Oil Market Reliance on U.S. Shale Potential Is Risky, IEA Says
- by Amanda Heroux
- in Science
- — Nov 15, 2018
That would be an increase roughly equivalent to twice the current demand for electricity in the United States.
According to Reuters, the International Energy Agency (IEA) has announced that it expects gas to overtake coal as the world's second largest energy source (after oil) by 2030.
The worldwide energy Agency (IEA) forecasts growth in electricity demand by 2040 60%.
At a time when geopolitical factors were exerting new and complex influences on energy markets, underscoring the critical importance of energy security, the World Energy Outlook's scenario-based analysis outlines different possible futures for the energy system across all fuels and technologies.
The report specifically hinted of a potential supply gap in the early 2020s.
As oil consumption is set to grow in the coming decades, approvals of conventional oil projects need to double from their current low levels.
The World Bank Group said at the One Planet Summit in Paris in December that it would cease to finance upstream oil and gas projects after 2019 "to align its support to countries to meet their Paris goals". This takes legislation and policies to decrease emissions and limit climate change into consideration, and also assume further energy efficiencies in the use of fuel, buildings, etc.
Switching more heating, industrial processes and transport to electricity - such as electric cars - would lead to a peak in oil demand by 2030, and reduce localised air pollution in cities.
Under the Paris agreement, the governments agreed to a long-term goal of maintaining the increase in global average temperature to well below 2 degrees Celsius above pre-industrial levels. The share of coal is forecast to fall from about 40 percent today to a quarter in 2040 while renewables would grow to just over 40 percent from a quarter now.
The volatility for the past two years has been driven by the combination of the OPEC and Russian production cap of 1.8 million barrels a day and now the Trump sanctions on Iranian crude which first boosted prices, and now are having no impact with 8 key major importers (India, Japan, China) still being allowed to lift Iranian crudes and import them.
According to the IEA, new nuclear power capacity decreased sharply to 3.6 gigawatts (GW) in 2017. In 2003, there were no Chinese companies in the top 15, according to the IEA.
This is transforming the global power mix, with the share of renewables in generation rising to over 40% by 2040, from 25% today, even though coal remains the largest source and gas remains the second-largest.
The WEO discusses the "major transformations" that are underway, narrowing specifically on the expansion of renewables and growing electrification of the economy, charting them in various scenarios based on expected trends and datasets.
The clamor for global action to dramatically cut emissions has reached fever pitch in recent months following the publication of a United Nations report that called for annual investment of $2.4 trillion in clean energy to avoid irreversible damage to the world.
Equally, the destination of energy investments will also need to be managed accordingly, with government policy set to play an important role. In particular, coal-fired power plants, which account for one-third of energy-related Carbon dioxide emissions today, represent more than a third of cumulative locked-in emissions to 2040.
