Growing Energy Needs Met by Renewables and Gas
Over the next 25 years, the world's growing energy needs will be met firstly by renewables and natural gas, as fast-declining costs turn solar power into the cheapest source of new electricity generation, according to the World Energy Outlook 2017.
The Outlook, the International Energy Agency's (IEA) flagship publication, finds that over the next two decades the global energy system will be reshaped by four major forces: the U.S. is set to become the undisputed global oil and gas leader; renewables are being deployed rapidly thanks to falling costs; the share of electricity in the energy mix is growing; and China's new economic strategy takes it on a cleaner growth mode.
Global energy demand is expected to be 30 percent higher by 2040 - but still half as much as it would have been without efficiency improvements.
The boom years for coal are over - in the absence of large-scale carbon capture, utilization and storage - and rising oil demand will slow down but will not be reversed before 2040, even as electric-car sales rise steeply.
Solar PV is set to lead capacity additions, pushed by deployment in China and India, meanwhile in the European Union, wind is expected to become the leading source of electricity soon after 2030.
A strong emphasis on cleaner energy technologies, in large part to address poor air quality, is catapulting China to world leader in wind, solar, nuclear and electric vehicles and the source of more than a quarter of projected growth in natural gas consumption. As demand growth in China slows, other countries continue to push overall global demand higher - with India expected to account for almost one-third of global growth to 2040.
"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 U.S. becomes the undisputed leader for oil and gas production for decades, which represents a major upheaval for international market dynamics."
The shale oil and gas revolution in the U.S. continues thanks to the remarkable ability of producers to unlock new resources in a cost-effective way. By the mid-2020s, the U.S. is projected to become the world's largest LNG exporter and a net oil exporter by the end of that decade.
This is having a major impact on oil and gas markets, challenging incumbent suppliers and provoking a major reorientation of global trade flows, with consumers in Asia expected to account for more than 70 percent of global oil and gas imports by 2040. LNG from the U.S. is also accelerating a major structural shift towards a more flexible and globalized gas market.
While carbon emissions have flattened in recent years, the report finds that global energy-related CO2 emissions will increase slightly by 2040, but at a slower pace than in last year's projections. Still, this is far from enough to avoid severe impacts of climate change.