IEA: Outlook for global energy demand

The International Energy Agency (IEA) has issued a report to provide an overview of the global energy demand. IEA says that signs of change in global energy have multiplied in the 12 months since their last report. Oil prices fell sharply, with the prices of other fuels moving in tandem in many parts of the world.

Highlights 

• Pledges made in advance of COP21 promise to give new impetus to the move towards a lower-carbon and more effi cient energy system, but do not alter the picture of rising global needs for energy.
• China’s transiti on to a less energy-intensive model for growth has major implicati ons for global trends.
• India – the subject of an in-depth country focus in WEO-2015 – contributes the single largest share of growth, around one-quarter, in global energy demand
• Meeting India’s energy needs requires a huge commitment of capital and constant vigilance as to the implications for energy security and the environment.
• India makes rapid gains in bringing energy access to its people, but the world as a whole is falling short of its ambition to provide affordable, reliable, sustainable and modern energy for all
• The process of adjustment in the oil market is rarely a smooth one, but, in IEA’s central scenario, the market rebalances at $80/bbl in 2020, with further increases in price thereafter.
• The short investment cycle of tight oil and its ability to respond quickly to price signals is changing the way that the oil market operates, but the intensity with which the tight oil resource is developed in the United States eventually pushes up costs
• Where it replaces more carbon-intensive fuels or backs up the integration of renewables, natural gas is a good fit for a gradually decarbonising energy system: a consumption increase of almost 50% makes it the fastest-growing of the fossil fuels
• Energy efficiency plays a critical role in limiting world energy demand growth to one-third by 2040, while the global economy grows by 150%.
• Policy preferences for lower carbon energy options are reinforced by trends in costs, as oil and gas gradually become more expensive to extract while the costs of renewables and of more efficient end-use technologies continue to fall.
• Despite the shift in policy intentions catalysed by COP21, more is needed to avoid the worst effects of climate change

IEA concludes that the direction of travel is changing, but the destination is still not 2 degrees. Despite the shift in policy intentions catalysed by COP21, more is needed to avoid the worst effects of climate change. There are unmistakeable signs that the much-needed global energy transition is underway, but not yet at a pace that leads to a lasting reversal of the trend of rising CO2 emissions. Annual investment in low-carbon technologies in our central scenario increases, but the cumulative $7.4 trillion invested in renewable energy to 2040 represents only around 15% of total investment in global energy supply.

The steady decarbonisation of electricity supply is not matched by a similarly rapid shift in end-use sectors, where it is much more difficult and expensive to displace coal and gas as fuels for industry, or oil as a transport fuel. The net result is that energy policies, as formulated today, lead to a slower increase in energy-related CO2 emissions, but not the full de-coupling from economic growth and the absolute decline in emissions necessary to meet the 2 °C target. A WEO special report released in June 2015, Energy and Climate Change, showed what more can be done, at no net economic cost, to bring about a peak in energy-related emissions by 2020 – an essential step if the door to a 2 °C outcome is to remain open:

Source: IEA