends on the adequate flow of support from developed economies like Australia to lower income nations with shifting to clean energy, adapting to the impacts of climate change, and addressing loss and damage.
Such support is vital to building trust and cooperation, reducing global emissions, and supporting regional and global security by enabling countries to transition away from fossil fuels and build greater resilience.
Despite its central leadership role in this year’s global climate negotiations, our Government is yet to announce its contribution to international climate finance for 2025-2030. Greenpeace recommends a commitment of $11 billion for this five year period, which is aligned with the global goal under the Paris Agreement to triple international climate finance from current levels.
This new commitment should include additional funding to address loss and damage from climate change and a substantial contribution to the Pacific Resilience Facility, ensuring support is accessible to countries and communities that need it most. It should also see Australia get firmly behind the vision of a Fossil Fuel Free Pacific.
7. Protect nature
There is no safe planet without protection of the ecosystems and biodiversity that sustain us and regulate our climate.
Last year the Parliament passed important and long overdue reforms to our national environment laws to ensure better protection for our forests and other critical ecosystems. However, the Government will need to provide sufficient funding to ensure the effective implementation of these reforms.
Greenpeace has recommended $500 million over four years to establish the National Environment Agency — the body responsible for enforcing and monitoring the new laws — and a further $50 million to Environment Information Australia for providing critical information and tools.
Further resourcing will also be required to fulfil the crucial goal of fully protecting 30% of Australian land and seas by 2030. This should include $1 billion towards ending deforestation by enabling farmers and loggers to retool away from destructive practices, $2 billion a year for restoring degraded lands, $5 billion for purchasing and creating new protected areas, and $200 million for expanding domestic and international marine protected areas.
Conclusion
This is not the first time that conflict overseas has triggered an energy crisis, or that a budget has been preceded by a summer of extreme weather disasters, highlighting the urgent need to phase out fossil fuels. What’s different in 2026 is the availability of solutions. Renewable energy is now cheaper and more accessible than ever before. Global momentum is firmly behind the transition away from fossil fuels. The Albanese Government, with its overwhelming majority, has the chance to set our nation up for the future, or keep us stranded in the past. Let’s hope it makes some smart choices.
The 2026 budget test: Will Australia break free from fossil fuels?
Anne Jellema is Executive Director of 350.org.
The war on Iran and Lebanon is a deeply unjust and devastating conflict, killing civilians at home, destroying lives, and at the same time sending shockwaves through the global economy. We, at 350.org, have calculated, drawing on price forecasts from the International Monetary Fund (IMF) and Goldman Sachs, just how much that volatility is costing us.
Even under the IMF’s baseline scenario – a de facto “best case” scenario with a near-term end to the war and related supply chain disruptions – oil and gas price spikes are projected to cost households and businesses globally more than $600 billion by the end of the year. Under the IMF’s “adverse scenario”, with prolonged conflict and sustained price pressures, we estimate those additional costs could exceed $1 trillion, even after accounting for reduced demand.
Which is why we urgently need a power shift. Governments are under growing pressure to respond to rising fuel and food costs and deepening energy poverty. And it’s becoming clearer to both voters and elected officials that fossil dependence is not only expensive and risky, but unnecessary.
People who can are voting with their wallets: sales of solar panels and electric vehicles are increasing sharply in many countries. But the working people who have nothing to spare, ironically, are the ones stuck with using oil and gas that is either exorbitantly expensive or simply impossible to get.
Drain on households and economies
In India, street food vendors can’t get cooking gas and in the Philippines, fishermen can’t afford to take their boats to sea. A quarter of British people say that rising energy tariffs will leave them completely unable to pay their bills. This is the moment for a global push to bring abundant and affordable clean energy to all.
In April, we released Out of Pocket, our new research report on how fossil fuels are draining households and economies. We were surprised by the scale of what we found. For decades, governments have reassured people that energy price spikes are unfortunate but unavoidable – the result of distant conflicts, market forces or geopolitical shocks beyond anyone’s control. But the numbers tell a different story.
