• A fast-changing future for energy – but what exactly is WEO 2017 telling us?

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      Philip Sharman

      IFRF Director

What will the world look like in 2040? In energy terms, if the picture painted by the 2017 edition of the IEA’s flagship World Energy Outlook comes to fruition, it could be quite an unfamiliar place.  Launched last November and based on current and announced energy policies, this prestigious publication sets out an array of eye-catching projections for 2040.

Here’s just a taste of them: despite improvements in energy efficiency, worldwide demand for energy grows by 30% – equivalent to adding another China and India to global demand; renewable energy meets 40% of the increase, with solar PV the cheapest form of ‘new’ electricity in many countries; the world’s car fleet doubles to 2 billion, including 280 million electric cars compared with 2 million today; and the old order is turned on its head as the USA establishes itself as a major energy exporter while the Middle East fast becomes a major energy consumer.

WEO 2017 attributes this reshaping of the energy terrain to factors such as the falling cost of renewables, growing electrification, and the harnessing of US shale-based energy resources.  Another key influence is China’s move towards cleaner growth and a cleaner energy mix – the ripples from which will be felt in every energy market around the world.

At first sight, these headline-grabbing findings add up to a very different energy future.  And there’s no doubt that WEO 2017 highlights some significant upheavals in the way we meet our energy needs.  But scratch a little deeper into the report, especially from a combustion perspective, and it’s clear that plenty of continuity will co-exist with the radical change.  The energy world won’t be tipping completely off its axis.

The more things change…

WEO 2017 certainly doesn’t sound the death knell for fossil fuels.  Indeed, it concludes that oil will remain the world’s number-one energy source, with global demand by 2040 rising to 105 million barrels a day.  Demand may rise less quickly in the next couple of decades but it certainly won’t slam into reverse, with the petrochemical sector, trucks, aviation and shipping all contributing to oil’s continuing pivotal role in the energy mix.  Furthermore, while the report sees the world passing peak oil use by passenger vehicles, largely due to fuel efficiency improvements and increasing sales of electric vehicles, it still projects over 1.7 billion non-electric cars on the roads by 2040.  No wonder it concludes that “the era of oil is not yet over”, with China overtaking the USA as the world’s biggest oil user by 2030.

But what of coal?  At first glance, the message is stark: in the absence of extensive carbon capture, utilisation and storage (CCUS), the boom years are over.  Compared with an increase of nearly 900GW in the world’s coal-fired power generation capacity since the year 2000, the period 2016-2040 will see a net addition of just 400GW – much of which is already under construction.  Moreover, China’s use of coal will fall by around 15% and coal’s share of India’s power mix will decrease from three-quarters to around half.  But again, deeper digging produces a more nuanced picture.  Essentially, global coal consumption will flatten.  There’s no prospect of a decline (much less a steep one) and an awful lot of coal will still be combusted to meet an awful lot of needs worldwide – hence IEA Executive Director Dr Fatih Birol confirming that “it’s far too early to write coal’s obituary”.  And these needs will also be extremely diverse: by 2040, WEO 2017 estimates that 2.3 billion people worldwide will still rely on coal, biomass and kerosene for their cooking requirements.

Natural gas, meanwhile, will lie right at the heart of the projected changes in the energy landscape.  Driven by the environmental benefits it offers compared with other fossil fuels, its use will grow by 45% – mostly in industry.  In fact, natural gas will be second only to renewables in meeting the growth in global energy demand, and second only to oil as an overall energy provider.  80% of the projected increase in natural gas demand will come from China, India and other developing economies.

Old meets new

Overall, then, in the energy future set out by WEO 2017, the crucial role of tried-and-tested energy sources and technologies shouldn’t be underestimated.  And in some key cases, old and new are woven tightly together.  Take the USA, whose energy boom will see it assume a dominant role as an energy producer.  This role will be rooted in ‘traditional’ fuels – oil and gas – but extracted from ‘new’, shale-based sources.  The net effect will be the country’s emergence as a global oil and gas titan, becoming a net exporter of oil by 2030 and the world’s biggest exporter of liquefied natural gas (LNG) by the mid-2020s.  Indeed, WEO 2017 makes the startling observation that the USA’s combined oil and gas output will be 50% higher than any other country has ever achieved – a new reality whose economic, industrial and other effects will inevitably be felt well beyond the USA, not least in terms of the development of a more flexible global gas market.

Of course, the landscape projected in WEO 2017 is simply that – a projection.  Opportunities, risks, uncertainties and many factors, expected and unexpected, are sure to interplay and interact as the future actually unfolds.  What’s absolutely clear, though, is this: hand-in-hand with radical shifts in patterns of energy production and consumption, and new solutions to energy challenges, ‘traditional’ fuels and technologies will continue to make a critical contribution to the world’s ability to meet its needs in the years and decades ahead.  The future will surely be one where the innovative dovetails with the tried-and-tested, which will in any case be strengthened by fresh advances and new approaches.  Quite simply, the need to make combustion technologies cleaner, safer and more efficient, aiding the fight to improve air quality and to cut carbon emissions (which WEO 2017 projects to increase slightly by 2040), isn’t going to go away anytime soon.