As the global economy faces growing pressure to reduce carbon emissions, the IEA’s World Energy Outlook 2024 emerges as a critical resource, offering insights into pathways toward a net zero future and supporting businesses in the challenge of maintaining competitiveness while embracing the transition. With the effects of climate change becoming more visible, the urgency to address this issue is greater than ever. Companies are increasingly subject to stringent regulatory, financial, and market demands to decarbonise. Without swift action, businesses risk falling behind in a world that prioritises low-carbon technologies and energy. 

Addressing this challenge is essential. Rising energy demand, particularly in emerging markets, further complicates the transition, as these regions develop and embrace globalisation. It is the collective responsibility of governments, businesses, and individuals to drive the shift to a net zero economy, ensuring that developing regions are supported in this transformation. Failing to act could lead to significant climate impacts on infrastructure, supply chains, and business operations, driving up both financial and operational costs. Businesses must navigate these challenges to remain competitive and resilient in the evolving global landscape. 

 The World Energy Outlook 2024 from the International Energy Agency (IEA) offers a roadmap for addressing these climate challenges through an energy transition lens. The report outlines three key transition scenarios: the Stated Policies Scenario (STEPS) illustrates our current trajectory, the Announced Pledges Scenario (APS) demonstrates how society would be if all climate targets were met on time and in full, and the Net Zero Emissions 2050 (NZE) scenario illustrates the ambition to achieve 1.5°C by 2100. These scenarios, widely used in climate-related financial disclosures, provide a framework for understanding different pathways towards achieving climate and energy goals, with broad implications for businesses and society.  

The World Energy Outlook 2024 emphasises several important points that businesses must acknowledge in their decarbonisation efforts:  

• For the first time, the deployment of clean energy has seen remarkable progress and this momentum could result in a peak of each fossil fuel (coal, oil and natural gas) by 2030.  

• Global energy demand is expected to continue to rise, particularly in emerging markets, but with the right policies, clean energy can meet this demand and mitigate further emissions growth.  

• Stronger measures to improve energy efficiency and accelerate the deployment of low-carbon technologies are crucial to achieving the necessary emissions reductions by 2030 and staying on track for net zero. 

• Critical minerals such as lithium and copper are expected to be in increased demand which highlights supply chain vulnerabilities. This poses challenges not only to the energy transition, but also to technological advancements, generally. 

• Electric vehicle (EVs) are projected to account for 50% of all new car sales globally by 2030, driven by government incentives and infrastructure development, significantly reducing oil demand. 

 So what is the solution? 

 Whilst this could be challenging, it is not impossible. The solution lies in a coordinated approach that combines strong policy frameworks, innovative technologies, and private-sector engagement. With the latter, businesses must focus on electrification, energy efficiency, and digital transformation to reduce emissions and remain competitive. To future-proof operations and capitalise on green economy opportunities, companies should develop strategies aligned with the Net Zero Emissions by 2050 Scenario. 

Crucially, the main driver behind this decarbonisation is new policy and legislation, and as such, it is critical that businesses engage with policymakers to create favourable regulatory environments that will enable businesses to remain on track for net zero emissions by 2050 and capitalise on the green economy.  

However, the time for government intervention is running out, and it is up to businesses to take action and raise the bar. This begins with conducting a climate risk assessment to understand how the potential changes to the global economy may present risks and opportunities to your business. 

Summary and next steps

The global transition to a net zero economy presents profound challenges but also unique opportunities for all businesses. The World Energy Outlook 2024 has provided a further update on our trajectory and should act as a guide for most businesses on how we should all work together to address the climate crisis and create a more sustainable society.  Whilst the scenarios within focus on the energy sector, their broader message is clear: businesses should act decisively to reduce emissions, improve energy efficiency, embrace renewable energy and clean technologies. By doing so, businesses can mitigate climate-related risks and capitalise on new climate-related opportunities which can propel your business into a low-carbon, more resilient economy.  

To understand more about your climate-related risks and opportunities, contact one of our friendly experts now.

Author: Cameron Wilson, Consultant, Simply Sustainable