In its World Energy Outlook for 2017, the US International Energy Agency says that, over the next two decades, the global energy system is being reshaped by major forces:
- the United States 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.
- Over the next 25 years, the world’s growing energy needs are met first by renewables and natural gas, as fast-declining costs turn solar power into the cheapest source of new electricity generation.
- Global energy demand is 30% 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 (CCUS) — and rising oil demand slows down but is not 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 becomes the leading source of electricity soon after 2030.
- A new phase of economic and energy policy in China's development results in an economy that is less reliant on heavy industry and coal.
- As demand growth in China slows, other countries continue to push overall global demand higher – with India accounting for almost one-third of global growth to 2040.
- The shale oil and gas revolution in the United States continues thanks to the remarkable ability of producers to unlock new resources in a cost-effective way. By the mid-2020s, the United States is projected to become the world’s largest LNG exporter and a net oil exporter by the end of that decade.
- Global oil demand continues to grow to 2040, although at a steadily decreasing pace – while fuel efficiency and rising electrification bring a peak in oil used for passenger cars, even with a doubling of the car fleet to two billion. But other sectors – namely petrochemicals, trucks, aviation, and shipping – drive up oil demand to 105 million barrels a day by 2040.
- While carbon emissions have flattened in recent years, the report finds that global energy-related CO2 emissions 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.
Growing energy demand
- In the New Policies Scenario, global energy needs rise more slowly than in the past but still expand by 30% between today and 2040. This is the equivalent of adding another China and India to today’s global demand.
- The largest contribution to demand growth – almost 30% – comes from India, whose share of global energy use rises to 11% by 2040 (still well below its 18% share in the anticipated global population).
- Southeast Asia is another rising heavyweight in global energy, with demand growing at twice the pace of China.
- Overall, developing countries in Asia account for two-thirds of global energy growth, with the rest coming mainly from the Middle East, Africa and Latin America.
- Despite their recent flattening, global energy-related CO2 emissions increase slightly to 2040 in the New Policies Scenario. This outcome is far from enough to avoid severe impacts of climate change, but there are a few positive signs.
- Projected 2040 emissions in the New Policies Scenario are lower by 600 million tonnes than in last year’s Outlook (35.7 gigatonnes [Gt] versus 36.3 Gt).
- In China, CO2 emissions are projected to plateau at 9.2 Gt (only slightly above current levels) by 2030 before starting to fall back.
- Worldwide emissions from the power sector are limited to a 5% increase between now and 2040, even though electricity demand grows by 60% and global GDP by 125%.
- However, the speed of change in the power sector is not matched elsewhere: CO2 emissions from oil use in transport almost catch up with those from coal-fired power plants (which are flat) by 2040, and there is also a 20% rise in emissions from industry.
When China changes, everything changes
- China is entering a new phase in its development. The president’s call for an “energy revolution”, the “fight against pollution” and the transition towards a more services-based economic model is moving the energy sector in a new direction
- Demand growth slowed markedly from an average of 8% per year from 2000 to 2012 to less than 2% per year since 2012, and in the New Policies Scenario it slows further to an average of 1% per year to 2040. Energy efficiency regulation explains a large part of this slowdown. Without new efficiency measures, end-use consumption in 2040 would be 40% higher. Nonetheless, by 2040 per-capita energy consumption in China exceeds that of the European Union.
- China’s choices will play a huge role in determining global trends, and could spark a faster clean energy transition. The scale of China’s clean energy deployment, technology exports and outward investment makes it a key determinant of momentum behind the low-carbon transition: one-third of the world’s new wind power and solar PV is installed in China in the New Policies Scenario, and China also accounts for more than 40% of global investment in electric vehicles (EVs).
- China overtakes the US as the largest oil consumer around 2030, and its net imports reach 13 million barrels per day (mb/d) in 2040. But stringent fuel-efficiency measures for cars and trucks, and a shift which sees one-in-four cars being electric by 2040, means that China is no longer the main driving force behind global oil use – demand growth is larger in India post-2025.
- China remains a towering presence in coal markets, but our projections suggest that coal use peaked in 2013 and is set to decline by almost 15% over the period to 2040.
The report can be found here.