Brent Wanner, Senior Energy Analyst Stockholm, 24 November 2015
The start of a new energy era? 2015 has seen lower prices for all fossil fuels Oil & gas could face second year of falling upstream investment in 2016 Coal prices remain at rock-bottom as demand slows in China Signals turn green ahead of key Paris climate summit Pledges of 150+ countries account for 90% of energy-related emissions Renewables capacity additions at a record-high of 130 GW in 2014 Fossil-fuel subsidy reform, led by India & Indonesia, reduces the global subsidy bill below $500 billion in 2014 Multiple signs of change, but are they moving the energy system in the right direction?
The global energy map in 2040 Share of primary energy demand, 2040 Change 2014-2040 Renewables United States 12% Latin America European Union Africa Middle East Russia India 11% China 22% Japan Southeast Asia Gas Nuclear Coal Oil 500 1 000 1 500 Mtoe Renewables see the highest share of growth to 2040; Asia absorbs an increasing share of global trade 80% of coal, 75% of oil and 60% of gas in 2040
Power is leading the transformation of the energy system Global electricity generation by source TWh 3 000 6 000 9 000 12 000 15 000 Renewables Coal Gas Nuclear Oil 2014 Change to 2040 Of which: Hydro Wind Solar Other renewables Driven by continued policy support, renewables account for half of additional global generation, overtaking coal around 2030 to become the largest power source
Nuclear capacity increases, but no nuclear renaissance in sight GW 700 Nuclear capacity by selected region 600 500 400 300 200 100 Other OECD Retirements China India Russia Other OECD Additions 2014 2040 Capacity grows 55% to over 610 GW in 2040, led by non-oecd, notably China & India; yet the share of nuclear in the global power mix remains well-below its historic peak
Nuclear power can play a role in CO 2 abatement & energy security CO 2 emissions avoided annually by nuclear power 1971-2040 Share of energy demand met by domestic sources and nuclear power in 2040 Gt 2.5 100% 2.0 1.5 1.0 0.5 80% 60% 40% 20% 1971 1980 2000 2020 2040 China United States European Union Indigenous Nuclear production Indigenous & production nuclear Japan Korea Net imports By 2040, almost 4 years of current emissions have been avoided by nuclear power; it cuts dependence on foreign fuel supplies & lowers import bills for some countries
The coverage of climate pledges is impressive Pledges submitted Yet to submit pledges Climate pledges for COP21 are consistent with a temperature rise of 2.7 C, with investment needs of $13.5 trillion in low-carbon technologies & efficiency to 2030
Climate pledges decouple power sector emissions from electricity demand Generation (thousand TWh) Emissions (Gt) World electricity generation and related CO 2 emissions 40 30 20 Electricity generation Electricity generation 20 15 10 10 CO 2 emissions CO 2 emissions 5 1990 2000 2010 2020 2030 The share of low-carbon power generation grows to almost 45% in 2030 so that power emissions remain flat, while electricity demand grows by more than 40%
Thosuand TWh gco 2 /kwh The power sector is central to a low-carbon world Electricity generation by technology and CO 2 intensity in the 450 Scenario 15 OECD China Other non-oecd 1.0 12 0.8 9 0.6 6 0.4 3 0.2 1990 2010 2030 Fossil-fuel plants fitted with CCS Fossil-fuel plants without CCS 1990 2010 2030 Renewables Nuclear 1990 2010 2030 CO2 electricity emission intensity (right axis) Low-carbon power generation needs to quadruple with respect to today, with renewables reaching half of the global power mix in 2040
Trillion dollars (2013) The 2 C goal last chance in Paris? World CO 2 budget for 2 C ~2300 Gt Average annual low-carbon investment, 2014-2040 100% 2012-2040 2.0 75% 50% 1900-2012 1.5 1.0 CCS Nuclear Renewables Efficiency 25% 0.5 Share of budget used in Central Scenario 2013 Central Scenario For 2 C target The entire global CO 2 budget to 2100 is used up by 2040 Paris must send a strong signal for increasing low-carbon investment four times beyond current levels
IEA Ministers issue statement on energy and climate change IEA s 29 member countries issue a collective statement stating that they: Welcome INDCs and endorse IEA view that INDCs should be a first step upon which to build ever-increasing ambition. Welcome the IEA s five key opportunities to reduce energy sector emissions: 1. Increasing energy efficiency in industry, buildings and transport 2. Phasing out the use of least efficient coal fired power plants 3. Increasing investment in renewables, including hydro 4. Gradual phasing out of inefficient fossil fuel subsidies 5. Reducing methane emissions from oil and gas production Call on the IEA to: advise how to enhance the environmental sustainability of the energy sector (including the reduction of local pollution), expand tracking of the energy sector transformation and increase international collaboration.
Conclusions Low prices bring gains to consumers in the short term, but can lead to greater reliance on fossil fuels India and China are the leading actors in the future energy growth story, with far-reaching impacts on energy markets The energy transition is underway in the power sector, led by renewables, with a role to play for nuclear More action is needed to put the world on a path to 2 Celsius, tapping the full suite of existing and emerging low carbon options International cooperation on energy has never been more vital as we look to COP to set up a virtuous cycle of increasing ambition
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