IEA Says Energy Markets Changed For ‘Coming Decades,’ Sees Fossil Fuels Declining In Mid-2020s. | Whuff News

Amid “profound restructuring” in international energy markets due to supply disruptions following Russia’s invasion of Ukraine, global demand for natural gas, coal and oil is expected to increase or plateau in the mid-2030s, the International Energy Agency (IEA) said. Monday.

In its annual World Energy Outlook (WEO-2022) report, the IEA said the global energy crisis is causing “major and long-lasting changes that could accelerate the transition to a sustainable and secure energy system. Notably, the outlook includes predictions that Russian oil exports will not return to the levels seen in 2021.

The world energy watchdog said the crisis was bringing “a shock of unprecedented scope and severity,” and a major shake-up in natural gas, coal and electricity markets. Significant turmoil was also seen in the oil markets, forcing the release of two oil stocks of “unprecedented scale” by the IEA member countries to prevent further disruption.

Along with short-term measures aimed at protecting consumers from the effects of the crisis, many governments are now taking long-term measures, IEA researchers note.

Some want to increase or diversify oil and gas supplies, and most want to accelerate structural change, they said. The most notable responses, according to the IEA, include the US Inflation Act; the European Union’s (EU) Ready for 55 package and REPowerEU; Japan’s Green Transition (GX) program, and Korea’s intention to increase the share of nuclear and renewables in its energy mix. China and India also have ambitious clean energy targets.

Based on the latest policy plans, WEO-2022 could see coal use rebound in the next few years and natural gas demand reach a plateau by the end of the decade. Meanwhile, the rise in electric vehicle (EV) sales means that oil demand will decline in the mid-2030s before rising slightly in the middle of the century.

“This means that the total demand for fossil fuels decreases gradually from between 2020 to 2050 with an annual average that is almost equal to the production of life in a large oil field,” the IEA researchers said. “The decline is faster and more pronounced in WEO’s climate-focused scenarios.”

The IEA noted that global fossil fuel consumption has grown alongside gross domestic product since the Industrial Revolution began. “Restoring this escalation will be a significant moment in the history of energy.”

At the same time, the recent measures taken by the governments seen by the IEA help to increase the investment of clean energy worldwide to more than 2 billion dollars / year by 2030, an increase of more than 50% from today. As markets adjust to this situation, the transition to coal in today’s crisis is temporary as the reform, supported by nuclear power, sees sustainable benefits, according to the agency. As a result, the maximum level of global emissions is reached by 2025.

“Energy markets and policies have changed because of Russia’s invasion of Ukraine, not now, but for decades to come,” said IEA Director Fatih Birol. “Even in today’s policy setting, the world of energy is changing dramatically before our eyes. Government responses around the world promise to make this a historic and decisive change to transform the energy system into a clean, affordable and secure one. “

The IEA sees the share of fossil fuels in the global energy mix falling from around 80% to just over 60% by 2050. Global carbon dioxide (CO2) emissions are expected to drop back slightly from their peak of 37 billion tonnes. annually to 32 billion tons by 2050.

This would be associated with an increase of about 2.5 degrees C in the average global temperature by 2100, “far from sufficient to avoid the severe impacts of climate change,” according to the IEA. “The full implementation of all climate pledges will move the world to a safer place, but there is still a large gap between today’s pledges and the sustainability of global temperature increases of around 1.5 degrees,” the agency said.

More clean energy is needed

IEA researchers say that the current growth rates in the deployment of solar photovoltaic (PV), wind, EVs and batteries, if maintained, will lead to a rapid transformation of energy markets. However, this will require supportive policies not only in the key markets of these technologies but worldwide.

Supply chains for some key technologies – including batteries, solar PV and electrolyzers – are increasing at rates that support the world’s huge demand, according to the agency. However, strong policies are essential to drive the significant increase in energy investment needed to reduce the risk of future inflation and volatility, it said. Reduced investment due to low prices in the 2015-2020 period has made the energy sector more vulnerable to the type of disruption seen in 2022, the agency added.

While clean energy investment rises to more than $2 trillion by 2030 in WEO-2022, it would need to be more than $4 trillion by the same date in a climate-friendly scenario that could reach net zero emissions by 2050, according to the IEA. This highlights the need to attract new investors to the energy sector, it said. At the same time, “major international efforts are still urgently needed to reduce the alarming disparity in net investment levels between advanced economies and emerging and developing economies.”

Birol added, “The environmental case for clean energy needs no strengthening, but the economic arguments supporting the cost-competitiveness and cleanness of clean technologies are now strong – and so is the case for energy security. Today’s alignment of economic, climate and security priorities has begun to lead to a better outcome for people.” of the world and the planet.

“It is important to bring everyone on board, especially at a time when the geopolitical breakdown in energy and climate is more visible. This means redoubled efforts to ensure that the wider world community participates in the new energy economy. The journey to a more secure and sustainable energy system may not be easy. But the problem is today makes it abundantly clear why we must move forward.”

Winter is a ‘Perilous Moment and a Time of Trial’

Obviously, Russian fossil fuel exports do not return to the levels seen in 2021 in any of the scenarios assessed by the IEA in WEO-2022. Russia’s re-adaptation to Asian markets is especially challenging in the case of natural gas, according to the agency.

Russia’s share of global trade power, which stands at around 20% in 2021, falls to 13% in 2030, while the shares of the United States and the Middle East are increasing.

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“For gas consumers, the coming winter of the Northern Hemisphere promises to be a dangerous time and a time to test the unity of the EU – and the winter of 2023-24 may be even more difficult,” said the IEA researchers. “But in the long run, one of the implications of Russia’s recent actions is that the period of rapid growth in gas demand is coming to an end.”

WEO-2022 shows global gas demand increasing by less than 5% between 2021 and 2030 and remaining flat until 2050. The pace behind gas in developing economies has slowed, particularly in South and Southeast Asia, according to the IEA. “This puts a damper on the suitability of natural gas as a transition fuel,” according to the researchers.

That said, with ongoing geopolitical and economic concerns, the IEA said energy markets remain “extremely vulnerable, and this crisis is a reminder of the fragility and instability of the global energy system.”

As part of WEO-2022, 10 principles were defined by IEA researchers that aim to help policy makers at a time when the reduction of fossil fuels and the expansion of clean energy systems exist together. Both systems are required to operate efficiently during power transitions in order to provide the energy services that consumers demand, Birol noted.

“And as the world moves forward in today’s energy crisis,” he said, “new vulnerabilities from high or volatile oil prices or highly concentrated clean energy supply chains must be avoided.”

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