World Energy Outlook 2016 sees broad transformations in the global energy landscape
- by Deborah Evans
- in Money
- — Nov 18, 2016
Speaking at a press conference in London to mark the launch of the IEA's World Energy Outlook 2016, Dr Fatih Birol, executive director of the IEA, said the evolution in shale gas in the United States has paved the way for the breakthrough in LNG, with expected projects in the U.S. and Australia to be followed by a second stream in Mozambique, Tanzania and Canada.
"We see clear winners for the next 25 years - natural gas but especially wind and solar - replacing the champion of the previous 25 years, coal", added Birol.
The agency said a "fully fledged policy drive to decarbonise the energy system will have important consequences for future revenues of fossil-fuel companies and exporting countries".
The Paris Agreement, ratified by the European Union on 5 October and effective 4 November, has targeted a limit on global warming to below two degrees as part of an ambitious move to tackle climate change.
But he said the transportation sector is getting more efficient, and predicted that the world's private auto fleet will use less oil by 2040 than it now does, even though its total size will surge to some 2 billion vehicles.
Consumption of natural gas would increase by 50 per cent by 2040 under such a scenario, while almost 60 per cent of new power capacity would be renewables such as wind and solar, with the clean technologies becoming the largest source of electricity.
The report is the most comprehensive energy outlook published by the IEA, analyzing long-term markets for oil, natural gas, coal and clean energy. The report shows that another year of lower upstream oil investment in 2017 would create a significant risk of a shortfall in new conventional supply within a few years.
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Investment in new oil supplies a year ago was at its lowest since the 1950s.
The IEA said this was deterring oil companies from investing in new oilfields, a trend it said could turn the global oil glut into a supply shortage within years.
"Today 81% of global energy comes from fossil fuels and in 2040, even if all the pledges are implemented, this share will go down to 74%".
LNG shipments are on course to exceed the volumes of natural gas delivered by pipeline, the IEA predicts. Around 100 nations have ratified the Paris agreement, which came into force on November 4, and seeks to limit temperatures rises to well below 2 degrees Celsius above pre-industrial levels and "pursue efforts" to limit the rise in temperatures to 1.5 degrees. National emissions cuts pledged in the Paris agreement will limit the rise in global temperatures to an average of 2.7 degrees Celsius which would miss the goal of 2 degrees above pre-industrial levels by 2100, Birol said.
According to the Agency's latest forecast, 730 GW of HELE plants will be built by 2040.More than half of the coal fleet in developing countries will increasingly consist of HELE plants by that time.
The crude oil price is now about $46 a barrel, have fallen dramatically over the last two years.
"Given its flexibility, gas now plays a critical role in balancing intraday fluctuations in power demand, and has an important role in the 2DS as a complement to variable renewables", said the IEA report. "The next frontier for the renewables story is to expand their use in the industrial and building sectors where enormous potential for growth exists".
