The best of EcoWatch, right in your inbox. Sign up for our email newsletter!
By Greg Muttitt
Governments and investors alike have been calling on the IEA to help guide them towards achievement of the Paris goals. Two years ago, the IEA itself proposed updating its climate scenario to match the ambition of the Paris goals, and also gave its updated scenarios a cameo in the WEO 2017.
Neither demand nor supply shows signs of ceasing to grow any time soon, the Paris-based organization said.
EcoWatch Daily Newsletter
By Simon Evans
The International Energy Agency (IEA) has once again forecast that world coal demand will rise, despite halving its outlook for growth in India.
The IEA's Coal 2017 report, published Monday, sees a small increase in global coal demand from 2016 to 2022, with growth in India and southeast Asian countries outweighing declines in rich nations and China.
By Ben Jervey
The growth of solar energy continues to outpace forecasts and this growth, according to a report published Wednesday by the International Energy Agency, (IEA) "is a China story."
While China today is far and away the global leader in solar generation, a decade ago, the country had just 100 megawatts of solar photovoltaic (PV) capacity installed. That's nothing. For reference, it's actually less than is currently installed in the city of San Antonio. By the end of 2016, China had increased its solar PV capacity by nearly 800 times, with more than 77 gigawatts currently installed.
By Simon Evans
Global emissions can be pushed down to "net zero" by 2060 to meet the climate goals of the Paris agreement, said the International Energy Agency (IEA).
For the first time, the 29-member intergovernmental group's annual Energy Technology Perspectives report, the 2017 edition published Tuesday, maps a "below 2°C" scenario. This shows how to limit warming to around 1.75°C above pre-industrial temperatures this century, roughly in line with Paris, which aims for "well below 2°C" and preferably 1.5°C.
By Greg Muttitt
We welcomed last week the first step by the International Energy Agency (IEA) towards describing how energy would look for the world to meet one of the Paris Agreement goals, to keep warming well below 2°C. Specifically, it looked at emissions being limited enough to give a two-in-three chance of staying below 2°C.
The report was co-published by IEA and its clean energy counterpart, the International Renewable Energy Agency, and commissioned by the German government. The two agencies are also working on a 1.5°C scenario, to be published in June.
Renewable energy has reached an important milestone. The World Economic Forum (WEF) has determined that in many parts of the world, solar energy is now the same price or even cheaper than fossil fuels for the first time.
In a handbook released this month, the WEF observed how the price of renewable technologies, particularly solar, has declined to unprecedented lows.
While the average global LCOE [levelized cost of electricity] for coal and natural gas is around $100 per megawatt-hour, the price for solar has plummeted from $600 a decade ago to $300 only five years later, and now close to or below $100 for utility-scale photovoltaic. For wind, the LCOE is around $50.
According to the WEF, more than 30 countries have already reached grid parity—even without subsidies. ("Grid parity" is the point when an alternative energy source, say solar, can generate power at a LCOE that's equal or even less than the price of traditional grid power.)
"It is relevant to note that the mentioned evolution, market share gain and continued potential for renewable energy do not hinge on a subsidy advantage," the report added. "In fact, according to [International Energy Agency], fossil-fuel consumption has received $493 billion in subsidies in 2014, more than four times the value of subsidies to renewable energy."
The WEF highlighted how the unsubsidized LCOE for utility-scale solar photovoltaic—which was not competitive even five years ago—has declined at a 20 percent compounded annual rate, "making it not only viable but also more attractive than coal in a wide range of countries."
Countries that have already reached grid parity include Chile, Mexico, Brazil and Australia with many more countries also on the same track. The WEF projects that two thirds of the world will reach grid parity in the next couple of years, and by 2020, solar photovoltaic energy is projected to have a lower LCOE than coal or natural gas-fired generation throughout the world.
"Renewable energy has reached a tipping point," Michael Drexler, who leads infrastructure and development investing at the WEF, told Quartz. "It is not only a commercially viable option, but an outright compelling investment opportunity with long-term, stable, inflation-protected returns."
The report follows a recent analysis from the IEA which revealed that total clean power capacity increased by 153 gigawatts, overtaking coal for the first time. To illustrate, about 500,000 solar panels installed were installed around the world every day.
By Andy Rowell
Something significant happened on Friday that warrants more than just a few column inches in a newspaper.
With the most divisive presidential election in U.S. history just days away from concluding, it is easy to understand why more is not being made of the news, but just to tell you something seismic happened on Friday last week.
