10 things you need to know from the World Energy Outlook 2017
This week's World Energy Outlook 2017 report from the International Energy Agency tells the story of an energy industry on the brink of a seismic shift, as it struggles to deal with the twin pressures of decarbonization and rising energy demand.
From a shift in the geopolitical center of the global energy market to the predicted trajectory of individual technologies, here's your need-to-know guide to this bumper report. All figures are based on the IEA's base case New Policies Scenario, unless otherwise stated.
1. Carbon emissions from energy are set to keep rising
The world remains way off course for avoiding severe impacts from climate change, according to the IEA's base case scenario, which predicts global energy-related carbon emissions will increase by 5 percent by 2040. The rise is mainly attributed to an expected increase in emissions from oil use and a 20 percent climb in industrial emissions, likely to offset falling emissions from the power sector.
The glimmer of hope is that this actually represents a positive revision of 600 million tonnes compared to the IEA's forecast in last year's report. However, it still acts as a stark warning that the battle for decarbonizing energy is far from won.
2. Global energy demand is only going one way: up
By 2040 global energy demand will be 30 percent higher than today, the IEA stated, while acknowledging that without improved energy efficiency the increase would be twice as high. Renewables and natural gas are expected to be the most popular generation sources to fill the demand gap, which is the equivalent to adding another China and India to today's energy demand, according to the IEA.
3. Coal's 'boom years' are over
It will come as no surprise to anyone who has kept a keen eye on global energy markets in recent years, but the IEA officially is predicting that the "boom years" for coal are well and truly over — barring the surprise emergence of carbon capture and storage technology as a mainstay of energy grids the world over.
Over the next 23 years, the IEA predicts just 400GW of new coal-fired capacity will be added around the world, compared to 900GW in the past 17 years. Many of these new plants already are under construction, and are set to be the last wave of new additions as global coal consumption flatlines over the next few decades.
4. China is becoming a world center for green power
The emphasis on Chinese energy policy has shifted squarely from coal power to renewables, natural gas and smart grid technologies. Energy efficiency rules have helped slow demand growth in the country over recent years and will continue to bite into energy demand, set to rise only by 1 percent a year between now and 2040.
China is set to be the linchpin of the global energy transition around which markets move, the IEA said. Coal use in the country is set to decline by 15 percent through to 2040 while natural gas demand will soar, and up to a third of the world's new wind and solar will find a home in China.
"A strong emphasis on cleaner energy technologies, in large part to address poor air quality, is catapulting China to a position as a world leader in wind, solar, nuclear and electric vehicles and the source of more than a quarter of projected growth in natural gas consumption," the IEA predicted.
But it stresses that China's influence is so great that if it were to embark on even more aggressive decarbonization policies the global clean energy transition could move even faster.
5. The U.S. is becoming the most powerful peddler of fossil fuels
In stark contrast to China's role as a leader in green energy, the U.S. is predicted to become the world's largest exporter of LNG natural gas by the mid-2020s and a net exporter of oil by the end of the next decade.
The boom in oil and gas will drive a major investment in petrochemicals and other energy-intensive industries in the States, the IEA stated.
6. EVs put the brakes on rising oil demand
By 2040 oil demand will still be growing according to the IEA, but at a steadily slowing rate largely thanks to the rise of the electric vehicle. The global electric car fleet is predicted to hit 900 million cars by 2040 thanks to extra policy and infrastructure support. This will help push the price of oil down to between $50 and $70 a barrel, but the IEA warns it is "not sufficient to trigger a major turnaround in global oil use" without strong policy action to tackle demand from aviation, shipping and freight transport.
7. Renewables are becoming the cheapest form of new generation
Renewables will make up 40 percent of total power generation by 2040, according to the IEA, with solar as the largest low-carbon power source on the planet. In fact, between 2017 and 2040, the average annual solar deployment rate is expected to hit 74GW, compared to 50GW for wind and 36GW for all other types of renewables.
Although China and India are expected to lead the way in renewables deployment, the EU also will plough almost all its new power investment in green energy, the IEA stated. As such, wind power is set to become the leading source of electricity for the trading bloc after 2030.
8. Air pollution remains a major killer
Although policy action to tackle air quality will lead to a dip in the emissions from major pollutants, air quality is still set to emerge as an increasingly important public health issue over the next three decades. Premature deaths from outdoor air pollution will rise from 3 million today to 4 million in 2040, the IEA warns.
9. Light at the end of the tunnel?
For the first time, the IEA has this year introduced what it dubs the Sustainable Development Scenario, which maps out a pathway for delivering a world with a stable climate, cleaner air and universal access to modern energy.
Under this scenario, low-carbon sources double their share in the energy mix to 40 percent by 2040, while global economies go full tilt towards achieving maximum energy efficiency improvements. The power sector, using a mix of renewables, nuclear and carbon capture and storage, is all but decarbonized by 2040, while electric cars move quickly into the mainstream.
Finally, consumption of natural gas grows by nearly 20 percent under this vision, but the IEA warned that its use as a helpful tool for decarbonization depends on "credible action" to tackle methane leaks in the system.
If all the measures in the Sustainable Development Scenario were implemented, it would have the "same impact on reducing the average global surface temperature rise in 2100 as shutting all existing coal-fired power plants in China," the IEA stated.
10. Is the IEA being overly pessimistic?
Green businesses and campaigners will be hoping that the IEA's predictions once again prove to be overly conservative. The agency has a track record of low balling renewables deployment predictions, only to upgrade them at a later date as the solar and wind energy industries surpass expectations.
However, coming in the same week as fresh warnings global greenhouse gas emissions are set to rise this year for the first time in four years, the warning to political and business leaders gathering at this week's U.N. climate summit could not be starker. If there is to be any chance of meeting the goals of the Paris Agreement, a step change in clean tech deployment is urgently needed.
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