The global energy market is undergoing rapid, large scale transitions that will see expansion of renewables, upheavals in oil production and globalization of natural gas markets, according to a new report released by the International Energy Agency (IEA).
The World Energy Outlook 2018 details global energy trends and what potential impact they will have on supply and demand, carbon emissions, air pollution, and energy access.
The report specifically details the importance of government policy making for the future of the global energy market.
“Our analysis shows that over 70% of global energy investments will be government-driven and as such the message is clear – the world’s energy destiny lies with government decisions,” said Dr Fatih Birol, the IEA’s Executive Director.
“Crafting the right policies and proper incentives will be critical to meeting our common goals of securing energy supplies, reducing carbon emissions, improving air quality in urban centers, and expanding basic access to energy in Africa and elsewhere.”
The report outlines growing demand of oil production, mainly due to the increasing demand of petrochemicals, trucking and aviation fuel.
In power markets, renewables have become the technology of choice, making up almost two-thirds of global capacity additions to 2040, thanks to falling costs and supportive government policies. This is transforming the global power mix, with the share of renewables in generation rising to over 40% by 2040, from 25% today, even though coal remains the largest source and gas remains the second-largest.
“We have reviewed all current and under-construction energy infrastructure around the world – such as power plants, refineries, cars and trucks, industrial boilers, and home heaters – and find they will account for some 95% of all emissions permitted under international climate targets in coming decades,” said Dr Birol.
“This means that if the world is serious about meeting its climate targets then, as of today, there needs to be a systematic preference for investment in sustainable energy technologies. But we also need to be much smarter about the way that we use our existing energy system. We can create some room for maneuver by expanding the use of Carbon Capture Utilization and Storage, hydrogen, improving energy efficiency, and in some cases, retiring capital stock early. To be successful, this will need an unprecedented global political and economic effort.”