The International Energy Agency (IEA) released the World Energy Outlook 2018 report, which discusses central considerations for the global energy industry in 2040. This includes an increasing demand for renewables, significant fossil fuel concerns, and a special focus on electricity.
Special Focus: Electricity
Electricity is gradually becoming the preferred “fuel” for economies leaning more towards lighter industrial sectors, services, and digital technologies. Factors like policy support and technology cost reductions are not only increasing its share in global consumption but also making the power sector a leader in emissions reduction efforts. Efficiency gains from stricter energy performance standards have significantly helped hold back demand. From 2010, there has been a decline in electricity use in 18 out of 30 IEA member economies.
Energy Scenario
By 2040, the rising incomes and an additional 1.7 billion people, mostly in urban areas in developing economies, will increase global energy demand by over a quarter. Fifteen years ago, European companies were dominant in the world’s top power companies’ list, measured by installed capacity. Now, six of the top-ten are Chinese utilities, predicting Asia’s domination by 2040.
Shale Gas Production
By 2025, the United States is expected to be responsible for more than half of global oil and gas production growth, putting pressure on traditional oil and gas exporters that heavily rely on export revenues to support national development.
International Energy Trade
Asia increasingly draws international energy trade flows from across the Middle East, Russia, Canada, Brazil, and the United States. New methods of sourcing energy are also visible at the local level, as digitalization and cost-effective renewable energy technologies enable distributed and community-based models of energy provision.
System Flexibility
| Year | Renewable Energy Generation Share |
|---|---|
| Today | 25% |
| 2040 (Projection) | 40% |
The emergence of solar Photo Voltaic (PV) and wind power highlights the increasing importance of flexible operation in power systems. By 2040, many countries including Europe, Mexico, India, and China are set to require a degree of flexibility.
Fossil Fuels
In 2017, there was a rebound in coal use after two years of decline. However, the final investment decisions in new coal-fired power plants were significantly below the level seen in recent years. Natural gas is projected to overtake coal in 2030 to become the second-largest fuel in the global energy mix.
Emissions and Accessibility
Although countries are set to meet the national pledges made as part of the Paris Agreement, these commitments may not be sufficient to reach an early peak in global emissions. The projected emissions trend reveals a significant collective failure to tackle the environmental consequences of energy consumption. In 2017, for the first time, the number of people without access to electricity dipped below 1 billion.
Challenges
While the costs of solar Photo Voltaic and wind continue to fall, oil prices climbed above $80/barrel in 2018 for the first time in four years, and hard-earned reforms to fossil fuel consumption subsidies are under threat in some countries. Global energy-related carbon dioxide (CO2) emissions rose by 1.6% in 2017, and energy-related air pollution continues to result in millions of premature deaths each year.
About International Energy Agency
The International Energy Agency (IEA), an autonomous organisation, was established in 1974 after the OPEC cartel shocked the world with a steep increase in oil prices. It ensures reliable, affordable and clean energy to its 30 member countries, 8 association countries and beyond. The IEA focuses on four main areas: Energy security, Economic development, Environmental awareness and Engagement worldwide. India became an associate member of International Energy Agency in 2017, and Mexico became the IEA’s 30th member country and its first Latin American member in 2018.