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Informist, Wednesday, Oct. 16, 2024

 

MUMBAI – Clean-energy sources are set to grow at a faster pace by the end of this decade, while global energy demand is set to slow down due to efficiency gains, electrification and a rapid build-out of renewables, the International Energy Agency said. 

 

"While a growing global population and higher incomes increase the need for energy services, energy demand growth slows to 0.7% per year from 2023 to 2030 in the Stated Policies Scenario, half the rate of the past decade", the energy watchdog said in its energy market outlook on Wednesday. 

 

The share of electricity in final consumption is likely to increase from 20% as of now to 26% in 2035 in the stated policies scenario, 29% in the announced pledges scenario and 36% in the net-zero emissions scenario, the agency said. Electricity demand in China is rising particularly fast and is set to surpass the level of demand in all advanced economies combined by 2030, it said. The stated policies scenario is based on current policy settings and market conditions, and the announced pledges scenario incorporates regional and national energy and climate targets and assumes they are met in full and on time.

 

A record high level of clean energy has come online globally, including more than 560 gigawatts of new renewable power capacity. Around $2 trillion is expected to be invested in clean energy in 2024, almost double the amount invested in fossil fuels, it said.

 

Countries are now putting more emphasis on building domestic clean technology manufacturing capacity to improve energy security and boost economic activity, including through tying support to domestic production or jobs and through trade measures. Since 2020, nearly 200 trade measures affecting clean energy technologies have been introduced.

 

The potential for a near-term disruption to oil and gas supply due to the conflict in West Asia is likely to be offset due to a slowdown in oil demand growth and a rise in spare crude production capacity to 8 million barrels per day by 2030, the International Energy Agency said in the report. 

 

However, two-thirds of the overall increase in energy demand in 2023 was met by fossil fuels, and energy-related carbon dioxide (CO2) emissions reached a record high that year. Fossil fuels accounted for 80% of global energy demand in 2023. Total global energy demand rose by around 2% last year, with declines in advanced economies more than offset by large increases in emerging markets and developing economies.

 

Demand for oil, natural gas and coal is set to peak by 2030, though oil use for aviation and petrochemicals increases to 2050 in the STEPS (stated energy policies scenario), natural gas demand remains robust in emerging market and developing economies, and the decline in coal use is relatively gradual, the agency said. "Higher clean energy investment and a faster descent from these peaks is needed to fulfil announced pledges and move the world towards a net-zero emissions pathway," it added.

 

Seven clean energy technologies – solar PV, wind, nuclear, electric vehicles, heat pumps, hydrogen and carbon capture – are key to affordable and secure transitions. Together, they account for three-quarters of the CO2 emissions reductions by 2050. 

 

While the stated policies scenario provides the direction of travel for the energy system based on current policy settings, a wide range of factors influence the energy sector and there are many uncertainties. Variations in the pace of growth of electric vehicles and in the use of plug-in hybrids might impact energy demand. Similarly, the agency said it considers variations in the assumed pace of renewable deployment and assesses potential responses to liquefied natural gas oversupply and uncertainties about how the development of data centres and artificial intelligence, the pace of appliance efficiency improvements, and more frequent and intense heat waves might affect electricity demand. 

 

Oil demand could be 2-3% higher or lower in 2035 than in the stated policy scenario in the sensitivity cases, the agency said. Electric vehicle sales were the largest uncertainty analysed, as a slower uptake of EVs could raise oil demand by 1.2 million barrels per day in 2030, mainly in the US and Europe, and by more than 2 million barrels per day by 2035. On the other hand, enhanced utilisation of EV manufacturing capacity could lead to more EVs being sold in emerging market and developing economies outside China, reducing oil demand by 1.8 million barrels per day in 2035, it said.

 

According to the energy watchdog's analysis, global peaks for oil, natural gas and coal demand would still occur within a few years of those for STEPS, albeit at higher absolute levels, up 1.7 million barrels per day for oil, 140 billion cubic meters for natural gas, and 37 million tonnes of coal equivalent for coal. 

 

Policymakers need to balance goals related to energy security, affordability and sustainability, the energy watchdog said, adding that some policy choices can simultaneously boost all three. Boosting clean energy investment is vital for just, orderly and equitable transitions, it said. Clean energy investment is seen rising from around $2 trillion currently to nearly $3 trillion in the stated policies scenario in 2035 and to $5 trillion in the net-zero emissions scenario, the report said.  End

 

US$1 = INR 83.9950

 

Reported by Taniva Singha Roy

Edited by Tanima Banerjee

 

 

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