IEA warns of stress signs in WEO 2014

Events of the last year have increased many of the long-term uncertainties facing the global energy sector, says the International Energy Agency’s World Energy Outlook 2014.

It warns against the risk that current events distract decision makers from recognising and tackling the longer-term signs of stress that are emerging in the energy system.

In the central scenario of WEO-2014, world primary energy demand is 37% higher in 2040, putting more pressure on the global energy system. But this pressure would be even greater if not for efficiency measures that play a vital role in holding back global demand growth. The scenario shows that world demand for two out of the three fossil fuels, coal and oil, essentially reaches a plateau by 2040, although, for both fuels, this global outcome is a result of very different trends across countries. At the same time, renewable energy technologies gain ground rapidly, helped by falling costs and subsidies (estimated at $120 billion in 2013). By 2040, world energy supply is divided into four almost equal parts: low-carbon sources (nuclear and renewables), oil, natural gas and coal.

In an in-depth focus on natural gas, IEA projects that demand for gas will be more than 50% higher in 2040, and it will be the only fossil fuel still growing significantly at that time.

According to the predictions the United States remains the largest global gas producer, although production levels off in the late-2030s as shale gas output starts to recede. East Africa emerges alongside Qatar, Australia, North America and others as an important source of liquefied natural gas, which is an increasingly important tool for gas security. A key uncertainty for gas outside of North America is whether it can be made available at prices that are low enough to be attractive for consumers and yet high enough to incentivise large investments in supply.

The global energy system continues to face a major energy poverty crisis. In sub-Saharan Africa (the regional focus of WEO-2014), two out of every three people do not have access to electricity, and this is acting as a severe constraint on economic and social development. Meanwhile, costly fossil-fuel consumption subsidies (estimated at $550 billion in 2013) are often intended to help increase energy access, but fail to help those that need it most and discourage investment in efficiency and renewables.

A critical “sign of stress” is the failure to transform the energy system quickly enough to stem the rise in energy-related CO2 emissions (which grow by one-fifth to 2040) and put the world on a path consistent with a long-term global temperature increase of 2°C. In the central scenario, the entire carbon budget allowed under a 2°C climate trajectory is consumed by 2040, highlighting the need for a comprehensive and ambitious agreement at the COP21 meeting in Paris in 2015.

[mappress mapid=”15897″]

Press Release; Image: IEA