01 POWER ISLAND / 02 H2+NH3 / IEA 2022 NetZeroby2050-ARoadmapfortheGlobalEnergySector

Box 3.3 What would be the implications of an all-electric approach to emissions reductions in the road transport sector?

The use of a variety of fuels in road transport is a core component of the NZE. However, governments might want to consider an all electric route to eliminate CO2 emissions from transport, especially if other technologies such as FCEVs and advanced biofuels fail to develop as projected. We have therefore developed an All Electric Case which looks at the implications of electrifying all road vehicle modes. In the NZE, decarbonisation of road transport occurs primarily via the adoption of plug in hybrid electric vehicles (PHEVs), battery electric vehicles (BEVs), fuel cell electric vehicles (FCEVs) and advanced biofuels. The All Electric Case assumes the same rate of road transport decarbonisation as the NZE, but achieved via battery electric vehicles alone.

The All Electric Case depends on even further advances in battery technologies than the NZE that lead to energy densities of at least 400 Watt hours per kilogramme (Wh/kg) by the 2030s at costs that would make BEV trucks preferable to FCEV trucks in long haul operations. This would mean 30% more BEVs (an additional 350 million) on the road in 2030 than in the NZE. Over sixty five million public chargers would be needed to support the vehicles, requiring a cumulative investment of around USD 300 billion, 35% higher than the NZE. This would require faster expansion of battery manufacturing. The annual global battery capacity additions for BEVs in 2030 would be almost 9 TWh, requiring 80 giga factories (assuming 35 GWh per year output) more than in the NZE, or an average of over two per month from now to 2030.

The increased use of electricity for road transport would also create additional challenges for the electricity sector. The total electricity demand for road transport (11 000 TWh or 15% of total electricity consumption in 2050), would be roughly the same in both cases, when account is taken of demand for electrolytic hydrogen. However, the electrolytic hydrogen in the NZE can be produced flexibly, in regions and at times with surplus renewables based capacity and from dedicated (off grid) renewable power. Peak power demand in the All Electric Case, taking into consideration the flexibility that enables smart charging of cars, is about one third (2 000 GW) higher than in the NZE, mainly due to the additional evening/overnight charging of buses and trucks. If not coupled with energy storage devices, ultra fast chargers for heavy duty vehicles could cause additional spikes in demand, putting even more strain on electricity grids.

While full electrification of road transport is possible, it could involve additional challenges and undesirable side effects. For example, it could increase pressure on electricity grids, requiring significant additional investment, and increasing the vulnerability of the transport system to power disruptions. Fuel diversification could bring benefits in terms of resilience and energy security.

Box 3.4 Towards zero-carbon-ready buildings

Achieving decarbonisation of energy use in the sector requires almost all existing buildings to undergo a single in depth retrofit by 2050, and new construction to meet stringent efficiency standards. Building energy codes covering new and existing buildings are the fundamental policy instrument to drive such changes. Building energy codes currently exist or are under development in only 75 countries, and codes in around 40 of these countries are mandatory for both the residential and services sub sectors. In the NZE, comprehensive zero carbon ready building codes are implemented in all countries by 2030 at the latest.

What is a zero carbon ready building?

A zero carbon ready building is highly energy efficient and either uses renewable energy directly, or uses an energy supply that will be fully decarbonised by 2050, such as electricity or district heat. This means that a zero carbon ready building will become a zero carbon building by 2050, without any further changes to the building or its equipment.

Zero carbon ready buildings should adjust to user needs and maximise the efficient and smart use of energy, materials and space to facilitate the decarbonisation of other sectors. Key considerations include:

Scope. Zero carbon ready building energy codes should cover building operations (scope 1 and 2) as well as emissions from the manufacturing of building construction materials and components (scope 3 or embodied carbon emissions).

Energy use. Zero carbon ready energy codes should recognise the important part that passive design features, building envelope improvements and high energy performance equipment play in lowering energy demand, reducing both the operating cost of buildings and the costs of decarbonising the energy supply.

Energy supply. Whenever possible, new and existing zero carbon ready buildings should integrate locally available renewable resources, e.g. solar thermal, solar PV, PV thermal and geothermal, to reduce the need for utility scale energy supply. Thermal or battery energy storage may be needed to support local energy generation.

Integration with power systems. Zero carbon ready building energy codes need buildings to become a flexible resource for the energy system, using connectivity and automation to manage building electricity demand and the operation of energy storage devices, including EVs.

Buildings and construction value chain. Zero carbon ready building energy codes should also target net zero emissions from material use in buildings. Material efficiency strategies can cut cement and steel demand in the buildings sector by more than a third relative to baseline trends, and embodied emissions can be further reduced by more robust uptake of bio sourced and innovative construction materials.

