The future is tough to predict.
The International Energy Agency recently came out with its World Energy Outlook 2014, a comprehensive analysis of global energy demand and the underlying supply mix through 2040. Along with BP’s annual forecast, it is one of the most authoritative documents of its kind.
But even the IEA can miss a trend. In the 2014 report, the IEA predicts that the share of renewables will grow from 21% in 2012 to 33% by 33%. Renewables, including hydropower, nearly triple by 2040 and surpass both natural gas and coal as the top source of electricity by 2035. By 2050, solar alone could become the largest source of power by 2050.
In the executive summary of the World Energy Outlook 2004, the words “solar” and “PV” do not appear. The share of “other” renewables, i.e. everything by hydropower, will triple, but only from 2% to 6% by 2030. Hydropower is around 16% of world power today so the base figure fits but the prediction was low.
The same holds for efficiency. “Efficiency” appears only twice in the 2004 summary. The report revolves around supply and the picture is grim for emerging markets.
“Huge amounts of new energy infrastructure will need to be financed. And many of the world’s poorest people will still be deprived of modern energy services. These challenges call for urgent and decisive action by governments around the world,” the 2004 report states. “Little progress will be made in reducing the total number of people who lack access to electricity.”
In the 2014 report, efficiency plays a more prominent role. The slowdown in the growth of demand for energy to 1.1% per year is attributed primarily to efficiency. Efficiency is also identified as a lynchpin in bringing power to emerging markets. It will still be a challenge to extend power to rural areas of Africa and Asia, but hope grows.
“Without the cumulative impact of energy efficiency measures over the projection horizon, oil demand in 2040 would be 23 mb/d (or 22%) higher, gas demand 940 bcm (or 17%) and coal demand 920 Mtce (or 15%) higher. Beyond cutting energy use, energy efficiency lowers energy bills, improves trade balances and cuts CO2 emissions. Improved energy efficiency compared with today reduces oil and gas import bills for the five largest energy-importing regions by almost $1 trillion in 2040,” the report states. “Technological progress and improved energy efficiency… allow a higher level of demand for energy services to be satisfied per unit of energy.”
Oil? In 2004, oil demand was expected to hit 121 million barrels a day. In the 2014 report, demand will only rise to 104 million barrels a day.
Biofuels? Not in the executive summary of 2004. 2014? “Biofuels use more than triples, rising from 1.3 million barrels of oil equivalent per day (mboe/d) in 2012 to 4.6 mboe/d in 2040, by which time it represents 8% of road-transport fuel demand,” the report states. “Advanced biofuels, which help address sustainability concerns about conventional biofuels, gain market share after 2020, making up almost 20% of biofuels supply in 2040.”
That prediction is below the sort of predictions from biofuel advocates like Vinod Khosla, but it’s certainly higher than in the past.
Again, this isn’t to say the IEA needs to rethink its methodologies. It’s an authoritative source. The lesson here really is our greatest source of energy is human ingenuity. Over the past decade we’ve seen a revolution in energy and it has come out because of new materials (i.e. semiconductors) new business models and new ways of thinking about systems.
And some other notes from the 2014 report
- Subsidies for fossil fuels are four times greater those given to renewables. Fossil fuel subsidies come to approximately $550 billion a year. Subsidies to renewables come to around $121 billion. Renewable subsidies will rise to $230 billion by 2030 but then drop to $205 billion by 2040.
- Global investment in power infrastructure will total $21 trillion by 2040. A significant portion will go toward upgrading transmission and distribution networks. It’s needed. The average age of transformers in the U.S. is 42 years. The average lifetime expectancy of a transformer is 40 years.
- Nuclear shifts to non–OECD nations. In 2013, there were 434 nuclear reactors worldwide, supplying 11% of the world’s power, far down from the 18% market share in 1996. Nuclear’s market share will grow to 12% by 2040, but the big change is the locations of the reactors. The bulk of the 380GW coming on line will be in China and other non-OECD nations while the majority of the 148GW retirements will come in North America, Europe and Japan. Still, nuclear remains one of the “limited options” for controlling emissions.
- Watch Sub-Saharan Africa. The region has tremendous potential for solar, geothermal, wind and natural resource extraction. In the last five years, 30% of new oil and discoveries were made there. It will also be a hotbed of grid experimentation. 950 million people will get access for the first time to regular sources of power by 2040 and 70% of those new customers in rural areas will get power through microgrids and off grid systems.