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Santa Marta: Ministers grapple with practicalities of fossil fuel phase-out
Around 60 governments that want to make progress on transitioning away from coal, oil and gas are meeting in Colombia to work out how they can do it an equitable way -
Why the transition beyond fossil fuels depends on cities and collective action
Cities will help identify concrete pathways for an equitable shift to clean energy at the Santa Marta conference, with C40 members aiming to halve their fossil fuel use by 2030
What we are living through today is not an energy crisis. It is a fossil fuel crisis. In just the first 50 days of the Middle East conflict, soaring oil and gas prices have siphoned an estimated $158 billion–$166 billion from households and businesses worldwide. That is money extracted directly from people’s pockets and transferred, almost instantly, into fossil fuel company balance sheets. And this figure only captures the immediate impact of price spikes, not the permanent economic drain of fossil dependence. Fossil fuels don’t just cost us once, they cost us over and over again.
First, through our bills. Every time there is a war, an embargo or a supply disruption, fossil fuel prices surge. For ordinary people, this means higher costs for energy, transport and food. Many Global South countries have little or no fiscal space to buffer the shock; instead, workers and families pay the price.
Second, through our taxes. Governments around the world continue to pour vast sums of public money into fossil fuel subsidies. These are often justified as a way to protect the most vulnerable at the petrol pump or in their homes. But in reality, the benefits are overwhelmingly captured by wealthier households and corporations. The poorest 20% receive just a fraction of this support, while public finances are drained.
Third, through climate impacts. New research across more than 24,000 global locations gives a granular account of the true costs of extreme heat, sea level rise and falling agricultural yields. Using this data to update IMF modelling of the social cost of carbon, we found that fossil fuel impacts on health and livelihoods amount to over $9 trillion a year. This is the biggest subsidy of all, because these massive and mounting costs are not charged to Big Oil – they are paid for by governments and households, with the poorest shouldering the lion’s share.
Massive transfer of wealth to fossil fuel industry
Adding up direct subsidies, tax breaks and the unpaid bill for climate damages, the total transfer of wealth from the public to the fossil fuel industry amounts to $12 trillion even in a “normal” year without a global oil shock. That’s more than 50% higher than the IMF has previously estimated, and equivalent to a staggering $23 million a minute.
The fossil fuel industry has become extraordinarily adept at profiting from instability. When conflict drives up prices, companies do not lose, they gain. In the current crisis, oil producers and commodity traders are on track to secure tens of billions of dollars in additional windfall profits, even as households face rising bills and governments struggle to manage the fallout.
Fossil fuel crisis offers chance to speed up energy transition, ministers say
This growing disconnect is impossible to ignore. Investors are advised to buy into fossil fuel firms precisely because of their ability to generate profits in times of crisis. Meanwhile, ordinary people are told to tighten their belts.
In 2026, unlike during the oil shocks of the 1970s, clean energy is no longer a distant alternative. Now, even more than when gas prices spiked due to Russia’s invasion of Ukraine in 2022, renewables are often the cheapest option available. Solar and wind can be deployed quickly, at scale, and without the volatility that defines fossil fuel markets.
How to transition from dirty to clean energy
The solutions are clear. Governments must implement permanent windfall taxes on fossil fuel companies to ensure that extraordinary profits generated during crises are redirected to support households. These revenues can be used to reduce energy bills, invest in public services, and accelerate the rollout of clean energy.
Second, we must shift subsidies away from fossil fuels and towards renewable solutions, particularly those that can be deployed quickly and equitably, such as rooftop and community solar. This is not just about cutting emissions. It is about building a more stable, fair and resilient energy system.
Finally, we need binding plans to phase out fossil fuels altogether, replacing them with homegrown renewable energy that can shield economies from future shocks. Because what the current crisis has made clear is this: as long as we remain dependent on fossil fuels, we remain vulnerable – to conflict, to price volatility and to the escalating impacts of climate change.
The true price of fossil fuels is no longer hidden. It is visible in rising bills, strained public finances and communities pushed to the brink. And it is being paid, every day, by ordinary people around the world.
