Who: World Energy Outlook 2015
What: Released by International Energy Agency
When: 10 November 2015
International Energy Agency (IEA) on 10 November 2015 released the World Energy Outlook 2015 (WEO-2015). The report, in light of low energy prices, calls for no complacency on energy security front and sees clear signs that the energy transition is underway, that is, from fossils to renewable.
The WEO-2015 presents updated projections for the evolution of the global energy system to 2040 as well as detailed insights on the prospects for fossil fuels, renewables, the power sector and energy efficiency. It also presents an analysis on trends in CO2 emissions and fossil-fuel and renewable energy subsidies.
India, which will move to the centre stage of global energy, is the subject of an in-depth focus in WEO-2015.
Main highlights of the WEO-2015
- An extended period of lower oil prices would benefit consumers but would trigger energy-security concerns by heightening reliance on a small number of low-cost producers, or risk a sharp rebound in price if investment falls short.
- The plunge in oil prices will set in motion the forces that lead the market to rebalance, via higher demand and lower growth in supply.
- In the central scenario of WEO-2015, a tightening oil balance will lead to a price around 80 dollars per barrel by 2020.
- World energy demand will grow by nearly one-third between 2013 and 2040 in the central scenario of WEO-2015, with the net growth driven entirely by developing countries.
- By 2040, China’s net oil imports will be nearly five times those of the United States, while India’s import will easily exceed those of the European Union.
- Developing Asia will be the leading demand centre for every major element of the world’s energy mix in 2040 – oil, gas, coal, renewables and nuclear.
- India in the developing Asia region will take over China as the largest source of consumption growth.
- The single largest energy demand growth story of recent decades, that is, China’s coal use will reach its plateau as its economy rebalances and overall energy demand growth slows, before declining.
- With India moving to the centre stage in global energy, the energy demand will increase to two-and-a-half-times current levels. The main causes will be India’s high level of economic growth, large (and growing) population and low (but increasing) levels of energy use per capita.
- The links between global economic growth, energy demand and energy-related emissions will weaken. This is because some markets (such as China) will undergo structural change in their economies and others reach a saturation point in demand for energy services.
- A prolonged period of lower oil prices could undercut the adoption of energy efficient technologies. Diminished incentives and longer payback periods mean that 15% of the energy savings will be lost in a low oil price scenario.
- Lower prices alone would not have a large impact on the deployment of renewables, but only if policymakers remain steadfast in providing the necessary market rules, policies and subsidies.
- Renewables: The leading source of energy in 2040
- There are clear signs that an energy transition is underway, that is, renewables contributed almost half of the world’s new power generation capacity in 2014 and have already become the second-largest source of electricity (after coal).
- The coverage of mandatory energy efficiency regulation has expanded to more than one-quarter of global energy consumption.
- Renewables are set to become the leading source of new energy supply from now to 2040.
- Their deployment grows worldwide, with a strong concentration in the power sector where renewables overtake coal as the largest source of electricity generation by the early-2030s.
- Renewables-based generation reaches 50% in the EU by 2040, around 30% in China and Japan, and above 25% in the United States and India.
The net result of the changes seen in the WEO-2015 central scenario is that the growth in energy-related emissions slows dramatically, but the emissions trajectory implies a long-term temperature increase of 2.7 °C by 2100. A major course correction is still required to achieve the world’s agreed climate goal.