IEA sees renewable capacity expansion in next 5 years

Yahoo Finance's Akiko Fujita and Rachelle Akuffo discuss the chart of the day, plus reports that the U.S. and EU consider proposing tariffs for polluting countries.

Video transcript

- For Chart of the Day. And after talking EVs and clean energy batteries, let's look at where the IEA thinks the push for a greener future could take us overall. This bar chart shows its projection for renewable capacity expansion in the next five years. And it's clearly moving at a very fast clip. The report states that between now and 2027, renewables are seen growing by almost 2,400 gigawatts in the IEA's main forecast. That is equal to the entire installed power capacity of China today. And Rachelle, the other big headline, I'd say, taking away from this IEA report really is about how solar power is expected to surpass coal in the next five years, which is a much faster trajectory than the IEA has projected in the past.

- Absolutely. The speed at which this is picked up is incredible. It will be interesting to see if that actually ends up being a target that gets hit. Now, we're going to stay with renewables and our theme as nations battle to keep up with their various green commitments. A report from Bloomberg suggests the EU and United States could be looking at punitive measures on China in a bid to rein in pollution in Beijing.

Now, the reporting says the US and EU are weighing new tariffs on Chinese steel and aluminum in a bid to fight carbon emissions. Now, this will be something of a fresh approach to further their respective climate agendas. I mean, you have to figure with China producing more than half of the world's steel, you have the US and the EU saying, look, this is over capacity. You're potentially threatening the survival of our own steel industries as well. But to put the climate angle on it I think is an interesting twist here.

- Yeah. And it comes at a really tenuous time when you think about the US wanting the cooperation of China on the issue of climate change. They had initially at the start of the Biden administration really pledged each other support. Since then, because of other geopolitical factors that have gone into the conversation, you could argue they're not necessarily as much communication. They're not as much on the same page. It's going to be interesting to see, if this in fact goes through, how China responds to that in relation to what's been playing out.

- Indeed. I mean, even when you look at some of the estimates for carbon, I know the firm Wood Mackenzie is estimating that global iron and steel production emit a combined 3.4 billion tons of carbon annually. That's about 7% of global emissions. But as you said, when you want to try and cooperate on climate but then you also have competition in some of these high-tech sectors, it does make for an interesting dynamic there. So we'll have to see if perhaps that could be a lever that either side could pull if things do get tense.

- Yeah. And always worth reminding everybody that the US and China, the largest emitters in the world. But certainly, they do have to take steps in trying to pull some of that back.