Source: Small Island Developing States
13 November 2018: The International Energy Agency (IEA) has issued its flagship publication titled, ‘World Energy Outlook 2018’ (WEO 2018), which analyzes global energy trends to 2040 for all fuels, regions and technologies, and outlines possible futures under three scenarios: the Current Policies Scenario, the New Policies Scenario and the Sustainable Development Scenario. The report finds that government policy choices are key to determining “the world’s energy destiny.”
WEO 2018, which the IEA describes as “the gold standard of long-term energy analysis,” warns that, under the Current Policies Scenario, the world is set to experience growing energy security strains and a significant rise in energy-related carbon dioxide (CO2) emissions. While under the New Policies Scenario, which includes policies and targets announced by governments, “the picture brightens,” the gap between that outcome and the Sustainable Development Scenario “remains huge.” The Sustainable Development Scenario envisions accelerated clean energy transitions that put the world on track to meet energy-related SDGs, reduce air pollution and achieve the goals of the Paris Agreement on climate change.
WEO 2018 predicts an increase in oil consumption in the coming decades, due to growing demand in the petrochemicals, trucking and aviation sectors. Meeting this rising demand in the near term, the report notes, will require doubling approvals of conventional oil projects from their current lows.
Flexibility the cornerstone of future electricity markets in order to keep the lights on.
According to the Agency, most emissions linked to energy infrastructure, particularly from coal-fired power plants, are already locked-in. Today, coal-fired power plants account for one-third of energy-related CO2 emissions, and represent over a third of cumulative locked-in emissions to 2040. WEO 2018 finds that most of these emissions are related to projects in Asia, where, at 11 years old, an average coal plant has decades left to operate, whereas the average age of coal plants in the US and Europe is 40 years.
While coal remains the largest energy source, followed by gas, the share of renewables in generation is projected to rise from 25 percent today to over 40 percent in 2040. WEO 2018 finds that, due to decreasing costs and supportive government policies, renewables “have become the technology of choice” in power markets, “making up almost two-thirds of global capacity additions to 2040.” The report notes that policy makers need to address challenges associated with this expansion, making “flexibility the cornerstone of future electricity markets in order to keep the lights on.”
Having reviewed all current and under-construction energy infrastructure in the world, the Agency concludes that in the coming decades it is expected to account for around 95 percent of “all emissions permitted under international climate targets.” From now on, said IEA Executive Director Fatih Birol, “there needs to be a systematic preference for investment in sustainable energy technologies,” and “we also need to be much smarter about the way that we use our existing energy system.” To be successful, Birol said, “unprecedented global political and economic effort” will need to be made as “over 70 percent of global energy investments will be government-driven.”
A UNFCCC press release on WEO 2018 notes that government decisions on energy will in part be shaped by the outcomes of the Katowice Climate Change Conference in December, where Parties are expected to agree on Paris Agreement implementation guidelines and consider next steps to increase climate ambition. According to the UNFCCC, renewable energy trends need to be accelerated to hold the global average temperature increase “to as close as possible to 1.5°C.” [Publication: World Energy Outlook 2018: Executive Summary] [WEO 2018 Webpage] [IEA Press Release] [UNFCCC Press Release]