The IEA noted that fossil fuel subsidies continue to outpace those for renewable energy by a factor of more than four-to-one. “Renewables are not a niche fuel anymore”, said Birol. “But there are also clouds on the horizon: the flip side of its versatility is that natural gas faces strong competition in all segments of the market where it is used”.
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Birol said: “It would be a grave mistake to index our attention to energy security to changes in the oil price”. Unconventional gas has been developed extensively in parts of North America and Australia, but it “appears to be off-limits in a number of other countries because of a lack of public acceptance”.
Whether gas actually holds an environmental advantage also is under scrutiny because of the impact of methane emissions from gas production and transport.
However, in every WEO scenarios, global gas demand is projected to increase.
Asia will catch up on the USA in terms of natural gas demand by 2025, before then taking the lead, the report predicted. Coal’s share of the global electricity mix is set to fall from 41% at present to 30% in 2040.
The shift to lower carbon energy sources will cause a “dramatic” slowdown in energy sector emissions. However given the growth in electricity demand and that the country’s power sector is highly dependent on coal, a great deal of the expected demand growth will also mean burning more of this carbon intensive fuel.
By contrast, energy consumption in the most industrialized nations would decline over the same period, the agency said. This takes into account Brazil’s current drought, which is affecting hydropower and increasing reliance on gas. Growth of 50% is equivalent to global gas consumption of around 5 trillion cubic metres in 2040 and is not dissimilar to the agency’s forecast of 5.1 tcm by 2035 in its Golden Age of Gas special report in 2011.
Natural gas imports by the European Union will grow by 30%, with supply sources diversifying by 2040. “So we see a decoupling of energy demand growth and economic growth in major advanced economies”. There are conditions under which oil prices could stay lower for much longer, however.
Coal now accounts for 29 per cent of the global energy mix, up from 23 per cent at the start of the century, but that surge in demand is “ebbing away”, the report says.
“The biggest story is in the case of renewables”, said IEA executive director, Fatih Birol.
“Now is not the time to relax”, he said.
The IEA projects energy trade relationships continue to be “rewritten”, with Asia to be the final destination for 80% of regionally traded coal, 75% of oil and 60% of natural gas in 2040, Kallanish Energy learns.
The world energy outlook also said that China’s coal use, a major source of emissions, is reaching a plateau, as its economy rebalances and energy demand growth slows, before declining, while energy demand in India is on the increase.
Those are the findings and projections of the latest annual World Energy Outlook by the Paris-based global Energy Agency (IEA) – an organization that has a history of underestimating just how fast renewable energy will expand.
“Pledges made in advance of COP21 promise to give new impetus to the move towards a lower-carbon and more efficient energy system, but do not alter the picture of rising global needs for energy”, the IEA noted.
In total, the report predicts that electricity consumption will grow by more than 70% to 2040, although 550 million people will still not have access, and that renewables will overtake coal as the largest source of power generation by the early 2030s.
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By 2040, IEA estimates China’s net oil imports to be almost five times those of the US, while India’s would easily exceed those of the European Union.
