Rapid and widespread changes across all parts of the energy system are needed to put the world on a path to a sustainable energy future, the International Energy Agency argues in its latest report.
The World Energy Outlook has set out three policy scenarios for energy use and security depending on whether the world continues on the current trajectory, announced policies are implemented or if the world embraces sustainable development.
To meet the sustainable scenario, the world needs to significantly improve progress towards energy efficiency with factors such as rising population and energy needs in African and the means by which Asia meets its energy demands also crucial.
The report says: “The faltering momentum behind global energy efficiency improvements is cause for deep concern. It comes against a backdrop of rising needs for heating, cooling, lighting, mobility and other energy services. Improvements in the energy intensity of the global economy (the amount of energy used per unit of economic activity) are slowing: the 1.2% improvement in 2018 was around half the average rate seen since 2010.”
The IEA says this reflects a relative lack of new energy efficiency policies and of efforts to tighten existing measures.
It says that a sharp pick-up in efficiency improvements is the single most important element that brings the world towards what it describes as the Sustainable Development Scenario.
“The pursuit of all economically viable opportunities for efficiency improvement can reduce global energy intensity by more than 3% each year. This includes efforts to promote the efficient design, use and recycling of materials such as steel, aluminium, cement and plastics.
“This increased “material efficiency” could be enough in itself to halt the growth in emissions from these sectors. Innovative approaches also include the use of digital tools to shift electricity demand to cheaper and less emissions-intensive hours of the day, reducing electricity bills for consumers and helping with system balancing, while also helping to reduce emissions.”
The three scenarios
Current Policies Scenario
The path the world is on right now is shown by the Current Policies Scenario, which provides a baseline picture of how global energy systems would evolve if governments make no changes to their existing policies. In this scenario, energy demand rises by 1.3% a year to 2040, resulting in strains across all aspects of energy markets and a continued strong upward march in energy-related emissions.
The Stated Policies Scenario
This was formerly known as the New Policies Scenario and incorporates today’s policy intentions and targets in addition to existing measures. The aim is to hold up a mirror to today’s plans and illustrate their consequences. The future outlined in this scenario is still well off track from the aim of a secure and sustainable energy future. It describes a world in 2040 where hundreds of millions of people still go without access to electricity, where pollution-related premature deaths remain around today’s elevated levels, and where CO2 emissions would lock in severe impacts from climate change.
In the Stated Policies Scenario, energy demand increases by 1% per year to 2040. Low-carbon sources, led by solar PV, supply more than half of this growth, and natural gas accounts for another third. Oil demand flattens out in the 2030s, and coal use edges lower. Some parts of the energy sector, led by electricity, undergo rapid transformations. Some countries, notably those with “net zero” aspirations, go far in reshaping all aspects of their supply and consumption.
The Sustainable Development Scenario
This indicates what needs to be done differently to fully achieve climate and other energy goals that policy makers around the world have set themselves. Achieving this scenario – a path fully aligned with the Paris Agreement aim of holding the rise in global temperatures to well below 2°C and pursuing efforts to limit it to 1.5°C – requires rapid and widespread changes across all parts of the energy system. Sharp emission cuts are achieved thanks to multiple fuels and technologies providing efficient and cost-effective energy services for all.
Putting electricity systems on a sustainable path will require more than just adding more renewables. The world also needs to focus on the emissions that are “locked in” to existing systems. Over the past 20 years, Asia has accounted for 90% of all coal-fired capacity built worldwide, and these plants potentially have long operational lifetimes ahead of them. The World Energy Outlook considers three options to bring down emissions from the existing global coal fleet: to retrofit plants with carbon capture, utilisation and storage or biomass co-firing equipment; to repurpose them to focus on providing system adequacy and flexibility; or to retire them earlier.
Asia’s three-way race
The report says a three-way race is underway among coal, natural gas and renewables to provide power and heat to Asia’s fast-growing economies. Coal is the incumbent in most developing Asian countries: new investment decisions in coal-using infrastructure have slowed sharply, but the large stock of existing coal-using power plants and factories (and the 170 GW of IEA capacity under construction worldwide), provides coal with considerable staying power in the Stated Policies Scenario.
Renewables are the main challenger to coal in Asia’s power sector, led by China and India. Developing countries in Asia account for over half of the global growth in generation from renewables. Demand for natural gas has been growing fast as a fuel for industry and (in China) for residential consumers, spurring a worldwide wave of investment in new LNG supply and pipeline connections. In our projections, 70% of the increase in Asia’s gas use comes from imports – largely from LNG – but the competitiveness of this gas in price-sensitive markets remains a key uncertainty.
Africa’s challenge
The report makes clear that Africa’s energy future is not predetermined. Current plans would leave 530 million people on the continent still without access to electricity in 2030, falling well short of universal access, a major development goal. But with the right policies, the IEA says Africa could reach that target while also becoming the first continent to develop its economy mainly through the use of modern energy sources.
Drawing on rich natural resources and advances in technology, the continent could by 2040 meet the energy demands of an economy four times larger than today’s with only 50% more energy.
Dr Fatih Birol, the IEA’s Executive Director says: “Africa has a unique opportunity to pursue a much less carbon-intensive development path than many other parts of the world,” said “To achieve this, it has to take advantage of the huge potential that solar, wind, hydropower, natural gas and energy efficiency offer. For example, Africa has the richest solar resources on the planet but has so far installed only 5 gigawatts of solar photovoltaics (PV), which is less than 1% of global capacity.”
The IEA adds that policy makers put a strong emphasis on clean energy technologies, solar PV could become the continent’s largest electricity source in terms of installed capacity by 2040.
Natural gas, meanwhile, is likely to correspond well with Africa’s industrial growth drive and need for flexible electricity supply. Today, the share of gas in sub-Saharan Africa’s energy mix is the lowest of any region in the world. But that could be about to change, especially considering the supplies Africa has at its disposal: it is home to more than 40% of global gas discoveries so far this decade, notably in Egypt, Mozambique and Tanzania.
Africa’s natural resources aren’t limited to sunshine and other energy sources. It also possesses major reserves of minerals such as cobalt and platinum that are needed in fast-growing clean energy industries.
“Africa holds the key for global energy transitions, as it is the continent with the most important ingredients for producing critical technologies. For example, the Democratic Republic of the Congo accounts for two-thirds of global production of cobalt, a vital element in batteries, and South Africa produces 70% of the world’s platinum, which is used in hydrogen fuel cells. As energy transitions accelerate, so will demand for those minerals,” Birol adds.
