by The world invests hundreds of billions of dollars each year in renewable energy and other clean energy solutions, but it needs more than a trillion dollars in investment each year if it is to have any chance of reaching net zero emissions by 2050.
These are some of the key findings World Energy Outlook 2022 published by International Energy Agency IEA this week.
The use of renewables in electricity is expected to peak demand for coal and natural gas by the end of this decade, as the ongoing energy crisis forces governments to adopt stronger policies to support clean energy and reduce reliance on fossil fuels, especially after Russia’s invasion of Ukraine, according to the agency.
For the first time, the IEA’s World Energy Outlook scenario, based on current government policies and regulations, is in global demand every fossil fuel showing a peak or a plateau, the IEA said. Even natural gas, whose demand was previously expected to continue growing, could now join coal and oil in peaking around 2030, according to the IEA’s latest estimates.
In the reported practices scenario (STEP), coal use is expected to decline in the next few years, demand for natural gas is expected to plateau by the end of the decade, and growth in electric vehicle (EV) sales means oil demand will level off in the mid-term. in the 2030s before declining slightly by mid-century.
“One of the effects of the current crisis is that the era of rapid growth in global gas demand is coming to an end,” IEA Director General Fatih Birol said.
“In Europe, climate policy accelerates the transition away from gas. New supply will lower prices by the mid-2020s, and LNG will become even more important for gas security,” Birol added.
The recent rise in coal is small and only temporary, the IEA’s latest analysis shows. At the same time, renewable energy sources are expected to continue to grow and eat into the share of coal and gas in electricity distribution.
The current energy crisis may be a turning point for the even wider use of renewable energy sources, as domestically produced clean energy reduces dependence on imported fossil fuels.
“Government responses around the world promise to make this a historic and definitive turning point towards a cleaner, more affordable and safer energy system,” Birol said.
“The environmental aspect of clean energy did not need confirmation, but the economic arguments for cost-competitive and affordable clean technologies are now stronger – and so is the argument for energy security. Today’s alignment of economic, climate and security priorities has already begun to turn the dial toward a better outcome for the world’s people and planet,” the agency’s director said.
In the World Energy Outlook 2022, the IEA stated that investment in electricity from renewable energy sources needs to increase one of the largest in the Net Emissions (NZE) scenario, increasing from $390 billion in recent years to $1.3 trillion by 2030.
This level of annual spending in 2030 is huge, but not unprecedented in the energy industry.
That would match the highest level ever spent on fossil fuels, the $1.3 trillion spent on fossil fuels in 2014, the IEA said.
Investments in clean energy today are massive, but that still have to climb a lot if the world has a chance to reach net zero by 2050.
“A huge increase in energy investment is essential to reduce the risks of future price spikes and instability and to get on track to achieve net zero emissions by 2050,” the IEA said.
“A smooth and safe energy transition requires a significant increase in clean energy investment flows. Achieving the NZE scenario requires a tripling of clean energy and infrastructure by 2030, as well as a shift towards much greater investment in emerging markets and emerging economies.
By Tsvetana Paraskova for Oilprice.com
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