Renewable energy could surpass coal, nuclear power, and natural gas as the world’s largest source of electricity within only 15 years, according to a new report from the International Energy Agency.
The report was published to provide a backdrop to the current state of affairs in energy markets ahead of the international climate negotiations set to take place in Paris in December. The IEA noted that economic growth is starting to “decouple” from energy – global GDP expanded by 3 percent in 2014 but emissions stayed flat. (Related: Canadian Economy More Damaged By Oil Prices Than Expected)
That puts the world at an interesting crossroads. A peak in global greenhouse gas emissions is starting to come within sight, but the world is not doing nearly enough to head off the worst effects of climate change.
As a result, much anticipation and excitement surrounds the upcoming climate negotiations in Paris. As countries start submitting their individual nationally determined contributions (INDCs), or pledges that individual countries issue detailing their plans to reduce their emissions, we can get a clearer picture of what the future might look like.
For example, the U.S. plans on cutting greenhouse gas emissions by 26 to 28 percent below 2005 levels by 2030. The EU, on the other hand, is much bolder, not only in its headline number but also in its baseline: a 40 percent cut from 1990 levels. Plans from other countries are starting to trickle in.
If the INDC plans are acted upon, they could result in a vastly larger global economy by 2030 that burns a lot less fossil fuels. Global GDP could nearly double over the next 15 years, rising by 88 percent. At the same time, carbon emissions from energy rise just 8 percent, a remarkable achievement.
Another potential development is the fact that renewable energy could become the world’s largest source of electricity by 2030, moving past all the major conventional sources of electricity that we have known during the modern era: coal, nuclear power, and natural gas. That is no small feat.
Still, the projections are amazingly underwhelming. At a time when global emissions need to peak and decline if there is to be any reasonable scenario in which the world stays below its stated 2 degree Celsius target, carbon emissions actually continue to rise for another decade and a half? Much more will be needed.
The IEA says that burning through the remaining carbon budget – the amount of greenhouse gas pollution that could be emitted into the atmosphere while still keeping warming to 2 degrees Celsius – will hardly be changed by the plans laid out by countries going into the climate talks in Paris. (Related: EIA Oil Production Numbers All Over The Place, Again)
Given the INDCs so far – which include the U.S., the EU, Russia, Mexico, but notably not China – the world blows through its carbon budget by 2040, a mere 8 months later than if none of those countries pledged to do anything at all. Put another way, the carbon reduction plans appear to be a rounding error over the long-term. Even if they can be fully implemented – a big if – they will be far from enough.
Of course, the inroads made by renewables could be accelerated if global subsidies for fossil fuels were scrapped. The IEA notes that carbon markets impose an average price on fossil fuels at about $7 per tonne of CO2, but that is swamped by subsidies for coal, oil, and gas, which amount to the equivalent of $115 per tonne. In other words, renewables are indeed starting to undermine the economic case for fossil fuels, but these fuels still enjoy significant financial assistance from governments around the world, which will extend the fossil fuel era for decades to come if they are not overhauled. (Related: Forget Asia. US Natural Gas To Be Exported To Mexico)
The IEA does offer a proposal to actually meet the 2 degree target, a plan that has five main parts:
1. Increasing energy efficiency
2. Reduce coal and ban new coal plants
3. Ratchet up investment in renewables from $270 billion to $400 billion by 2030
4. Phase out fossil fuel subsidies
5. Reducing methane emissions in oil and gas production
All sensible stuff, but of course it is easy to lay out these principles, much harder to implement. We will see what happens in Paris.
By Nick Cunningham of Oilprice.com
More Top Reads From Oilprice.com:
- Oil Demand Weaker Than Many Expect
- Crunch Time For The US Coal Industry
- Don’t Believe The Hype On U.S. Shale Growth