Tag: GlobalEnergyMarket

IEA Report: Global CO2 Emissions from Electricity Generation to Plateau

The International Energy Agency (IEA) recently released its 2023 Electricity Market Report and it provides an overview of the trends and developments in the global electricity sector in 2022 and the outlook for 2023-2025. It should be noted at this point that historically IEA reports have proven to significantly underestimate the growth of renewables.

The report covers the impacts of the energy crisis triggered by Russia’s invasion of Ukraine in 2022, which led to record-high energy prices and a sharp decline in electricity demand in the European Union. It also examines the role of renewables and nuclear energy in meeting the growing electricity demand and reducing the CO2 emissions of power generation. Finally, it discusses the challenges and opportunities for electricity security in a world where both the demand and supply of electricity are becoming increasingly weather-dependent.

The report finds that world electricity demand remained resilient in 2022 amid the global energy crisis, rising by almost 2% compared with the 2.4% average growth rate seen over the period 2015-2019. However, the soaring prices for energy commodities, including natural gas and coal, sharply escalated power generation costs and contributed to a rapid rise in inflation. Economic slowdowns and high electricity prices stifled electricity demand growth in most regions around the world, especially in the European Union, which recorded a 3.5% decline year-on-year in 2022. The report also notes that China’s zero-Covid policy weighed heavily on its economic activity and electricity demand growth in 2022, while India and the United States saw strong increases in demand due to their robust post-pandemic recovery and extreme weather conditions.

The report projects that global electricity demand will grow at a much faster pace of 3% per year over the 2023-2025 period, driven by the electrification of the transport and heating sectors and the economic development of emerging and developing economies. The total increase in global electricity demand of about 2 500 terawatt-hours (TWh) out to 2025 is more than double Japan’s current annual electricity consumption. More than 70% of the growth in global electricity demand is set to come from China, India and Southeast Asia combined, with China’s share of global electricity consumption rising to one-third by 2025.

Global changes in electricity supply 2021-2025

The report also analyses the trends and outlook for global electricity supply, highlighting the dominant role of renewables and nuclear energy in meeting the additional demand. Together, they are expected to account for more than 90% of the growth in global electricity supply over the next three years, with China leading the expansion of renewable generation and India, Japan and Korea contributing to the growth of nuclear generation. The report also notes that the share of renewables in the global power generation mix is forecast to rise from 29% in 2022 to 35% in 2025, while the shares of coal- and gas-fired generation are set to fall. As a result, global CO2 emissions from electricity generation are expected to plateau to 2025 and its CO2 intensity will further decline in the coming years.

The report concludes by discussing the challenges and opportunities for electricity security in a world where both the demand and supply of electricity are becoming increasingly weather-dependent. It points out that the energy crisis has renewed interest in the role of nuclear power in contributing to energy security and reducing the CO2 intensity of power generation, especially in Europe and the United States. It also stresses that the substantial growth of renewables will need to be accompanied by accelerated investments in grids and flexibility for their successful integration into the power systems. Finally, it warns that the world’s power systems will face more risks from extreme weather events, such as droughts, heatwaves, storms and floods, which can affect both the supply and demand of electricity.

So, given how conservative the IEA has traditionally been when it comes to its predictions of the future growth of renewables, I think their prediction of renewables growth to 35% by 2025 is very positive, seeing as that implies will reach 35% well before then!

IEA (2023), Electricity Market Report 2023, IEA, Paris https://www.iea.org/reports/electricity-market-report-2023, License: CC BY 4.0