IEA’s World Energy Outlook 2017 – Renewables the cheapest energy source

The International Energy Agency’s (IEA) World Energy Outlook 2017, released yesterday, foresees that in the European Union 80% of new capacity will come from renewables, the cheapest source of energy for many countries.

The report contains a full update of energy demand and supply projections until 2040. It analyses different scenarios and discusses their consequences for energy security, industry and the environment. The New Policies Scenario is a baseline scenario taking account current or announced policy commitments and plans, and the Sustainable Development Scenario offers an integrated approach to reach international goals regarding climate change, air quality and energy poverty.

In the New Policies Scenario, the global energy demand grows by 30% with a 3,4% annual growth rate by 2040. Thanks to energy efficiency uptake, Europe’s primary energy demand will drop about 200 Mtoe, but this will be by far overridden by developing countries and especially India, whose share of global energy use will rise up to 11%.

Renewables will become the cheapest source of energy for many countries and they will make up two-thirds of global investments in power plants by 2040. The share of renewables in power generation will be 40% globally, finally defeating coal in the power sector. In the European Union, 80% of new capacity will come from renewables, wind power being the leading source of electricity, due to rapid growth of onshore and offshore wind power plant production. However, the EU will still remain number one in projected gas imports by 2040, making it difficult for the EU to fulfil commitments of the Paris Agreement under this scenario.

According to the New Policies Scenario, the United States will become a net exporter of oil after unlocking new resources cost-effectively, so the era of oil will continue. However, China will shift to a cleaner energy mix and can play a key role in the pace of the energy transition by determining global trends.

The Sustainable Development Scenario looks at the desired outcomes to determine necessary actions. It aims at reducing CO2 emissions rapidly, in compliance with the Paris Agreement. In the Sustainable Development Scenario, energy efficiency is maximised, and coal and oil demand decline immediately. Renewables will account for over 60% of the power generation and carbon capture and storage will significantly reduce emissions from the industry sector. The use of electric cars will spread quickly, but stronger energy efficiency measures are required in order to decarbonise the whole transport sector. According to IEA, only 15% additional investment is needed to achieve the Sustainable Development Scenario.

It is urgent for the EU to take stock of these trends and to accept the fact that business as usual is certainly not in line with the Paris Agreement. On the contrary, setting higher renewables and efficiency targets is the only way to proceed in order to reach our climate ambition.

Find here the Executive Summary.

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