The world's largest listed oil company, Exxon, announced that it was going to have to cut its reported proved reserves by just under a fifth—by 19 percent.
It would be the biggest reserve revision in the history of the oil industry. It is yet another sign that Big Oil is in big trouble.
For years people have been warning that Big Oil's business model was fundamentally flawed and was not only putting the climate at risk, but millions of dollars of shareholders' money.
For years the industry's critics warned the industry was ignoring the risks of climate change and was just caring on drilling regardless.
But the oilmen did what the oilmen do: find oil and gas, no matter the consequences.
And the worst oil company has been Exxon which for decades has denied climate change and the impact that climate change will have on its business.
For decades it could have invested wisely in renewables but it carried on looking for oil and gas—including unconventional oil which is even more carbon intensive than conventional oil. Its critics warned this was pure folly: but the oilmen carried on drilling anyway.
Big Oil is used to doing things its own way.
The warnings have kept coming, but the boys from Exxon didn't listen. Oil Change International, 350.org, Carbon Tracker and many others in the #keepintheground movement have been saying for years that large swathes of oil reserves must stay in the ground.
They warned that fossil fuel reserves will become "stranded assets."
Exxon often dismissed its critics as irrelevant lentil-eating, sandal wearing hippies, who wanted to take humanity back to the stone age.
And it carried on drilling. And it dismissed the fact that any of its assets could become stranded.
But then came the Paris agreement on climate change last December. "With the Paris agreement on climate ratified in December 2015 … no company has more to lose than Exxon," noted the Chicago Tribune in a great article written last Friday entitled, Exxon enters no man's land.
The Chicago Tribune continued:
"Big oil companies have been solid investments for years, with a deceptively simple business model: Find at least as much new oil as you sell, book those barrels as future sales and reinvest in the hunt for new reserves. That made sense as long as oil prices went up, but it locked companies into a vicious cycle of replenishment, leading them to search for ever more extreme, and expensive, sources of crude oil in the Arctic and beneath the oceans."
And it added:
"Cheap oil has stopped that business cold and the threat of climate action raises fundamental questions about whether it'll ever be viable again."
The issue of long term viability has been raised by numerous organizations over the last eighteen months too. Last year the energy watch-dog, the International Energy Agency, argued that two thirds of known reserves would have to stay unburnt, if we are to keep climate change to the limits agreed in Paris.
But Exxon carried on drilling.
Last year Citigroup issued a report warning policies to limit climate change could render vast swaths of oil companies' reserves worthless, leading to trillions in losses.
But Exxon ignored the warnings.
In May this year, the London-based Chatham House warned in a report, entitled The Death of the Old Business Model, that the world's largest oil companies "Faced with the choice of managing a gentle decline by downsizing or risking a rapid collapse by trying to carry on business as usual."
Importantly, most of Exxon's de-booked reserves, about 3.6bn barrels, will be at the company's dirty Kearl oil sands project in Canada. The reduction would account for over three quarters of the reserves. Not only are tar sands very energy intensive, but they are expensive to produce.
In a low oil price, carbon-constrained world, they are stranded assets.
"For the oil sands, this is a tipping point," argued Andrew Logan, director of the oil and gas program at the ethical investment organization, Ceres. "Why would any company invest billions of dollars in a new oil-sands project now, given the near certainty that the world will be transitioning away from fossil fuels during the decades it will take for that project to pay back?"
Indeed, two days before Friday's announcement an article on CNN Money noted just how much trouble the oil giant was in: "Exxon's stock is down 17% from its 2014 peak amid the crash in oil prices. The oil giant's profits have plunged to 17-year lows and its once-perfect AAA credit rating has evaporated."
It quoted Tom Sanzillo, former deputy comptroller of New York State and now head of finance at the Institute for Energy Economics and Financial Analysis saying the company was in the middle of an "irreversible decline."
Friday's announcement is further evidence that we are witnessing the beginning of the end of the oil age.
And the great carbon dinosaur Exxon is slowly dying before our eyes.
Reposted with permission from our media associate Oil Change International.
"We are witnessing a transformation of global power markets led by renewables and, as is the case with other fields, the center of gravity for renewable growth is moving to emerging markets," Dr. Fatih Birol, the IEA's executive director, said.
The agency also raised its five-year forecast for renewable energy by 13 percent and now expects renewables to be 42 percent of global energy capacity by 2021.
