Moving towards a low carbon energy sector: what does the future hold?

Published 29th February 2016 by Rachel Hunter

The International Energy Association (IEA) released its latest World Energy Outlook this week. The report provides clear evidence of the ongoing changes in the global energy markets – with a predicted increase in the energy mix from low carbon and renewable technologies.

It also highlights that more will need to be done. In particular, negotiations at the Paris climate conference (COP 21) in December need to focus on building the policy and regulatory conditions to help move towards a low carbon energy sector.

The report is particularly timely as the World Meteorological Organization also announced this week that concentrations of carbon dioxide in the atmosphere have reached 400 parts per million, a record high for the 30th year in a row.

We know that to limit increases in atmospheric CO2 we need to limit burning fossil fuels. This will be supported by an increase in the development of renewable energy generation. But global energy demand is also predicted to increase (grow by one-third to 2040). With this in mind, what are the key findings of the IEA’s report?

With this in mind, what are the key findings of the IEA’s report?

  • If the pledges made at COP21 bear fruit, by 2040, renewables-based generation could reach a 50% share of energy mix in the European Union, around 30% in China and Japan, and above 25% in the United States and India.
  • By 2040, China’s total energy demand will be almost double that of the USA and it will consume more natural gas than the whole of the EU combined.
  • India will be a key energy player. India today is home to one-sixth of the world’s population, but accounts for only 6% of global energy use. Increasing energy demand will initially be met by fossil fuels (especially coal) but India has also pledged to generate 40% of its energy capacity from non-fossil fuels.
  • Any preferences for lower carbon energy options are likely to be reinforced by trends in energy costs, as oil and gas gradually become more expensive to extract while the costs of renewables continue to fall.
  • Increasing energy efficiency will play a critical role in managing increasing energy demand.

What does this mean for businesses? There are already national and international regulations focused on measuring and taxing energy usage and efficiencies in business operations. We can expect to see more punitive laws in the future and companies that are taking action now and preparing themselves to manage these risks to their commercial operations will save money, drive innovation and have a competitive edge.

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