Contributed by Robert Lyman © 2017
In November 2016, the International Energy Agency issued its latest World Energy Outlook (WEO), its summary of econometric model projections of global energy supply and demand from 2015 to 2040. The full outlook sells for several hundred dollars, so most observers have had to make do with the Executive Summary and the presentation of report highlights made to market analysts in London shortly thereafter. The U.S.-based Institute for Energy Research also published a useful summary and commentary in December 2016.
More recently, some of those who support the thesis that humans are causing catastrophic global warming have taken to quoting WEO 2016 as evidence that the COP21 Agreement on Climate Change has placed the world on a fundamentally new path of energy development and consumption. This note will review the contents of the 2016 WEO as revealed in the documents referenced above to allow the reader to judge whether this is correct.
The IEA has been publishing World Energy Outlooks every few years since the organization was founded in 1974 at the time of the first OAPEC oil embargo. Then, the IEA was an organization whose primary focus was on energy security matters, meaning the risks posed to the economies of the member states by possible oil supply disruptions and the subsequent volatility of crude oil prices. As the danger of such disruptions subsided during the 1980’s, many policy advisors among the OECD countries questioned whether there remained any need for its continued existence. By then, however, the IEA had established a significant bureaucracy within the OECD structure and regular meetings in Paris proved very appealing. In 1988, European countries began to pay more attention to the claim that humans were causing catastrophic global warming. This, and the increasing political strength of the Green Parties in Europe, meant that the European countries wanted an institution that could serve to coordinate and conduct analysis on the actions countries were taking to reduce greenhouse gas emissions. The IEA had already demonstrated its expertise in market analysis, so it took on this role. Since then, the IEA’s published analysis, especially its projections of future trends, has been heavily influenced by the preoccupations of the European members.
The WEO 2016 is based upon analysis of three scenarios, none of which are well explained in the material available. There is a “main scenario”, another which would place the world on a pathway to meet the United Nations goal of limiting the rise in average global temperatures to less than 2 degrees Celsius, and a scenario involving a pathway consistent with limiting the rise in average global temperatures to less than 1.5 degrees Celsius. Even the main scenario involves assumptions and projections that are far closer to the U.N.’s policy goals than those of other major forecasters, like the U.S. Energy Information Administration.
Here are the most important projections from the main scenario:
- Global energy demand will rise 30% from 2015 to 2040. Consumption of all fuels will increase.
- Total energy consumption in OECD countries will decline but increase significantly in China, India, Southeast Asia, the Middle East, Latin America and parts of Africa.
- The demand for low-carbon energy sources, including nuclear energy, hydro-electricity, biomass, wind and solar will represent the largest share (nearly half) of the increase in global energy demand over the period 2015-2040.
- In 2040, solar photovoltaic power generation will exceed 2,000 terawatt hours globally, and wind generation will exceed 4,000 terawatt hours.
- There will be extremely fast growth in the take-up of electric vehicles, with the worldwide stock of electric cars reaching 30 million by 2025 (up from 2 million at the end of 2016) and 150 million in 2040. Like the growth in renewable energy, this depends on the continuation of “supportive policies”.
- Oil consumption will grow to 103.5 million barrels per day in 2040.
- Natural gas demand will grow at an annual rate of 1.5% to 2040, with LNG playing an increasingly important role in trade.
- While coal consumption in the United States and Europe will decline by up to 60% by 2040, global coal consumption will continue to increase due to growth in China, India and Southeast Asia.
- Fossil fuels will still represent 74% of global energy demand in 2040.
- Countries are on a track to achieve the goals set out in their Paris Agreement pledges (presumably meaning the goals set out in the first set of five year Individual Nationally Determined Contributions, or INDCs).
- These measures will slow the growth in greenhouse gas emissions, but will not be nearly enough to limit warming to less than 2 degrees C.
- “The transformation required for a reasonable chance of remaining within the temperature goal of 1.5 degrees C. is stark. It would require net-zero emissions at some point between 2040 and 2060, thus requiring radical near-term reductions in energy sector CO2 emissions, employing every known technological, societal and regulatory decarbonization option.”
It is not clear on which basis the IEA could judge that countries are on a track to meet the “pledges” in their first five-year INDCs, when the assessment was being made less than one year after the pledges were filed.
The summaries of WEO 2016 released to the public lay special emphasis and pride of place on the projected growth in renewable energy consumption, the increases in electric vehicle sales, the enormous potential in energy efficiency improvements and recent (one-year) declines in hydrocarbon industry investment. WEO 2016 never explains what it means by the “supportive policies” that it foresees bringing this about, but the intent seems clear – strict regulatory mandates and very large taxpayer-funded subsidies for the foreseeable future.
For all of its focus on global warming-related objectives, it is notable that the WEO 2016 report summaries nowhere mention what will happen in terms of global greenhouse gas emissions to 2040. With consumption of all fossil fuels growing to that point in time, the result, however, should be clear.
World Energy Outlook 2016, https://www.iea.org/newsroom/news/2016/november/world-energy-outlook-2016.html
IEA Fact Sheet, World Energy Outlook
Institute for Energy Research Summary