Covid recovery clouds World Energy Outlook, but IEA calls for unprecedented changes to avoid lock-in to 1.65 degree temperatures

The IEA World Energy Outlook 2020 , the flagship publication of the International Energy Agency, was released on October 12, stating, “The Covid-19 pandemic has caused more disruption to the energy sector than any other event in recent history, leaving impacts that will be felt for years to come.” The report is a comprehensive discussion and  analysis of those impacts, and attempts to model the crucial next  10 years of recovery. Modelling is provided for all energy sources – fossil fuels, renewables, nuclear –  under four different scenarios, including a longer-than-expected Covid recovery and a Sustainable Development Scenario. Key highlights:

Solar is “king”: In 2020,  global energy demand is forecast to fall by 5% overall:  8% in oil, 7% in coal and 3% in natural gas demand. Under the heading “Solar becomes the new King of electricity” , the report states: “Renewables grow rapidly in all our scenarios, with solar at the centre of this new constellation of electricity generation technologies. Supportive policies and maturing technologies are enabling very cheap access to capital in leading markets. With sharp cost reductions over the past decade, solar PV is consistently cheaper than new coal- or gasfired power plants in most countries, and solar projects now offer some of the lowest cost electricity ever seen.”  

Questionable future for new Liquified Natural Gas projects: For natural gas, “different policy contexts produce strong variations”. For the first time, the business as usual scenario for advanced economies shows a slight decline in gas demand by 2040. And “An uncertain economic recovery also raises questions about the future prospects of the record amount of new liquefied natural gas export facilities approved in 2019.”  In certain scenarios, “the challenge for the gas industry is to retool itself for a different energy future. This can come via demonstrable progress with methane abatement, via alternative gases such as biomethane and low-carbon hydrogen, and technologies like carbon capture, utilisation and storage (CCUS).”

Peak oil within sight despite growing importance of plastics manufacturing: The era of growth in global oil demand comes to an end within ten years, but the shape of the economic recovery is a key uncertainty. The report notes “The longer the  (Covid) disruption, the more some changes that eat into oil consumption become engrained, such as working from home or avoiding air travel. However, not all the shifts in consumer behaviour disadvantage oil. It benefits from a near-term aversion to public transport, the continued popularity of SUVs and the delayed replacement of older, inefficient vehicles.”  The analysis also considers the impact of plastics manufacturing on oil demand.

Inequities will persist or be made worse.  “Reversing several years of progress, our analysis shows that the number of people without access to electricity in sub-Saharan Africa is set to rise in 2020. Around 580 million people in sub-Saharan Africa lacked access to electricity in 2019….and in addition, “a rise in poverty levels worldwide in 2020 may have made basic electricity services unaffordable for more than 100 million people who already had electricity connections”.

Structural change, not Covid, will bring lasting CO2 emissions decline: The economic downturn related to Covid has brought a temporary decline of 2.4 gigatonnes in annual CO2 emissions, although an accompanying decline in methane emissions is not clear.  And emissions are expected to rebound. “The pandemic and its aftermath can suppress emissions, but low economic growth is not a low-emissions strategy. Only an acceleration in structural changes to the way the world produces and consumes energy can break the emissions trend for good.”….  “ if today’s energy infrastructure continues to operate as it has in the past, it would lock in by itself a temperature rise of 1.65 °C.”

Finally, the report concludes by advocating a future path built on its Sustainable Development Scenario  , calling for “unprecedented” actions, not just from government and business, but from individuals.

“Reaching net zero globally by 2050…. would demand a set of dramatic additional actions over the next ten years. Bringing about a 40% reduction in emissions by 2030 requires, for example, that low-emissions sources provide nearly 75% of global electricity generation in 2030 (up from less than 40% in 2019), and that more than 50% of passenger cars sold worldwide in 2030 are electric (from 2.5% in 2019). Electrification, massive efficiency gains and behavioural changes all play roles, as does accelerated innovation across a wide range of technologies from hydrogen electrolysers to small modular nuclear reactors. No part of the energy economy can lag behind, as it is unlikely that any other part would be able to move at an even faster rate to make up the difference.

To reach net-zero emissions, governments, energy companies, investors and citizens all need to be on board – and will all have unprecedented contributions to make. The changes that deliver the emissions reduction in the SDS are far greater than many realise and need to happen at a time when the world is trying to recover from Covid-19.”

The full World Energy Outlook 2020 is only available for purchase. An overview, FAQ’s, and related reports including modelling details and a methane tracker are all available here .

Ontario and Quebec sign Agreements on Electricity Trade and Climate Change

On November 21, Ontario and Québec announced a number of agreements to “strengthen Ontario and Québec’s partnership to build up Central Canada’s economy, create jobs and make a difference in people’s lives”. These agreements specifically focused on electricity trade, climate change (including carbon pricing), infrastructure investments, the Energy East pipeline, interprovincial trade, and the Francophonie.

Relating to Energy East, Ontario affirmed Québec’s concerns and insistence that climate change is considered by the NEB and that the unfair burden of risk born by those nearby the converted aging gas pipelines is addressed.

Read Ontario’s press release and Ontario’s backgrounder, and see CBC coverage in “Ontario, Québec sign deals on Electricity, Climate Change”. According to the Globe and Mail, federal and Alberta government ministers will be travelling to Quebec soon to press the case for Energy East. Read reaction to the Ontario-Quebec agreement by Clare Demerse at Clean Energy Canada.

The Future of Canada’s Electrical System

On March 25, the Canadian Electricity Association (CEA) released Vision 2050: The Future of Canada’s Electricity System, a report which offers recommendations and calls for urgent decisions and action. The report concludes with “Principles for Prudent Investment” which include: reliability, equity (calling for social policies to support ratepayers and protect low income consumers from energy poverty), integration of intermittent sources of electricity (i.e. solar and wind), innovation and modernization of infrastructure, energy efficiency improvements, and the electrification of transportation. See http://www.electricity.ca/resources/publications/vision-2050-the-future-of-canadas-electricity-system.php; See also the Sustainable Electricity Annual Report 2013 at: http://www.sustainableelectricity.ca/media/AnnualReport2013/2013SustainableElectricityAnnualReport.pdf (published August 2013), and Power for the Future: Electricity’s Role in a Canadian Energy Strategy (July 2013) at: http://www.electricity.ca/media/ReportsPublications/PowerForTheFutureElectricityRoleCanadianEnergyStrategyE.pdf.