It’s time for the great power shift.
Full details on the methodology used for this report are available here.
The Great Power Shift is a new campaign by 350.org global campaign to pressure governments to bring down energy bills for good by ending fossil fuel dependence and investing in clean, affordable energy for all
The post What fossil fuels really cost us in a world at war appeared first on Climate Home News.
Computer models that use artificial intelligence (AI) cannot forecast record-breaking weather as well as traditional climate models, according to a new study.
It is well established that AI climate models have surpassed traditional, physics-based climate models for some aspects of weather forecasting.
However, new research published in Science Advances finds that AI models still “underperform” in forecasting record-breaking extreme weather events.
The authors tested how well both AI and traditional weather models could simulate thousands of record-breaking hot, cold and windy events that were recorded in 2018 and 2020.
They find that AI models underestimate both the frequency and intensity of record-breaking events.
A study author tells Carbon Brief that the analysis is a “warning shot” against replacing traditional models with AI models for weather forecasting “too quickly”.
AI weather forecasts
Extreme weather events, such as floods, heatwaves and storms, drive hundreds of billions of dollars in damages every year through the destruction of cropland, impacts on infrastructure and the loss of human life.
Many governments have developed early warning systems to prepare the general public and mobilise disaster response teams for imminent extreme weather events. These systems have been shown to minimise damages and save lives.
For decades, scientists have used numerical weather prediction models to simulate the weather days, or weeks, in advance.
These models rely on a series of complex equations that reproduce processes in the atmosphere and ocean. The equations are rooted in fundamental laws of physics, based on decades of research by climate scientists. As a result, these models are referred to as “physics-based” models.
However, AI-based climate models are gaining popularity as an alternative for weather forecasting.
Instead of using physics, these models use a statistical approach. Scientists present AI models with a large batch of historical weather data, known as training data, which teaches the model to recognise patterns and make predictions.
To produce a new forecast, the AI model draws on this bank of knowledge and follows the patterns that it knows.
There are many advantages to AI weather forecasts. For example, they use less computing power than physics-based models, because they do not have to run thousands of mathematical equations.
Furthermore, many AI models have been found to perform better than traditional physics-based models at weather forecasts.
However, these models also have drawbacks.
Study author Prof Sebastian Engelke, a professor at the research institute for statistics and information science at the University of Geneva, tells Carbon Brief that AI models “depend strongly on the training data” and are “relatively constrained to the range of this dataset”.
In other words, AI models struggle to simulate brand new weather patterns, instead tending forecast events of a similar strength to those seen before. As a result, it is unclear whether AI models can simulate unprecedented, record-breaking extreme events that, by definition, have never been seen before.
Record-breaking extremes
Extreme weather events are becoming more intense and frequent as the climate warms. Record-shattering extremes – those that break existing records by large margins – are also becoming more regular.
For example, during a 2021 heatwave in north-western US and Canada, local temperature records were broken by up to 5C. According to one study, the heatwave would have been “impossible” without human-caused climate change.
The new study explores how accurately AI and physics-based models can forecast such record-breaking extremes.
First, the authors identified every heat, cold and wind event in 2018 and 2020 that broke a record previously set between 1979 and 2017. (They chose these years due to data availability.) The authors use ERA5 reanalysis data to identify these records.
This produced a large sample size of record-breaking events. For the year 2020, the authors identified around 160,000 heat, 33,000 cold and 53,000 wind records, spread across different seasons and world regions.
For their traditional, physics-based model, the authors selected the High RESolution forecast model from the Integrated Forecasting System of the European Centre for Medium-Range Weather Forecasts. This is “widely considered as the leading physics-based numerical weather prediction model”, according to the paper.
They also selected three “leading” AI weather models – the GraphCast model from Google Deepmind, Pangu-Weather developed by Huawei Cloud and the Fuxi model, developed by a team from Shanghai.
The authors then assessed how accurately each model could forecast the extremes observed in the year 2020.
