BY Neil Eisberg | Editor
Big changes are ahead for the global energy system, according to the latest annual outlook from the International Energy Agency (IEA). The IEA believes there is a need for stronger policies and greater investments to accelerate and expand the transition to cleaner and more secure technologies.
In its latest annual report, World Energy Outlook 2024, the IEA says the world is set to experience a new energy market over the next few years, marked not only by continued geopolitical hazards but also – perhaps surprisingly – by a relatively abundant supply of multiple fuels and technologies.
This ‘abundant’ supply of fuels and technologies also includes what the IEA describes as ‘an overhang of oil and liquefied natural gas coming into view during the second half of the 2020s’. This is matched by a large surfeit of manufacturing capacity for some key clean energy technologies, including solar photovoltaic (PV) and batteries.
As IEA Executive Director Fatih Birol highlights: ‘In the second half of this decade, the prospect of more ample – or even surplus – supplies of oil and gas, depending on how geopolitical tensions evolve, would move us into a very different energy world from the one we have experienced in recent years during the global energy crisis.’
It implies downward pressure on prices, providing some relief for industries – such as the European chemicals industry – that have been hit hard by price spikes. However, fundamental changes in the system are still needed it warns: ‘The breathing space from fuel price pressures can provide policymakers with room to focus on stepping up investments in clean energy transitions and removing inefficient fossil fuel subsidies. This means government policies and consumer choices will have huge consequences for the future of the energy sector and for tackling climate change.’
According to the report, low-emissions sources are set to generate more than half of the world’s electricity before 2030, while demand for fossil fuels is projected to peak by the end of the decade. But while ‘clean’ energy is entering the global market at an unprecedented rate, its deployment is far from uniform across technologies and markets.
‘In energy history, we’ve witnessed the Age of Coal and the Age of Oil,’ says Birol. ‘We are now moving at speed into the Age of Electricity, which will define the global energy system going forward and increasingly be based on clean sources of electricity.’
The IEA points out that global electricity use has grown at twice the pace of overall energy demand over the last decade, with two-thirds of the increase in electricity demand coming from China.
The IEA believes China will account for almost 60% of all renewable energy capacity installed worldwide between now and 2030, making it home to almost 50% of global renewable power capacity.
‘Between now and 2030, the world is on course to add more than 5500GW of renewable power capacity – roughly equal to the current capacity of China, the EU, India and the US combined,’ forecasts Birol. ‘By 2030, we expect renewables to be meeting half of global electricity demand.’
All this is good news for the replacement of fossil fuels as the generator of electricity, however, IEA also points out that rates of curtailment – where renewable electricity generation isn’t put to use – have also been increasing substantially, reaching as much as 10% in several countries.
Government policymakers need to focus on measures such as increasing power system flexibility including upgrading electricity grids and electricity storage facilities as the development of supporting infrastructure is not matching the pace of energy capacity increases. The IEA estimates that for every US dollar spent on renewable power, only $0.60 is being spent on grids and storage, for example.
Energy is a core concern for the chemicals industry and negotiating this changing landscape will be critical. European industry, for example, is facing the challenge of high energy costs, even as the entire industry is looking to electrification as a key way to cut the carbon emissions associated with their projects by replacing fossil-fuel based thermal heating.
The advent of an Age of Electricity will help to support those projects that will play an important part in decarbonising the industry. It will mean using a mix of technologies including heat pumps for relatively low temperature processes, while a range of new technologies are being developed for higher temperature processes. The scale of these projects is growing.
The gradual shift towards green energy is welcome, but challenges remain. Despite the growing momentum behind clean energy, the IEA believes the world is ‘still a long way from a trajectory aligned with its net-zero goals’.
‘Decisions by governments, investors and consumers too often entrench the flaws in today’s energy system, rather than pushing it towards a cleaner and safer path.’
For industry and government, there is still a long way and a lot of hard work to go.
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