Investment needed to keep pace with demand

Federico Mansilla
Noviembre 15, 2018

Investment in the power sector hit $750 billion in 2017, higher than oil and gas investment for the second straight year, the agency said.

The IEA's Laura Cozzi says that, while electricity will grow at twice the pace of overall energy demand over the period, wind and solar PV will grow four times faster than electricity.

"Today's flow of new upstream projects appears to be geared to the possibility of an imminent slowdown in fossil fuel demand, but in the New Policies Scenario this could well lead to a shortfall in supply and a further escalation in prices", the report read. This takes legislation and policies to decrease emissions and limit climate change into consideration, and also assume further energy efficiencies in the use of fuel, buildings, etc.

Commenting on the report, IEA's executive director, Dr. Fatih Birol said: "Our analysis shows that over 70 per cent of global energy investments will be government-driven and as such the message is clear - the world's energy destiny lies with government decisions".

"The share of generation from nuclear plants - the second-largest source of low-carbon electricity today after hydropower - stays at around 10%, but the geography changes as generation in China overtakes the United States and the European Union before 2030", the report read.

Although China is the world's third-biggest user of natural gas behind the United States and Russian Federation, it has to import about 40 percent of its needs as local production can not keep pace.

In a similar report Tuesday, OPEC warned that "although the oil market has reached a balance now, the forecasts for 2019 for non-OPEC supply growth indicate higher volumes outpacing the expansion in world oil demand, leading to widening excess supply in the market". LNG involves cooling gas to a liquid so it can be transported by ship.

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On the supply side, the United States, already the world's biggest producer, will dominate output growth to 2025, with an increase of 5.2 million bpd, from current levels around 11.6 million bpd. Except the world doesn't look like it's headed down that path, and it's likely that developing economies will drive oil consumption higher through to 2040.

"We have reviewed all current and under-construction energy infrastructure around the world - such as power plants, refineries, cars and trucks, industrial boilers, and home heaters - and find they will account for some 95% of all emissions permitted under worldwide climate targets in coming decades", said Dr Birol.

Coal and renewables will swap their positions in the power generation mix.

The IEA, which advises Western governments on energy policy, maintained its forecast for the global auto fleet to almost double by 2040 from today, growing by 80 percent to 2 billion.

But the IEA warns most emissions linked to energy infrastructure are already essentially "locked-in", because they are already built technology - such as coal-fired power plants recently constructed in Asia with decades left to run. The vast majority of these are related to projects in Asia, where average coal plants are just 11-years-old on average with decades left to operate, compared with 40 years on average age in the United States and Europe. We can create some room for manoeuvre by expanding the use of Carbon Capture Utilization and Storage, hydrogen, improving energy efficiency, and in some cases, retiring capital stock early.

Total global carbon dioxide output rose 1 percent previous year and the IEA expects that to reach a record high in 2018.

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