Energy demand rising faster.  Energy-related carbon dioxide (CO₂) emissions reaching an historic high.  Energy efficiency improvements slowing down significantly.  Rapid growth in demand for electricity.  It’s not difficult to find big talking-points in the IEA’s first-ever ‘Global Energy & CO₂ Status Report’.  Covering 2017, the report makes an invaluable contribution to our understanding of the current energy landscape.

As with any snapshot publication, the reader’s eye is initially caught by what’s changing.  On the upside, for instance, 2017 saw strong growth in deployment of renewable energy sources, which met a quarter of the increase in energy demand and now account for 25% of global electricity generation – a record for renewables.  But when looking for the report’s key lessons, it’s vital to consider what hasn’t as well as what has changed.

For example, fossil fuels’ contribution to world energy supplies stayed stable at 81% – the same as for the last three decades.  Interestingly, they met 72% of the growth in energy demand, nearly three times as much as renewables.  Clearly, then, the report sets out a complex story with several dimensions.  What should we make of it all?

Energy in demand

Beginning with the big picture, global energy demand increased by 2.1% in 2017 – more than double the 2016 figure.  Key reasons included robust economic growth and the low price of fossil fuels.  While most of the increase in demand was concentrated in Asia, especially China and India, advanced economies still accounted for 20% of the rise.

The report highlights two developments intrinsically linked to growing energy demand: one resulting from it, the other contributing to it.  Firstly, after three flat years and despite reductions in the USA, the UK, Japan and elsewhere, 2017 saw energy-related CO₂ emissions climb 1.4% to an unprecedented 32.5 Gt – equivalent to 170 million more cars on the road.  Other recent work amplifies the message, with analysts reporting the first increase for seven years in emissions from large installations covered by the EU Emissions Trading Scheme.

Secondly, energy efficiency increased in 2017 by a disappointing 1.7% compared with an average of 2.3% between 2014 and 2016, due not only to lower energy prices but also to a reduced policy ‘push’.  Although energy efficiency didn’t actually decline, the improvement was nevertheless too sluggish to act as an effective counterweight to the global economic growth that was driving up demand for energy.

According to the report, 2017 saw carbon emissions intensity improve by less than a third of what was necessary to keep the world on track to achieve the goals of the Paris Agreement signed the previous year.  Overall, the IEA affirms that “growth [in energy demand] is a strong warning for global efforts to combat climate change”.  The conclusion is inescapable: more needs to be done to cut carbon emissions and boost energy efficiency.

Fossil fuels aren’t history  

The rapid rise of renewables – including bioenergy, which accounted for 12% of the increased output from renewable energy in 2017 – can only be welcomed.  Moreover, there’s still plenty of scope to seek out radical ways of cutting energy use and meeting energy requirements more efficiently.

Fundamentally, however, it’s also crucial to recognise – and respond to – the facts on the ground.  One of the main takeaways from the report is confirmation of fossil fuels’ enduring role as the world’s principal energy workhorse.  We clearly underestimate their continuing importance at our peril.  As a result, it’s imperative to embrace the reality that they must lie at the heart of the global drive to cut carbon and increase efficiency.

In 2017, natural gas met 22% of total energy demand – more than ever before. Global demand for gas grew 3% and, for the first time in a decade, industry and buildings overtook the power sector as the world’s biggest gas consumers.  Demand for oil, meanwhile, climbed by 1.6% or 1.5 million barrels a day – a significantly bigger rise than the average 1% increase over the last 10 years; the EU, for example, saw its highest rate of growth in oil demand since 2001.  The transport sector was a major factor in the worldwide increase and, while the IEA report foresees a slowdown in demand growth in the years ahead, it sees no immediate sign of any peak in global oil demand.

Demand for coal also increased last year – a 1% rise representing a rebound from the drop in demand in 2015 and 2016, although total demand for coal in 2017 did remain below the 2014 peak of just over 3,900 Mtoe.  (Intriguingly, the report expects that budgetary and fiscal measures in the USA will significantly boost investment in carbon capture, utilisation and storage (CCUS) there, with over $1 billion of capital investment possible in the next six years; CCUS is, of course, a potential a game-changer in terms of coal’s compatibility with climate change mitigation.)

Declining use of coal in buildings and industry offset some of the growth in its use for power generation, and other recent analyses have concluded that the global coal fleet will begin to shrink in 2022.  Nevertheless, although the boom years may slowly be drawing to a close, the report strongly suggests that ‘King Coal’ won’t be heading into exile anytime soon and will remain a mainstay of the global energy mix at the very least for the foreseeable future.

One plain, undeniable fact follows from the findings of this thought-provoking new report: the world simply cannot afford to abandon or slacken its efforts to make fossil fuels – in all their applications – more efficient and less emissions-intensive.  A lot has already been achieved but a lot more remains to be done and the need to do it will remain relentless.  More research, more development, more insight, more investment – all are essential to ensuring that so-called fuels of the past help to deliver a future that simultaneously spreads the benefits of economic prosperity and is less environmentally damaging.  It’s a challenge that the IFRF will keep addressing vigorously in partnership with – and to the benefit of – all our members worldwide.