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G7 poised to lead the world towards clean electrification

The IEA’s newest report shows that G7 members are well placed to decarbonise their electricity by 2035, helping to unlock the benefits of clean electrification globally.

Dave Jones

Head of Data Insights

22 October 2021 | 2 min read

This week’s G7 pathway from the IEA shows why a 2050 net-zero economy needs a 2035 net-zero electricity sector. With lots of progress to celebrate, there’s still a hefty gap between what the G7 has committed to so far, and where they need to be in the next 15 years.

The IEA is not backing down from ambitious milestones, and the message to the G7 is clear: you have a responsibility to fast-track your electricity transition to keep the world on track for 1.5C.

Clean electricity by 2035 is necessary for 1.5C

The IEA’s latest G7 report reiterates what we already knew from their Net Zero Roadmap earlier this year: the G7 and other advanced countries need to get to virtually 100% clean power by 2035 in order to be on track for 1.5 degrees.

The report calls for decisive action in the short term, including no new unabated coal from 2021, over 60% of electricity from low emissions sources by 2025 and a coal phase-out by 2030. Gas generation needs to be mostly phased out of the electricity sector by 2035; the IEA envisages just 2% of the G7’s electricity would come from unabated fossil gas in 2035, which means the only role of unabated fossil gas power plants would be to run low-load, providing flexibility to the electricity system.

IEA Net Zero by 2050 Roadmap
Source: IEA

The report is clear on the scale of ambition needed. It sees power demand in G7 increase 80% by 2050, as electrification of transport, heating and industry push up electricity demand. Renewables capacity quadruples between 2021 and 2050. By 2030, G7 investment in generation capacity triples compared to the level of recent years and then stabilises at nearly double the current level in the 2030s and 2040s.

The transformation brings with it many benefits: net employment in the sector grows from an estimated 8.5 million to about 10.5 million. By 2050, the average G7 energy bill is cut by over USD 1,000 per household.

The IEA makes clear that the G7 will play a key role in demonstrating to the world how this can be done. Setting – and meeting – ambitious targets will signal to the global energy market that the electricity transition is underway, and will be critical in accelerating efforts globally.

Are G7 countries on track?

The IEA says that the G7 are ‘well placed’ to fully decarbonise their electricity by 2035. All of the G7 have committed to a mid-century Net Zero target, and earlier this year the group agreed to achieve ‘overwhelmingly’ decarbonised power in the 2030s. The US, UK and Canada have already set their sights on a 2035 deadline to reach 100% clean power.

The majority of G7 countries have committed to a Paris-aligned coal phase-out and Germany’s new coalition has signalled it aims to bring the country in line. However, Japan and the United States remain silent on coal phase-out commitments, even as the upcoming COP26 seeks to consign coal to history.

G7 Progress towards power sector decarbonisation

Across the G7, coal-fired generation is already shrinking. The UK leads on the pace of phase-out, with a 93% (71 TWh) collapse of coal use between 2015 and 2020. Germany saw the second largest fall in the G7, with coal generation dropping by 51% (138 TWh) in that time. While the US saw a smaller 43% decline between 2015-2020, this accounts for a staggering 579 TWh reduction.

However, the IEA’s pathway brings into focus the ways the G7 are falling short compared to the ambition needed to meet short term milestones. For one, gas dependence is going in the wrong direction – particularly in Japan, the US, the UK, Germany, and Italy. Meanwhile Japan has only seen a small decrease in coal power, which still produces almost a third of its electricity.

What’s needed next from the G7?

The IEA is clear that limiting global heating to 1.5C and reaching Net Zero by 2050 is possible – but bold action now is needed, with critical targets in the next ten years. This isn’t a vision of incremental change: it’s a systemic overhaul of electricity generation. But the IEA’s pathway shows the benefits of rising to the challenge: job creation, energy self-sufficiency, and reduced household electricity bills.

There is a daunting gap between where the G7 is currently, and where the IEA shows they need to go. What’s lacking is a plan to phase out gas from the electricity mix in Germany and Italy, credible action from the US to implement Biden’s 2035 clean power pledge, and a step up from Japan which doesn’t have a plan to phase out either coal or gas power as yet.

The IEA’s report shows that there’s no room to contest the scale of the challenge and what’s needed to meet it. The G7 will need to rise to the moment and lead on ambition in order to reach clean power by 2035.

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