For a deeper dive:
By Simon Evans
For the first time ever, investment in new renewables was more than enough to cover rising global electricity demand in 2015, according to the first World Energy Investment report published by the International Energy Agency (IEA).
While fossil fuels still dominate energy supplies, the IEA says changing investment flows point towards a "reorientation of the energy system."
Carbon Brief has seven charts showing why the IEA thinks an energy shift is underway.
1. Energy Investment
World energy investment amounted to $1.8 trillon in 2015, the IEA says, equivalent to 2.4 percent of the global GDP. Around half went towards fossil fuel extraction and distribution, mainly for oil and gas.
Renewables accounted for 17 percent of the total, around $300 billon. The vast majority of which was in the electricity sector, where nearly 70 percent of investment in power stations went towards renewables.
Global energy investment in 2015, by sector.World Energy Investment 2016 / IEA
2. Oil Slide
Investment in energy was down 8 percent year-on-year in 2015—around $150 billon—largely because of falling investment in oil and gas. Soft demand and Saudi Arabia's determination to squeeze competitors has created a prolonged period of cheap oil that has decimated incomes.
Reductions have been particularly steep in North America, the IEA says, with investment halving in the past two years. The smaller companies that dominate the U.S. shale industry have been particularly hard-hit by the falling oil price, with scores of firms filing for bankruptcy.
Upstream oil and gas investment in 2015, by region.World Energy Investment 2016 / IEA
3. Falling Costs
The Saudi strategy has only been partially successful. Some two-thirds of the fall in oil and gas investment has been absorbed by cost reductions, particularly in the shale sector. Upstream oil and gas costs fell 15 percent in 2015, the IEA says.
These recent oil and gas cost reductions have been easily outpaced by those for new energy technologies. Costs for onshore wind are down by nearly 40 percent since 2008, solar by more than 80 percent, LEDs more than 90 percent and grid-scale batteries by 70 percent.
The IEA says renewable costs will continue to fall, while the reverse will be true for oil and gas:
"IEA medium-term analyses foresee lower costs in renewables, lighting and electricity storage and eventually modest cost increases in upstream oil and gas."
Energy cost developments 2008-2015, by technology.World Energy Investment 2016, IEA
4. Power Shift
The large clean energy cost reductions are behind a continuing shift in the power sector, where 70 percent of investment in generating assets goes to renewables and fossil fuel investment is in decline.
Renewable power investment held steady at around $290 billon in 2015, the IEA says, yet cost reductions mean more capacity could be bought for the money. Solar investment was lower than 2011 in dollar terms, but 60 percent more capacity was added.
Last year, rising renewable additions combined with weakening power demand growth in a landmark way.
The IEA says:
"For the first time, investment in renewables-based capacity generates enough power to cover global electricity demand growth in 2015."
New renewables commissioned in 2015 have the capacity to generate 350 terawatt hours (TWh), against an increase in demand of less than 250TWh. This means all other capacity brought online in 2015 was effectively surplus to requirements.
(It's worth adding a couple of qualifiers: first, 40 percent of investment was to replace aging assets; second, renewables often generate power intermittently rather than on demand).
Net of retirements, nuclear also expanded last year, adding the capacity to generate an extra 50TWh. In total, new plant added in 2015 has the capacity to generate 1,000TWh of electricity a year, more than four times the increase in demand.
Global investment in power generation and electricity networks (colored bars, left axis) and electricity demand growth (line, right axis).World Energy Investment 2016, IEA
Investment in electricity networks is increasing, reaching $260 billon last year. This is partly down to the need to incorporate renewables. However, the IEA says around 90 percent is being driven by the need to expand electricity access and replace old kit.
The network investment figures includes grid-scale batteries. Spending here has risen 10-fold since 2010, the IEA says, though it still amounts to less than 1 percent of the network total.
5. Investment Map
Power sector investments were disproportionately concentrated in China and other Asian countries. The split was particularly stark for new coal-fired generation, where more than 80 percent of investment was in Asia.
This trend is likely to continue. The IEA says around half of under-construction coal capacity is in China, which added more than 50 gigawatts (GW) of coal plant in 2015.
Investment in electricity generation and networks by region and type, 2015.World Energy Investment 2016, IEA
6. China Stranding
The IEA, in comments that echo recent Greenpeace analysis, says that much of this surge in Chinese coal capacity is unnecessary. It says:
"China has over-invested in new fossil fuel capacity … low-carbon sources are expected to be able to cover annual demand growth … through 2020, leaving little scope for an expansion in fossil fuel generation."
