The report, published by the International Energy Agency (IEA), projects that a steady increase in hydropower, coupled with the rapid expansion of wind and solar power, will fortify the position of renewables in the global energy mix. Indeed, according to the IEA, within the next two decades, renewables will account for nearly one-third of total electricity output.
By 2015, they will grow to become second only to coal as the worlds largest source of power generation; and, by 2035, they will rival coal as the primary forms of global electricity. While the rapid increase in renewable energy will be buoyed by falling technology costs, rising fossil-fuel prices and carbon pricing, it will largely be contingent on continuing subsidies.
Rising from US$88 billion globally in 2011, renewable subsidies will approach $240 billion in 2035. However, the IEA warns that subsidy measures to support new renewable energy projects must be adjusted over time, as capacity increases and as the costs of renewable technologies fall, to avoid placing excessive burdens on governments and consumers.
The report outlines four scenarios for future energy usage, ranging from a sequence of events based on contemporary conditions to an aspirational vision. Among them are the:
- Current Policies Scenario, under which government policies enacted to date continue unchanged;
- New Policies Scenario, under which existing policies are maintained and recently announced commitments are implemented cautiously;
- 450 Scenario, under which policies are adopted that offer a 50% chance of limiting the long-term global increase in average temperature to 2° C; and,
- Efficient World Scenario, under which all possible energy efficiency investments are made and all market barriers are eliminated.
Based on the assumptions of the New Policies Scenario the course of events realistically envisioned by the report electricity generated by photovoltaics in 2035 will rise 26-fold from 2010, increasing from 32 terawatt hours (TWh) to 846 TWh. Installed photovoltaic capacity, meanwhile, will increase from 67 GW in 2011, to just over 600 GW in 2035, thanks to continuing cost reductions and government support.
According to the experts, this rapid expansion is in line with recent experience. Global photovoltaic capacity stood at just 1 GW in 2000. Over the course of 2011, it grew by about 30 GW, thus representing a 75% increase. About 60% of the additional deployments were in Germany and Italy the world leaders in photovoltaics, with 25 GW and 13 GW of installed capacity, respectively, at the end of 2011.
Overall, the European Union accounted for more than three-quarters of global photovoltaic capacity last year. Over the Outlook period, EU capacity is projected to escalate to 146 GW, accounting for 5% of the regions electricity generation in 2035 (up from 1% in 2010).
In the United States, capacity is expected to increase from 4 GW in 2011, to 68 GW in 2035. Other countries expected to deploy large amounts of photovoltaic capacity by 2035 are China (113 GW), India (85 GW) and Japan (54 GW).
Investment in photovoltaic installations has been encouraged in recent years by substantial reductions in costs, which resulted largely from widespread installations and substantial oversupply. Between the first quarter of 2010 and the first quarter of 2012, photovoltaic generating costs fell by 44%, according to the Frankfurt School UNEP Collaborating Centre and Bloomberg New Energy Finance. Overall, costs will continue to plummet over the projection period, although at lower rates, as the oversupply situation is corrected.
The report also notes that consolidation and failure are likely to persist in the industry in the short-term, especially on the manufacturing side, until the imbalance between supply and demand is corrected.
Energy independence in the US
In other trends, IEA executive director, Maria van der Hoeventhe sees "North America at the forefront of a sweeping transformation in oil and gas production that will affect all regions of the world." Under the New Policies Scenario, the United States will become a net exporter of natural gas by 2020, attaining a position close to self-sufficiency in energy by 2035. This will accelerate a switch in the direction of international oil trade, with almost 90% of Middle Eastern oil exports drawn to Asia by 2035.
While regional dynamics will change, global energy demand will push ever higher, growing by more than one-third through 2035. China, India and the Middle East will account for 60% of the growth. Demand will barely rise among the members of the Organization for Economic Cooperation and Development (OECD), but there will be a pronounced shift toward gas and renewables.
Biofuel use would more than triple under the New Policies Scenario, from 1.3 million barrels of oil equivalent per day (mboe/d) in 2010, to 4.5 mboe/d in 2035, driven primarily by blending mandates. The report predicts that ethanol will remain the dominant biofuel meeting 37% of road transport demand in 2035 in Brazil, 19% in the United States and 16% in the European Union.
Proceed with caution
The current Outlook finds that no more than one-third of proven reserves of fossil fuels can be consumed prior to 2050, if the world is to achieve the 2 °C goal, unless carbon capture and storage (CCS) technology is widely adopted. This finding is based on the IEAs assessment of global "carbon reserves," measured as the potential CO2 emissions from proven fossil-fuel reserves.
Almost two-thirds of these carbon reserves are related to coal, 22% to oil and 15% to gas. Geographically, two-thirds are held by North America, the Middle East, China and Russia. These findings emphasize the importance of CCS as a key option to mitigate CO2 emissions, but its pace of deployment remains highly uncertain, with only a handful of commercial-scale projects currently in operation.
Whats more, water is essential to the production of energy, and the energy sector already accounts for 15% of the worlds total water usage. Its needs are set to grow, making water an increasingly important criterion for assessing the viability of energy projects. In some regions, water constraints already are affecting the reliability of existing operations and they will introduce additional costs.
The deployment of renewables under the New Policies Scenario would reduce CO2 emissions by over 4.1 gigatonnes in 2035, contribute to the diversity of the energy mix, lower oil and gas import bills, cut local air pollution and, in most cases, reduce stress on water resources.
Edited by Becky Beetz.