Amid growing energy needs, the global energy system is set to undergo sweeping changes triggered by a sharp decline in the cost of renewables, which continue to gradually erode traditional ways of meeting energy demand. In its latest report, the International Energy Agency (IEA) says that over the next 25 years, the world’s energy needs will be met first by renewables and natural gas, with solar as the cheapest energy generation source.
According to the IEA annual publication the World Energy Outlook 2017, the global energy system will be shaped by four major forces over the next two decades: the United State’s rise as world’s oil and gas leader, accelerated deployment of renewables on the wings of falling prices, growing share of electricity in the energy mix, and China’s economic strategy shaped around a cleaner and more diversified energy mix.
With a 30% increase in global energy demand by 2040, the global energy system is set to leave behind coal, in the absence of large-scale carbon capture, utilization and storage, and slowly depart from oil, but not completely abandon it even as electric car sales rise steeply. Meanwhile, solar PV will lead capacity additions, pushed by deployment in China and India, while in the European Union, wind becomes the leading source of electricity soon after 2030, the report reads.
“Solar is forging ahead in global power markets as it becomes the cheapest source of electricity generation in many places, including China and India,” said Fatih Birol, the IEA’s executive director. “Electric vehicles are in the fast lane as a result of government support and declining battery costs but it is far too early to write the obituary of oil, as growth for trucks, aviation, petrochemicals, shipping and aviation keep pushing demand higher. The U.S. becomes the undisputed leader for oil and gas production for decades, which represents a major upheaval for international market dynamics.”
Firmly positioned as global leader in wind, solar, nuclear and electric vehicles and the source of more than a quarter of projected growth in natural gas consumption, China will continue to reaffirm its dominance in clean energy deployment even with a later-stage slowdown in demand growth, followed by India, which will account for almost one-third of global growth to 2040.
Furthermore, according to the IEA projections, the United States is expected to become the world’s largest LNG exporter by the mid-2020s and a net oil exporter by the end of that decade, with consumers in Asia accounting for more than 70% of global oil and gas imports by 2040. In terms of CO2 emissions, IEA expects a slight increase by 2040, but at a slower pace than in last year’s projections.