It illustrates the problem with the chart below, which shows falling demand growth being more than covered by consistent expansion of nuclear and renewables.
China's power generation growth (bars) and demand growth (line).World Energy Investment 2016, IEA
Fossil over-investment in China and elsewhere, will lead to stranded assets that become redundant before they have repaid the money spent to build them, the IEA said. It calls Chinese investments "inconsistent with market fundamentals."
7. Climate Inconsistent
Low-carbon sources of power are on the rise and fossil fuel's share of the global energy mix is falling. Yet despite identifying a change in direction for energy investment, the IEA says spending on low-carbon will need to increase rapidly over the years ahead if countries of the world are to meet their agreed climate goals.
"Globally, energy investment is not yet consistent with the transition to a low-carbon energy system envisaged in the Paris Climate Agreement reached at the end of 2015."
New low-carbon electricity generation and growth rates in the IEA 2C scenario (2DS).World Energy Investment 2016, IEA
This article was reposted with permission from our media associate Carbon Brief.
Exposure to poor air quality inside and outside is the world's fourth-leading threat to human health. A first-of-its-kind International Energy Agency (IEA) study released Monday reported 6.5 million deaths globally are attributed to poor air quality.
The only items more of a threat to human health than poor air quality are high blood pressure, dietary risks and smoking, Reuters reported. IEA's report estimates that premature deaths caused by outdoor air pollution will rise from 3 million in 2015 to 4.5 million by 2040, 90 percent of the deaths occurring in developing Asia.
But developed countries aren't safe from the pollution either. The American Lung Association's 2016 State of the Air report found 52.1 percent—or 166 million people—of Americans live in counties that have unhealthful levels of either ozone or particle pollution, EcoWatch reported.
"Clean air is a basic human right that most of the world's population lacks," Fatih Birol, IEA executive director, said in an agency press release. "No country—rich or poor—can claim that the task of tackling air pollution is complete. But governments are far from powerless to act and need to act now. Proven energy policies and technologies can deliver major cuts in air pollution around the world and bring health benefits, provide broader access to energy and improve sustainability."
Unregulated and poorly regulated energy production and use, as well as inefficient fuel combustion, are the "most important man-made sources of key air pollutant emissions," IEA stated. Eighty-five percent of particulate matter—which can contain acids, metals, soil and dust particles—and almost all sulfur oxides and nitrogen oxides can be linked back to those sources.
International Energy Agency
The air quality outlook, IEA stated, is not set in stone. A 7 percent increase in total energy investment can produce a huge health improvement by 2040. Premature deaths from outdoor air pollution would decline by 1.7 million in 2040. Household pollution related deaths would decrease by 1.6 million annually.
International Energy Agency
"This is completely peanuts," Birol told Reuters. "With a seven percent increase you can save over three million lives."
IEA listed three important areas for government action:
- Setting an ambitious long-term air quality goal, to which all stakeholders can subscribe and against which the efficacy of the various pollution mitigation options can be assessed.
- Putting in place a package of clean air policies for the energy sector to achieve the long-term goal, drawing on a cost-effective mix of direct emissions controls, regulation and other measures, giving due weight to the co-benefits for other energy policy objectives.
- Ensuring effective monitoring, enforcement, evaluation and communication: keeping a strategy on course requires reliable data, a continuous focus on compliance and on policy improvement, and timely and transparent public information.
"We need to revise our approach to energy development so that communities are not forced to sacrifice clean air in return for economic growth," Birol said. "Implementing the IEA strategy in the Clean Air Scenario can push energy-related pollution levels into a steep decline in all countries. It can also deliver universal access to modern energy, a rapid peak and decline in global greenhouse-gas emissions and lower fossil-fuel import bills in many countries."
The Clean Air Scenario includes calls to deliver access to clean cooking facilities to an additional 1.8 billion people by 2040; implement emission controls and fuel switching in the power sector; increase energy efficiency in industry; and set emission standards that are strictly enforce for road transport.
International Energy Agency
Following these strategies, the energy demand would be 13 percent lower in 2040. In India, the portion of population exposed to a high concentration of fine particles, the Times reported, would fall below 20 percent in 2040 from 60 percent today.
Watch Newsy's video on the report's findings: