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COP23: IEA report points to global shifts in the energy system
The latest World Energy Outlook report published by the International Energy Agency to coincide with the COP23 conference in Bonn, points to four large-scale shifts in the global energy system.
The report highlights the rapid deployment and falling costs of clean energy technologies, the growing electrification of energy, the shift to a more services-oriented economy and a cleaner energy mix in China, and the resilience of shale gas and tight oil in the United States.
With an expected world population of 9 billion by 2040, the IEA anticipates that global energy demand will rise by 30% by this time – the equivalent of adding the energy needs of another China and India. The report notes that without improvements in energy efficiency, the projected rise in final energy usage would more than double.
India is expected to contribute almost 30% of the demand growth, with developing countries in Asia projected to account for another two-thirds. The rest will come predominantly from the Middle East, Africa and Latin America, according to the IEA. It is thought that the growth in energy use will be driven mainly by a rising demand for electricity, set to make up 40% of the rise in final consumption to 2040.
Renewable energy, set to become a cheaper form of new power generation that gas by the mid-2020s, is expected to meet two-fifths of the increase in primary demand. Fast-declining costs will allow solar to enjoy the largest share of low-carbon capacity, according to the report, with major investments in China and India.
The IEA states that a strong emphasis on cleaner energy technologies and reduced reliance on heavy industry and coal will catapult China to a position of global leadership in renewables – the country is expected to account for one-third of the world’s new wind power and solar PV.
Soon after 2030, wind power is expected to become the leading source of electricity in Europe, where renewables are projected to account for 80% of new capacity. Policy mechanisms to support renewables will come increasingly through competitive auctions rather than feed-in-tariffs, the IEA says.
In the European Union, renewables account for 80% of new capacity and wind power becomes the leading source of electricity soon after 2030, due to strong growth both onshore and offshore. Policies continue to support renewable electricity worldwide, increasingly through competitive auctions rather than feed-in tariffs, and the transformation of the power sector is amplified by millions of households, communities and businesses investing directly in distributed solar PV.
Growth in renewables is not confined to the power sector. The direct use of renewables to provide heat and mobility worldwide also doubles, albeit from a low base. In Brazil, the share of direct and indirect renewable use in final energy consumption rises from 39% today to 45% in 2040, compared with a global progression from 9% to 16% over the same period.
Electricity is the rising force among worldwide end-uses of energy, making up 40% of the rise in final consumption to 2040 – the same share of growth that oil took for the last twenty-five years.
Industrial electric motor systems account for one-third of the increase in power demand in. Rising incomes mean that many millions of households add electrical appliances (with an increasing share of “smart” connected devices) and install cooling systems.
Electricity makes inroads in supplying heat and mobility, alongside growth in its traditional domains, allowing its share of final consumption to rise to nearly a quarter. A strengthening tide of industry initiatives and policy support pushes our projection for the global electric car fleet up to 280 million by 2040, from 2 million today.
The scale of future electricity needs and the challenge of decarbonising power supply help to explain why global investment in electricity overtook that of oil and gas for the first time in 2016 and why electricity security is moving firmly up the policy agenda.
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