Global volatility in the energy market and further price rises will continue without a major boost in clean energy investment, warns the International Energy Agency.
Executive director Fatih Birol believes the transition to net-zero carbon emissions will remain unstable, unless future energy needs can be financed.
As economies shift from fossil fuels and less sustainable industries, the consumption demands of consumers have to be met by clean energy investment across all technologies and markets.
He said, "There is a looming risk of more turbulence for global energy markets. We are not investing enough to meet future energy needs, and the uncertainties are setting the stage for a volatile period ahead."
Birol outlined his views in the institute's World Energy Outlook for 2021, which has been published amidst an energy price crisis in Europe and Asia.
Oil prices passed remain at $82.88 a barrel on the Brent Crude Index, slightly below its $84 peak on Monday, however this remains a marked increase on its trading cost of $73.07 on September 20 prior to its multiple rallies in the following weeks.
Meanwhile, across the pond the WTI Index has breached the $80 threshold this week for the first time since 2014, currently sitting on $80.48.
The instability over soaring wholesale costs has already resulted in three UK energy companies such as Igloo, Symbio Energy and Enstroga going bust within the past month. There is now speculation that four more firms are on the brink.
The IEA has warned in its outlook that the crisis has led to a sharp rebound in coal and oil usage, putting the world on course for the second-largest annual increase in carbon emissions in history this year.
The report also stated that investment in clean energy and infrastructure must triple over the next decade to meet net-zero targets for carbon emissions in 2050.
It suggested that current climate pledges would only result in 20 per cent of the planned emissions reductions necessary by 2030, which is key to putting the world on a path towards net zero by 2050. This would need to be spread across developed and emerging economies around the world.
Birol believes that while a new economy based on clean energy is emerging, the rate of progress remains too slow.
He said, "Reaching that path requires investment in clean energy projects and infrastructure to more than triple over the next decade. Some 70 per cent of that additional spending needs to happen in emerging and developing economies, where financing is scarce and capital remains up to seven times more expensive than in advanced economies "
The institute considers its outlook to be a guide for the upcoming Cop26 climate conference in Glasgow, which aims to keep 1.5-degree temperature rises as an achievable target.
As it stands, the IEA believes current climate pledges are too modest. Measures already announced by governments would still result in temperature increases of 2.1 degrees by 2100, while implemented policies still leave the world on track for a 2.6-degree rise. They also anticipate that oil demand will not peak until the mid-2030s without further action.
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Comments
Energy supply in world did all time increase but mainly from oil, gas and coal not geothermal, solar and wind with wrong peak values in medias in praxis FRG 1/10 from peak middle value of solar panel, wind power 1/6 in danger of hurricanes & tornados and always backup power system needed.
This means that the global economy will continue to run on oil and gas well into the future. It also means that the global demand for oil and gas will continue to rise well into the future fuelled by rising world population and growing global economy. This equally means rising oil and gas prices. As a result, net-zero emissions will never be achieved by 2050 0r 2100 or ever.
In order to have a stable global energy market, renewables should be allowed to grow through rising global investments but with support from fossil fuels. As the share of renewables rise, the share of fossil fuels will automatically decline particularly the use of coal and natural gas in electricity generation.
Therefore, there is no need to continue talking about ditching fossil fuels. Instead, we should encourage fossil fuels to support a global energy transition until we reach a point where fossil fuels won’t be needed. However, I doubt we will ever reach this point. Still, we should encourage a peaceful existence between renewables and fossil fuels rather than a dogmatic polarization as called by environmental activists and divestment campaigners and a score of other vested interests.
The story of energy transition through the ages has been a constant move toward fuels that are more energy-dense and convenient to use than the fuels they replaced.
That is why the world had moved away from whale oil as a source of energy to wood and then to coal and oil and natural gas in that progression. Until more energy-dense and more efficient and convenient energy alternatives are developed, the global economy will continue to run on oil and gas well into the future.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
Once that happens, a process already tested and patented by the US Navy about a decade ago will make it cheaper to manufacture synthetic clean burning carbon neutral substitutes for gas, diesel/jet fuel, and natural gas (pure methane) from seawater than to extract and refine petroleum (the primary cost of the process is the cost of electricity). Give it another decade for countries around the world to build their on "factories," and fossil fuels die (who will want to pay more for dirtier fuels?). These fuels will be usable in legacy equipment without alteration (and may no longer require catalytic converters), and also slot into our existing distribution systems - meaning we will not have to sacrifice our investments in legacy equipment to "go green."
Using the more pessimistic estimate of 2015, that puts the end of fossil fuels around 2045.