There are no new coal and oil boilers sold globally from 2025 in the NZE. Sales of gas boilers fall by more than 40% from current levels by 2030 and by 90% by 2050. By 2025 in the NZE, any gas boilers that are sold are capable of burning 100% hydrogen and therefore are zero carbon ready. The share of low carbon gases (hydrogen, biomethane, synthetic methane) in gas distributed to buildings rises from almost zero to 10% by 2030 to above 75% by 2050.

Buildings that meet the standards of zero carbon ready building energy codes drive down the need not only for space heating but also for space cooling – the fastest growing end use in buildings since 2000. Space cooling represented only 5% of total buildings energy consumption worldwide in 2020, but demand for cooling is likely to grow strongly in the coming decades with rising incomes and a hotter climate. In the NZE, 60% of households have an air conditioner in 2050, up from 35% in 2020. High performance building envelopes, including bioclimatic designs and insulation, can reduce the demand for space cooling by 30 50%, while providing greater resilience during extreme heat events. In the NZE, electricity demand for space cooling grows annually by 1% to reach 2 500 TWh in 2050. Without 2 000 TWh of savings from residential building envelope improvements and higher efficiency equipment, space cooling demand would be almost twice as high.

Appliances and lighting

Electric appliances and lighting become much more efficient over the next three decades in the NZE thanks to policy measures and technical advances. By 2025 in the NZE, over 80% of all appliances and air conditioners sold in advanced economies are the best available technologies today in these markets, and this share increases to 100% by the mid 2030s. In emerging market and developing economies, which account for over half of appliances and air conditioners by 2050, the NZE assumes a wave of policy action over the next decade which leads to 80% of equipment sold in these markets in 2030 being as efficient as the best available technologies in advanced economies today, increasing to close to 100% by 2050 (Figure 3.30). The share of light emitting diode (LED) lamps in total lightbulb sales reaches 100% by 2025 in all regions. Minimum energy performance standards are complemented by requirements for smart control of appliances to facilitate demand side response in all regions.

Energy use in buildings will be increasingly focused on electric, electronic and connected equipment and appliances. The share of electricity in energy consumption in buildings rises from 33% in 2020 to around two thirds in 2050 in the NZE, with many buildings incorporating decentralised electricity generation using local solar PV panels, battery storage and EV chargers. The number of residential buildings with solar PV panels increases from 25 million to 240 million over the same period. In the NZE, smart control systems shift flexible uses of electricity in time to correspond with generation from local renewables, or to provide flexibility services to the power system, while optimised home battery and EV charging allow households to interact with the grid. These developments help improve electricity supply security and lower the cost of the energy transition by making it easier and cheaper to integrate renewables into the system.

Near term government decisions are required for energy codes and standards for buildings, fossil fuel phase out, use of low carbon gases, acceleration of retrofits and financial incentives to encourage investment in building sector energy transitions. Decisions will be most effective if they focus on decarbonising the entire value chain, taking into account not only buildings but also the energy and infrastructure networks that supply them, as well as wider considerations including the role of the construction sector and urban planning. Such decisions are likely to bring wider benefits, notably in reducing fuel poverty.

Near term government action is needed to ensure that zero carbon ready buildings become the new norm across the world before 2030 for both new construction and retrofits. This requires governments to act before 2025 to ensure that zero carbon ready compliant building energy codes are implemented by 2030 at the latest. While this goal applies to all regions, ways to achieve zero carbon ready buildings vary significantly across regions and climate zones, and the same is true for heating and cooling technology strategies. Governments should consider paving the way by making public buildings zero carbon ready in the coming decade.

Governments will need to find ways to make new zero carbon ready buildings and retrofits affordable and attractive to owners and occupants by overcoming financial barriers, addressing split incentive barriers and minimising disruption to building use. Building energy performance certificates, green lease agreements, green bond financing and pay as you save models could all play a part.

Making zero carbon ready building retrofits a central pillar of economic recovery strategies in the early 2020s is a no regrets action to jumpstart progress towards a zero emissions building sector. Foregoing the opportunity to make energy use in buildings more efficient would drive up electricity demand linked to electrification of energy use in the buildings sector and make decarbonising the energy system significantly more difficult and more costly (Box 3.5).

Box 3.5 What would be the impact of global retrofit rates not rising to 2.5%?

Decarbonising heating in existing buildings in the NZE rests upon a deep retrofit of the majority of the existing building stock. Having almost all buildings meet zero carbon ready building energy codes by 2050 would require retrofit rates of 2.5% each year by 2030, up from less than 1% today. Retrofits can be disruptive for occupants, require high upfront investment and may face permitting difficulties. These issues make achieving the required pace and depth of retrofits in the coming years the biggest challenge facing the buildings sector.

Any delay in reaching 2.5% of annual retrofits by 2030 would require such a steep subsequent ramp up as to make retrofitting the vast majority of buildings by 2050 virtually impossible. Modelling indicates that a delay of ten years in the acceleration of retrofitting, would increase residential space heating energy demand by 25% and space