Electric surge to require flexible power systems: IEA

  • Electric surge to require flexible power systems: IEA

Electric surge to require flexible power systems: IEA

Global demand for oil will continue to increase until 2040, the International Energy Agency (IEA) said Tuesday, but peak oil could be reached around 2020 if there were serious government interventions to address climate change.

According to the IEA, wind electricity generation in the European Union will more than triple to 1,100 TWh by 2040.

The IEA predicts the growth of electricity generation by 60% until 2040.

Carbon emissions from the energy sector are expected to increase slowly until 2040, undermining hopes of world countries to turn the corner on tackling climate change, the International Energy Agency said.

"Our analysis shows that over 70 per cent of global energy investments will be government-driven and as such the message is clear, the world's energy destiny lies with government decisions", IEA's Executive Director Fatih Birol said.

A more comprehensive energy system strategy - centred on significantly more widespread deployment of renewables - would be required to both accommodate for rising demand and meet climate targets. That's less than 160 gigawatts of new wind production and 230 gigawatts of solar.

Under current and planned policies, modelled in the New Policies Scenario, energy demand is set to grow by more than 25% to 2040, requiring more than US$2 trillion a year of investment in new energy supply.

Investment in the power sector hit $750 billion in 2017, higher than oil and gas investment for the second straight year, the agency said.

Now in its 21st edition, this year's conference was opened by the United Arab Emirate (UAE) president, Sheikh Khalifa Bin Zayed Al Nahyan, with the theme: "Shaping the future of the world's oil and gas industry".

OPEC and rival producers such as Russian Federation, have floated the possibility of cutting oil production next year to prevent an unwelcome build-up in global inventories, even as Iran now faces U.S. sanctions on its exports. "Without such a pick-up in investment, USA shale production, which has already been expanding at record pace, would have to add more than 10 million barrels a day from today to 2025, the equivalent of adding another Russian Federation to global supply in seven years - which would be an historically unprecedented feat", the IEA said.

"Today's flow of new upstream projects appears to be geared to the possibility of an imminent slowdown in fossil fuel demand, but in the New Policies Scenario this could well lead to a shortfall in supply and a further escalation in prices", the report read.

"In the wake of the fallout from the 2014 oil price crash, the continued expansion of tight oil production in the United States and the prospect of major structural changes in oil consumption underpinned a view that the oil price was set to stay lower for longer, perhaps forever".

Asia is a major influence on the world's energy market, according to the report. China will remain the biggest emitter.

In its monthly report the Paris-based IEA left its forecast for global demand growth for 2018 and 2019 unchanged from last month at 1.3 million barrels per day (bpd) and 1.4 million bpd, respectively, but cut its forecast for non-OECD demand growth, the engine of expansion in world oil consumption.

Australia is well placed for that demand being so close to the region and especially the likes of China, India, Japan and Indonesia. 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.