The IEA said the solution must come from a blitz of spending on solar power, hydro and other renewables, making up 60pc of new investment. The rest depends on better efficiency in cars and fridges and insulation, costing $550bn (£328bn) a year by 2035, up from $130bn today. This is cheaper than trying to extract gas from the Arctic or the mid-Atlantic.
While coal is abundant, it is the dirtiest fuel without carbon capture and storage (CCS), a technology yet to flourish. The IEA said failure to wean the world off coal would make it impossible to meet CO2 targets and hold global warming to a rise of two degrees Celsius by 2100.
Current energy policies will push up temperatures by 4C. Some scientists say this level would set off a chain reaction as melting ice sheets in Greenland and Antarctica cause more heat to be absorbed. “Without carbon capture we can forget about the climate target,” said Maria van der Hoeven, the IEA’s director.
The agency said the coal industry has a survival interest in mastering CCS, otherwise it may find itself sitting on $300bn of “stranded assets” as regulators turn tough. The US Environmental Protection Agency fired a warning shot on Monday with new rules clamping down on emissions, intended to cut pollution 30pc from 2005 levels by 2030.
The IEA said it would take a new “investment landscape” to hold global warming to 2C, raising the bill to
$53 trillion. Fossil fuels would fall from 82pc of energy to 65pc over 20 years.
“It would require an extra $6 trillion for efficiency. The difference in cost is very small,” said Dr Birol.
There have been two revolutions in global energy over the past decade: shale fracking in the US and renewables in Europe. While both have led to a surge of supply, Europe has paid three times as much, though this may change as solar costs fall. The IEA’s warnings of blackouts in Europe echo comments this week by the EU gas body Cedigaz, which said gas power operators are mothballing plants because they cannot compete with cheap US coal. The risk is that investment in gas plants will dry up.
Yet coal cannot be relied on for long since EU rules will eventually lead to closures of 70 gigawatts of coal-fire plants. Cedigaz said Europe risks losing a third of its power capacity, leaving too little to cover ebbs in wind and solar power. “The current situation has the potential to unfold into a major structural crisis,” it said.
The root of Europe’s woes lies in a botched trading scheme that has mispriced carbon, as well as bursts of supply from Germany’s wind and solar energy that disrupt the grid and cripple utilities. Scientific discoveries in energy storage may conquer the “intermittency curse” of renewables over time.
Europe is counting on liquefied natural gas to keep factories running but this comes at a price. The IEA said it costs 10 times as much to ship LNG as it does oil or coal, and retails in Europe at three times US gas prices.
EU energy commissioner Gunther Oettinger said: “Unless we can bring down power prices, we are going to lose most chemical and steel industries.”