Dr Zhongwei Zhang is the lead author on the study and a researcher at Karlsruhe Institute of Technology. He tells Carbon Brief that many AI weather forecast models were built for “general weather conditions”, as they use all historical weather data to train the models. Meanwhile, forecasting extremes is considered a “secondary task” by the models.
The authors explored a range of different “lead times” – in other words, how far into the future the model is forecasting. For example, a lead time of two days could mean the model uses the weather conditions at midnight on 1 January to simulate weather conditions at midnight on 3 January.
The plot below shows how accurately the models forecasted all extreme events (left) and heat extremes (right) under different lead times. This is measured using “root mean square error” – a metric of how accurate a model is, where a lower value indicates lower error and higher accuracy.
The chart on the left shows how two of the AI models (blue and green) performed better than the physics-based model (black) when forecasting all weather across the year 2020.
However, the chart on the right illustrates how the physics-based model (black) performed better than all three AI models (blue, red and green) when it came to forecasting heat extremes.
The authors note that the performance gap between AI and physics-based models is widest for lower lead times, indicating that AI models have greater difficulty making predictions in the near future.
They find similar results for cold and wind records.
In addition, the authors find that AI models generally “underpredict” temperature during heat records and “overpredict” during cold records.
The study finds that the larger the margin that the record is broken by, the less well the AI model predicts the intensity of the event.
‘Warning shot’
Study author Prof Erich Fischer is a climate scientist at ETH Zurich and a Carbon Brief contributing editor. He tells Carbon Brief that the result is “not unexpected”.
He adds that the analysis is a “warning shot” against replacing traditional models with AI models for weather forecasting “too quickly”.
The analysis, he continues, is a “warning shot” against replacing traditional models with AI models for weather forecasting “too quickly”.
AI models are likely to continue to improve, but scientists should “not yet” fully replace traditional forecasting models with AI ones, according to Fischer.
He explains that accurate forecasts are “most needed” in the runup to potential record-breaking extremes, because they are the trigger for early warning systems that help minimise damages caused by extreme weather.
Leonardo Olivetti is a PhD student at Uppsala University, who has published work on AI weather forecasting and was not involved in the study.
He tells Carbon Brief that “many other studies” have identified issues with using AI models for “extremes”, but this paper is novel for its specific focus on extremes.
Olivetti notes that AI models are already used alongside physics-based models at “some of the major weather forecasting centres around the world”. However, the study results suggest “caution against relying too heavily on these [AI] models”, he says.
Prof Martin Schultz, a professor in computational earth system science at the University of Cologne who was not involved in the study, tells Carbon Brief that the results of the analysis are “very interesting, but not too surprising”.
He adds that the study “justifies the continued use of classical numerical weather models in operational forecasts, in spite of their tremendous computational costs”.
Advances in forecasting
The field of AI weather forecasting is evolving rapidly.
Olivetti notes that the three AI models tested in the study are an “older generation” of AI models. In the last two years, newer “probabilistic” forecast models have emerged that “claim to better capture extremes”, he explains.
The three AI models used in the analysis are “deterministic”, meaning that they only simulate one possible future outcome.
In contrast, study author Engelke tells Carbon Brief that probabilistic models “create several possible future states of the weather” and are therefore more likely to capture record-breaking extremes.
Engelke says it is “important” to evaluate the newer generation of models for their ability to forecast weather extremes.
He adds that this paper has set out a “protocol” for testing the ability of AI models to predict unprecedented extreme events, which he hopes other researchers will go on to use.
The study says that another “promising direction” for future research is to develop models that combine aspects of traditional, physics-based weather forecasts with AI models.
Engelke says this approach would be “best of both worlds”, as it would combine the ability of physics-based models to simulate record-breaking weather with the computational efficiency of AI models.
Dr Kyle Hilburn, a research scientist at Colorado State University, notes that the study does not address extreme rainfall, which he says “presents challenges for both modelling and observing”. This, he says, is an “important” area for future research.
The post Traditional models still ‘outperform AI’ for extreme weather forecasts appeared first on Carbon Brief.
Traditional models still ‘outperform AI’ for extreme weather forecasts
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