2023-10-25 10:32:26
In a context of crisis reminiscent of that of the 1970s, the International Energy Agency draws up its annual report. It highlights how the energy system has embarked on a profound transformation, which needs to be accelerated.
Created in response to the oil crisis of the early 1970s, the International Energy Agency (IEA) has just drawn up a portrait of the evolving global energy system. The current high oil prices could suggest a similarity to the observation she made in her younger years. But the situation that the IEA has just revealed in its World Energy Outlook is very different from that which prevailed 50 years ago, both in terms of the level of consumption, the need to reduce the use of fossil fuels in the context of climate policies, and the existence of alternative solutions.
The observation, first. Compared to 1973, energy consumption worldwide has tripled, from approximately 200 to 600 exajoules. Oil consumption increased from just under 60 million barrels per day to 100 million. Electricity production has increased from 5,000 to nearly 28,000 TWh: alone, today’s renewable energies produce more electrons than all the electricity consumed 50 years ago!
Major weight of photovoltaic solar
The constraint of climate change has emerged in the meantime, leading governments to launch policies to mitigate greenhouse gas emissions. To assess its relevance, the IEA updates three scenarios every year: one which reflects current policies (STEPS – Stated Policies Scenario), another which models the objectives of States (APS – Announced Pledges Scenario) and one the latter giving the vision of the actions to be taken to limit average global warming to +1.5°C as indicated in the Paris Agreement (NZE – Net Zero Emissions). For the first time since the beginning of World Energy Outlook, the Agency announces that there will be a peak in fossil fuel consumption by the end of the decade. Very real changes already show this: sales of thermal vehicles are lower than their level before the Covid-19 pandemic; new installations of coal or gas power plants are half as numerous as before; sales of gas boilers in the residential sector have declined and are now exceeded by the sale of heat pumps in several European countries and the United States. Oil, gas and coal, which have long accounted for 80% of global energy consumption, will see this share drop to 73% in 2030 according to STEPS. This share even reaches 69% for APS or 62% in NZE.
In a growing world (+2.6% per year on average until 2050) and with a population that will increase from 8 to 9.7 billion people, the challenge is to amplify disinvestment in fossil fuels. In the NZE scenario, this translates into financing ten times more clean solutions from 2030, with overall investment levels between $4,700 and $5,000 billion per year between 2030 and 2050.
For the IEA, the path to follow is clear: we must triple renewable energy capacities by 2030, simultaneously bringing the reduction in energy intensity to 4% per year (i.e. twice as much as currently) , reduce the consumption of fossil fuels by 25%, and reduce methane emissions from oil and gas installations by 75%. The strong electrification envisaged for the transition will mainly come from renewable energies. By using only a fraction of their potential, they will contribute to 80% of new means of electricity production by 2030 (STEPS). Photovoltaic solar accounts for half, thanks to significant capacities of equipment manufacturers which could almost double by the end of the decade and reach 1,200 GW/year, mainly in China.
In the STEPS scenario, 500 GW of photovoltaics are installed per year in 2030, which already requires anticipating the strengthening of electricity networks, the addition of electricity storage capacities and demand modulation mechanisms. By moving to 800 GW per year as envisaged in the NZE scenario, the effects would be significant: electricity production from coal would drop by 20% in China, and that from fossil fuels in Latin America, in Africa , Southeast Asia and the Middle East would fall by 25%. In wind power, the capacities to be installed are lower, of the order of 200 GW per year, but remain substantial.
Additional solar photovoltaic and wind capacities installed worldwide according to IEA scenarios. Source: International Energy Agency, WEO 2023, page 147.
Major challenges for hydrogen and CCS
Among the many other aspects raised in the World Energy Outlook, the IEA mentions light electric vehicles whose market share has already tripled in two years to reach 14%, and could flirt with 40% in 2030, or even 60% in the case of NZE. The heat pump market is growing strongly and its market share could increase from 10% to a range of 20-40% depending on the scenarios, i.e. 2,000 to 3,000 thermal GW in 2030.
Hydrogen by electrolysis is also examined, with very contrasting horizons: in the STEPS scenario, 7 million tonnes of low-carbon hydrogen are produced in 2030, while APS envisages 25 Mt and NZE nearly 70 Mt… A rapid move to industrial scale will be decisive to ensure competitive costs for this hydrogen. The challenge seems even more difficult for carbon capture and storage (CCS). The announced projects show a possibility of 400 Mt CO2 captured in 2030, or ten times more than in 2022. But in reality, the IEA notes that only 115 Mt CO2 would be within reach in STEPS.
For the Executive Director of the IEA, Fatih Birol, we are witnessing a long-term transformation which must be accelerated in order to secure our future. Even if investments continue for a few years in fossil fuels, he considers that these are no longer safe choices for the future, not only for the climate, but also for security of supply, as the Russian-Ukrainian crisis has shown. has shown, and as the crisis in the Middle East still raises fears.
Image credit of one: Kindel Media – Pexels
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