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Clean Energy Production in the next decade and Sustainability

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World Energy Demand

Every facet of the global energy system is thoroughly examined, along with strategic insights, in the World Energy Outlook. This study examines how structural changes in economies and energy use are changing how the globe is meeting the growing need for energy against the backdrop of geopolitical tensions and unstable energy markets. An unfavourable environment for the new World Energy Outlook is created by conflict and uncertainty.

Energy markets and pricing may be further disrupted after Russia's invasion of Ukraine amid ongoing Middle East unrest. This demonstrates once more the shortcomings of the fossil fuel era and the advantages of switching to a more sustainable energy system in terms of both emissions and energy security [1].

In certain areas, supply chain constraints, cost inflation, and increased borrowing prices are posing challenges for clean energy projects.

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However, the most active area of global energy investment is clean energy. The key to understanding the variations in trajectories and results amongst our three primary scenarios is how quickly it expands in the upcoming decades in response to policy and market inputs. The clean energy economy is expected to generate a peak in demand for coal, oil, and natural gas this decade, however the rates of decline after the peak will differ significantly.

Click each Scenario.

Announced Pledges Scenario (APS)

Net Zero Emissions by 2050 Scenario (NZE)

Stated Policies Scenario (STEPS)

This section examines a few significant uncertainties:

Those related to China's economic growth rate and the potential for faster solar photovoltaic cell (PV) deployment brought about by a significant anticipated increase in manufacturing capacity (led by China).

We draw attention to the consequences of a significant expansion in the ability to export liquefied natural gas, spearheaded by Qatar and the United States, beginning in the middle of this decade.

We look at how the chances for both energy security and quick, inexpensive transitions would be jeopardised by any worsening of geopolitical tensions [1].

This World Energy Outlook has a new context. Energy is one of the dividing lines in a geopolitical environment that is more divided and complicated. Owing in part to worries about energy security and resilience, new settings for industrial and energy policies are developing as nations vie for a piece of the burgeoning clean energy economy. The amount of greenhouse gas emissions is still at record highs, and the buildup of emissions is making physical climate concerns more serious. All of this is happening in a challenging macroeconomic environment, since the current crisis has increased living expenses and put a stop to an era of cheap borrowing rates. After a prolonged and extremely turbulent period since 2020, some of the tensions in the energy markets have subsided in 2023. But there are still a lot of threats, and the relative quiet that exists now could not endure. More than a year after Russia's invasion, the combat in Ukraine is still going strong, and this increases the possibility of a lengthy confrontation in the Middle East. Extreme weather events are increasingly posing a serious risk to energy security.

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There are compelling indications that the shift to sustainable energy is accelerating, despite challenges.The overall balance of investment is moving towards clean energy, as seen by the favourable deployment patterns for solar PV, electric cars, batteries, and heat pumps. Five years ago, the ratio was 1:1. Today, USD 1.8 is spent on a variety of renewable energy technologies and related infrastructure for every USD 1 spent on fossil fuels (Figure 1). China and other developed economies are the main recipients of the expenditure surge. It will need a lot more clean energy projects with better national regulations and international funding to achieve the Sustainable Development Goals, which include targets for energy access, the global climate, and energy security.

Fig. 1: Flow of investment to renewable energy sources [1]

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Energy costs, particularly for natural gas, surged dramatically in Europe and many other regions of the world in 2022, making it a challenging year for the world's energy markets. Government actions mitigated the price shock's effects on consumers to a significant degree. Global energy consumption increased by 1.3%, in keeping with the current trend. Revolutionary shifts in key aspects of the global energy system are becoming apparent, despite geopolitical tension, fluctuating commodity prices, and cost unpredictability. According to the Stated Policies Scenario (STEPS), electric cars (EVs) would make up 15% of all automotive sales by the year 2030. Heat pumps are expected to more than quadruple their percentage of heating equipment sales in the STEPS by 2030, while a record 220 gigawatts (GW) of solar power was installed in 2022. The STEPS, if fully realised, the anticipated increase in these clean energy technologies' manufacturing capacity looks able to meet many of the Announced Pledges Scenario (APS) deployment milestones. In the case of solar and batteries, also provide what is needed in the Net Zero Emissions by 2050 (NZE) Scenario.

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There is very limited room for growth in fossil fuels due to the accelerated renewable energy transition; in the scenarios, demand for coal, natural gas, and oil all peak before 2030 for the first time.After rising to 80% over the previous 20 years, fossil fuels will only account for 73% of primary energy consumption in the STEPS by 2030, 69% in the APS, and 62% in the NZE (Figure 2).

Fig. 2: Electricity by various sectors [1]

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In all cases, the supply of electricity gets cleaner when the number of low-emission sources rises more quickly than the demand. While wind power also grows despite short-term supply chain issues, solar PV is the obvious leader. Other renewables, nuclear electricity, and low-emission fuels all make headway.

Preserving the global average surface temperature rise below 1.5 °C is essential for safe energy transitions. The current temperature is around 1.2 °C higher than pre-industrial levels, and there hasn't been a peak in global emissions yet. Under 2050 and 2100, respectively, the temperature increases:

Fig. 3: Projected global emissions [1]

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To 1.9 °C and 2.4 °C underSTEPS. This is much higher than the levels of the Paris Agreement, although it is 0.1 °C lower than predicted by the STEPS from the World Energy Outlook-2022.

By 1.4 °C in the NZE.

By 1.7 °C in the APS.

Reference: [1] IEA World Energy Outlook 2023.https://www.iea.org/reports/world-energy-outlook-2023 (Access: 22nd July 2024)

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