Grid investment key to combatting fossil fuel volatility costs says IEA
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The International Energy Agency’s (IEA’s) latest World Energy Outlook (WEO) report finds that investment in robust, digitalised grid systems will be key for preventing costs associated with potentially volatile fuel prices.
The report, which looks to a 2030 energy system in which clean tech plays a significantly greater role than today, states how sheltering consumers from volatile fuel prices in 2022 cost governments $900 billion in emergency support.
The way to limit these expenditures in the future, they add, is to deploy cost-effective, clean technologies at scale, especially in poorer households, communities and countries.
And as the world moves towards a more electrified, renewables-based system, the key is security of electricity supply. This will be enabled by higher investment in robust and digitalised grid systems, accompanied by a role for batteries and demand response measures for short-term flexibility.
The report also highlights the importance of increasing levels of lower-emissions technologies for seasonal variations, including hydropower, nuclear, fossil fuels with carbon capture, utilisation and storage, bioenergy, hydrogen and ammonia.
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Additionally, the report adds how clean electrification, improvements in efficiency and a switch to lower- and zero-carbon fuels are key levers available to emerging and developing economies to reach their national energy and climate targets.
The next energy era
Getting on track to meet these targets, including net zero goals, has broad implications for future pathways, states the report.
Citing projection data of India as an example, the WEO report states how these implications mean every dollar of value added by industry in India results in 30% less carbon dioxide (CO2) by 2030 than it does today, and each kilometre driven by a passenger car, on average, emits 25% less CO2.
Some 60% of two- and three-wheelers sold in 2030 would also be electric, ten times higher than today.
Stated Laura Cozzi, IEA director of Sustainability, Technology and Outlooks: “We identified some key structural shifts that will make us live in 2030 in a very different world than today.
“When walking in the streets in 2030, you will actually see 10 times more electric vehicles than today. Importantly, we have been describing the clean energy transition up to now as another type of transformation – as an addition.
“But what’s going to happen in this decade is that this is going to shift from ‘addition’ to ‘substitution’. This means more electric cars, but also less conventional vehicles.”
Reshaping the energy system
According to the Outlook, thanks largely to current policy measures and the rise of clean tech, countries are on their way to net zero.
In large part due to the Inflation Reduction Act (IRA) in the US, it is projected that 50% of new US car registrations will be electric by 2030, based on the report’s Stated Policies Scenario (STEPS), which provides an outlook based on the latest policy settings, including energy, climate and related industrial policies. Two years ago, the corresponding figure was 12%.
Additionally, states the report, in the EU by 2030, heat pump installations in the STEPS reaches two-thirds of the level needed for a net zero scenario, compared with the one-third projected two years ago.
The World Energy Outlook 2023 proposes a global strategy for getting the world on track by 2030 that consists of five key pillars:
- Tripling global renewable capacity;
- Doubling the rate of energy efficiency improvements;
- Slashing methane emissions from fossil fuel operations by 75%;
- Innovative, large-scale financing mechanisms to triple clean energy investments in emerging and developing economies;
- Measures to ensure an orderly decline in the use of fossil fuels, including an end to new approvals of unabated coal-fired power plants.
“The transition to clean energy is happening worldwide and it’s unstoppable. It’s not a question of ‘if’, it’s just a matter of ‘how soon’ – and the sooner the better for all of us,” said IEA executive director Fatih Birol.
“Governments, companies and investors need to get behind clean energy transitions rather than hindering them. There are immense benefits on offer, including new industrial opportunities and jobs, greater energy security, cleaner air, universal energy access and a safer climate for everyone.”
