The global energy market is undergoing dramatic changes, as big consumers such as the United States and China become the major producers of oil and solar power, and renewables plunge in price.
These were some of the messages of the of the International Energy Agency’s 2017 World Energy Outlook, whose Brussels launch took place at a Friends of Europe High-level Conference on 20 November.
The IEA noted four upheavals that are shaping the world energy market, Executive Director Fatih Birol said. One is the growing electrification of energy: In 2016, global consumer spending on electricity was close to that on oil products, while future growth in electricity demand is expected to be double that of overall energy. Another is the move by China – the world’s largest energy consumer – away from heavy industry towards a more services-oriented economy and a cleaner energy mix. Thirdly, the US is becoming the leader in oil and gas production. Finally, clean energy technologies are spreading and falling in cost: the cost of solar energy has halved since 2014.
The IEA outlined two main scenarios for the coming two decades. In the New Policies Scenario, existing policies and announced intentions cause global energy needs to rise more slowly than in the past – but they still expand by 30 percent between today and 2040.
The Sustainable Development Scenario describes an approach to achieve the energy-related aspects of the UN Sustainable Development Goals for 2030, which include action on climate change, universal access to energy and reduced air pollution.
“Two things make me optimistic,” said Birol. “One is that the market dynamics are pushing clean technology. Wind, solar and electric cars are becoming cheaper. The other is that there is a strong political will across the world to address climate change.”
The recent changes in thinking by many governments have been remarkable, said Laurence Tubiana, Chief Executive Officer at the European Climate Foundation (ECF) and France's former Climate Change Ambassador and Special Representative for COP21, the 2015 United Nations Climate Change Conference, which produced the Paris Agreement. “Two years ago, every country thinking for first time about putting forward a climate plan,” she said. “Now they are thinking about how to put this into law. It’s a remarkable evolution.”
Governments can play a role by facilitating distributed energy production and setting up the right legal framework, said Maroš Šefčovič, European Commission Vice-President for Energy Union. “A big help for additional investment could be more decentralized ways to power our economies,” he said. “More consumers are turning into producers, and small towns and villages are turning into clean-energy producers. We need to provide effective delivery and legal certainty.”
Among fossil fuels, gas is cleaner and emits relatively smaller quantities of greenhouse gases. “We can make gas more and more sustainable,” said Marco Alvera, President of GasNaturally and Chief Executive Officer of Snam. “Methane leakage has been an issue, but more can be done in the interests of the environment and safety. Initiatives are under way such as common standards and best practices.”
Birol said the key question for the world’s energy transformation is its speed. “We know the destination,” he said. “The only thing is the pace – and whether it is too late or not.”
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