The International Energy Agency published its annual World Energy Outlook report this week in which it describes “A world in transformation” defined by four large-scale shifts currently underway in the global energy system, led by the “rapid deployment and falling costs of clean energy technologies.”
Each year the International Energy Outlook (IEA) publishes its flagship publication, the World Energy Outlook report, in which it presents several projections through to 2040 based on what the Agency determines is possible according to various policy assumptions. The main case of the report is the IEA’s New Policies Scenario which models current and announced energy policies, including those enshrined in the Paris Climate Agreement.
This year, the World Energy Outlook 2017 (WEO17) highlights four “large-scale shifts in the global energy system”:
- The rapid deployment and falling costs of clean energy technologies: In 2016, growth in solar PV capacity was larger than for any other form of generation; since 2010, costs of new solar PV have come down by 70%, wind by 25% and battery costs by 40%.
- The growing electrification of energy: In 2016, spending by the world’s consumers on electricity approached parity with their spending on oil products.
- The shift to a more services-oriented economy and a cleaner energy mix in China, the world’s largest energy consumer, is the subject of a detailed focus in this Outlook.
- The resilience of shale gas and tight oil in the United States, cementing its position as the biggest oil and gas producer in the world even at lower prices.
The authors of the report further explain that the above four “shifts come at a time when traditional distinctions between energy producers and consumers are being blurred and a new group of major developing countries, led by India, moves towards centre stage.”
Maybe the most exciting highlight to come out of the report is the IEA’s belief that, “Over the next 25 years, the world’s growing energy needs are met first by renewables and natural gas, as fast-declining costs turn solar power into the cheapest source of new electricity generation.” The IEA has not always accurately highlighted the role that clean energy is playing in the world’s energy mix, often undervaluing the size of the market and the current impact in favor of outlining a scenario in which fossil fuel remains top dog. This may simply be to do with how the WEO is designed to work — not so much as a crystal ball but as a representation of current situations, stretched over the next few decades.
Nevertheless, WEO17 is quick to highlight the massive role solar is playing on the global playing field, explaining that it “is set to lead capacity additions, pushed by deployment in China and India, meanwhile in the European Union, wind becomes the leading source of electricity soon after 2030.”
“Solar is forging ahead in global power markets as it becomes the cheapest source of electricity generation in many places, including China and India,” said Dr Fatih Birol, the IEA’s executive director.
“Electric vehicles (EVs) are in the fast lane as a result of government support and declining battery costs but it is far too early to write the obituary of oil, as growth for trucks, aviation, petrochemicals, shipping and aviation keep pushing demand higher. The US becomes the undisputed leader for oil and gas production for decades, which represents a major upheaval for international market dynamics.”
Global energy demand slows its pace of growth but nevertheless increases by 30% by 2040, according to WEO17, essentially adding another China and India to today’s already burgeoning energy demand. This growth is driven by economic growth of 3.4% per year, population growth from 7.4 billion today to more than 9 billion, and a process of urbanization that beggars belief — adding a city the size of Shanghai to the world’s urban population every four months.
The largest contribution to energy demand comes from India, accounting for 30% of the total growth in demand, with its own share of the global energy use increasing by 11% by 2040 — but still well below its 18% share in the anticipated global population.
As already mentioned, the role of clean energy technologies is only going to increase as we move forward, joining natural gas as the primary way we meet our energy needs by meeting 40% of the increase.
On top of the role played by renewable energy sources, energy efficiency improvements will “play a huge role” in taking the strain off energy supply, without which the projected rise in final energy use would more than double.
Importantly, coal energy will drop off significantly — though it will still hang around longer than we might wish. The IEA points out that between the year 2000 and today, nearly 900 GW (gigawatts) of coal-fired power generation capacity was brought online, but only 400 GW will be brought online between now and 2040.
Thankfully, the IEA predicts that renewable energy will account for two-thirds of global investment in power plants through to 2040.
Solar energy will become the largest source of low-carbon power capacity by 2040 at the same time that renewable energy as a whole accounts for 40% of total power generation.
For more information about the World Energy Outlook 2017 here where you can check out the IEA’s summary, and purchase the report or view its executive summary.
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