The annual World Energy Outlook report predicts renewables will overtake coal as the largest source of electricity by the early 2030s.
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“Emissions of methane, a powerful greenhouse gas, along the supply chain will dent the environmental credentials of gas if there is no concerted policy action to tackle these leaks”, the IEA said. “It is no longer a niche”.
The findings of the report highlight that renewable technology could become a primary source of new energy supply between 2015 and 2040. He said 60% of all new investment was going into renewables but warned that the $490bn of fossil fuel subsidies in 2014 meant there was not a “fair competition”. Despite the low price, demand is subdued and the current glut will only be absorbed by 2020, by which time the price will be $80 per barrel, according to the IEA. The price of solar panels fell by 75% from 2009 to 2014 and the costs of producing energy from the sun continues to fall. But it said USA shale oil producers could move back into profit with prices of $60-$70 a barrel.
Birol said that the scenario was “unlikely”, but that if it came to pass, “reliance on a very few number of countries in a region that is in turmoil may not be the best news for oil security”. “Now is not the time to relax”.
Despite paring back its coal projections, the IEA was criticised by anti-coal analysts who say it has over-estimated demand and has further to go in recognising momentum towards low carbon-dioxide emissions energy technologies.
A goal at the conference will be to keep global warming below 2°C over pre-Industrial Revolution levels, which is widely believed to be the threshold to avoid catastrophic effects of climate change. “The difference between 2.7C and 2C is not something meaning you can take your jacket off and adapt to life – it will have major implications for all of us”. Coal’s share of the global electricity mix is set to fall from 41% at present to 30% in 2040. While China’s coal use will plateau, India’s energy demand will surge, driven by rising economic growth, a growing population and low but increasing levels of energy use per capita. “This is a major story and has implications for the entire world”.
The report says the plunge in oil prices has set in motion the forces that lead the market to rebalance, via higher demand and lower growth in supply, although the adjustment mechanism in oil markets is rarely a smooth one.
The United States today is the largest gas-consuming country and, although the market is mature, “demand growth has continued to impress, rising by around 14% since 2009”, the report said. “South-east Asia is amazingly important and not getting much attention”, said Birol. The report predicts that the region will continue to be a world leader in biofuels. He said, in the absence of climate policies, cheap coal and renewables would squeeze out gas in the region.
The report says Asia, including India, would be the leading demand centre for every major element of the world’s energy mix in 2040 – oil, gas, coal, renewables and nuclear.
China, the world’s biggest carbon polluter, may even cut energy use faster than expected as it accelerates the transition of its economy away from heavy industry.
The IEA has been criticised in the past for underestimating the speed of solar energy deployment.
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Analysis from the World Resource Institute demonstrates that over half of the climate pledges submitted have renewable energy targets in them, leading renewable energy supplies in the 8 largest emitters to nearly double collectively by 2030, says says Taryn Fransen, project director at the World Resource Institute. “If the policies change, the numbers will change as well”, he said.
