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WASHINGTON – Over the next two decades, the world's energy system will undergo a tremendous transformation. Wind and solar energy become dominant sources of electricity. China's relentless appetite for coal will abate. The amount of oil we use to fuel our cars could peak and fall.
This is the conclusion of the International Energy Agency, which released its annual World Energy Outlook on Monday, a 661-page report forecasting global energy trends by 2040. These forecasts are particularly difficult right now, as the global energy markets usually do this step by step, undergoing major upheavals.
Here are some of the main topics of the report:
Wind and Sun gain in importance
Worldwide, the electricity sector is experiencing its most dramatic transformation since its creation more than a century ago, "the report says. An important factor is the rapid growth of wind and solar energy.
Over the past five years, average solar costs have fallen 65 percent and onshore wind costs have dropped 15 percent. The Energy Agency predicts that these prices will continue to fall as technology improves and governments withdraw subsidies. Solar power plants are able to outbid new coal-fired power plants almost everywhere.
The agency envisages that renewable electricity will provide 40 percent of global electricity by 2040, compared to 25 percent today. Again, this forecast could prove conservative: In the past, the agency underestimated the speed at which wind and solar power grow.
"Our solar thermal expectations are 20 percent higher than last year, both due to new policies in China and India and high costs," said Fatih Birol, executive director of the agency.
However, the report warns that many countries need to retrofit their networks to control the performance of wind and solar installations that run intermittently. This means revising the rules governing the functioning of electricity markets, relying on network flexibility batteries and gas systems, and exploring new tools such as the storage of hydrogen.
Coal Boom Days Are Over
For decades, developing countries like China and India have turned coal as the cheapest and easiest way to boost their economies and free themselves from poverty. This is an important reason why carbon dioxide emissions have skyrocketed.
That changes fast.
China, which burns half of the world's coal, is investing heavily in wind, solar, nuclear and natural gas, which was partly fueled by concerns about air pollution from its coal-fired power plants. The agency now expects China's coal consumption to reach a plateau by 2025, with renewable energy replacing coal by 2040 as the nation's largest source of electricity.
And while countries in Southeast Asia and elsewhere are still planning to build new coal-fired power plants, the agency expects this construction burden to slow down sharply after 2020.
Do not expect coal to disappear completely. As the age of rapid coal growth fades, the agency expects global coal consumption to remain unchanged over decades. One reason for this is that the average coal-fired power plant in Asia is less than 15 years old (compared to about 41 years in the US). These plants will be polluting for decades, unless countries decide to retire prematurely or develop technologies to capture and bury their emissions.
Oil is far from reaching its highest level.
Even as the world puts hundreds of millions of new cars on the road, we use less and less oil to fuel them. The report projects that global oil consumption for cars will peak in the mid-2020s as countries increase their fuel efficiency standards and use more electric vehicles.
However, this does not mean that overall oil consumption will decrease. Only about a quarter of the world's oil is used for refueling passenger cars. The remainder is used to refuel trucks, ships and aircraft. for heating; and produce plastics and other petrochemicals.
The same efficiency gains were not seen in these sectors The Agency therefore expects global oil demand to continue rising until 2040, led by developing countries.
Climate Goals Remain Unachievable
Even with the impressive recent increases in renewable energy, the world is still far from solving global warming. Global carbon dioxide emissions rose 1.6 percent last year and are well on track to rise again this year . The report estimates that emissions will rise slowly by 2040.
One reason: Carbon-free sources such as wind, solar and nuclear power are not growing fast enough to keep up with global demand for energy, especially in India like India and Southeast Asia. This means that the consumption of fossil fuels continues to grow to fill the gap.
For this to change, nations need to take comprehensive policy measures, such as investing in energy efficiency, to slow down demand growth, reduce methane leakage in oil and gas operations, and develop carbon dioxide capture technology for existing power plants and cement factories fossil fuels.
Governments will play a key role: the report states that the world invests $ 2 trillion in energy infrastructure annually, and 70 percent of these are government-led or business-led regulators. "That tells me that our energy destiny will depend heavily on government decisions over the next two decades," Birol said.
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