The world wants to “switch” from fossil fuels to green energy, but the difficult reality is this: dirty fuels will not disappear – or even, their consumption will not fall – in the near future.
The total amount of renewable energy available is growing. That is good news for a world threatened by potentially devastating climate change.
But the increase in renewable energy is still lower than the increase in global energy demand as a whole. The “transition” from fossil fuels may come one day, but for now, renewable energy is not even keeping pace with growing energy demand. Therefore, the demand for fossil fuels continues to grow.
“The global electricity market is experiencing rapid growth in electricity demand as markets recover from the pandemic. Despite all the additional capacity in renewable energy production (RES), the amount of energy currently produced by renewable energy sources is still not enough to meet this increased demand, ”said Matthew Boyle, Global Coal and Asia Analytics Manager at S&P Global Platts.
Global supply of renewable energy will increase by 35 GW from 2021 to 2022, but global demand for electricity will increase by 100 GW in the same period. According to Boyle, countries will have to use traditional fuel sources to meet the rest of the demand.
The projections of the International Energy Agency tell a similar story. Global electricity demand will recover strongly, jumping close to 5% this year and 4% in 2022, the IEA predicts.
The amount of electricity produced from renewable sources will also increase – by 8% this year and more than 6% in 2022, the IEA said. However, it is added: “Despite these rapid increases, renewables are expected to be able to meet only about half of the projected growth in global demand in 2021 and 2022.
Total lack of energy
At the same time, the amount of oil and gas consumption fell, although prices “collapsed” in 2020, when the industry faced increasing pressures to move away from dirty fuels. Total spending in 2021 was worth just over $ 350 billion – “well below” 2019 levels, according to an IEA (World Energy Outlook) report released last month.
“The world is not investing enough to meet its future energy needs. Transition-related spending is gradually rising. But it is still far from what is needed to meet the growing demand for energy services in a sustainable way, ”the IEA report said.
That shortage will only increase as economies reopen and travel continues. Demand has already risen to pre-pandemic levels. The IEA said a rapid “but uneven” recovery from the pandemic was straining energy markets, causing a sharp rise in natural gas, coal and electricity prices.
Countries are already in trouble for a major energy crisis, as gas shortages hit Europe and coal shortages put pressure on China and India.
However, just because large energy companies may be cutting investment in fossil fuels does not mean that those emissions have stopped altogether.
Speaking at the Green Horizon summit, BlackRock president and CEO Larry Fink expressed concern that publicly traded oil companies were reducing emissions reported only by selling parts of their business to private companies, which are less transparent than large firms. in public markets.
Fossil fuels as a necessary reserve
One of the problems with renewable energy sources is that many sources are at the mercy of time.
“You may build a lot of wind farms, you may have hydro tanks and hydropower plants, and you may have a lot of solar panels. The problem is: what if you don’t have enough water, wind or sun compared to your initial planning assumption, “said Anthony Juen, head of energy strategy at City Research.
According to Boyle of S&P Global Platts, renewable energy sources tend to underproduce and supply insufficient electricity at certain times – such as in September, when less wind energy is produced in Europe and China.
Yuen said countries should consider ways to ensure a reliable energy supply. One “common solution” would be to use traditional fuels as reserves, when renewables fail to produce enough energy.
“We have to be more conservative, and that means two things. First, build more RES capacity, so try to provide more. Another thing is some of the reserve capacity systems. Because, sometimes, you know, when the hydro tank is not enough and there is no wind for days… So, the battery system is probably not enough “, says Juen, noting that some” cleaner “fossil fuels, such as natural gas, can be used as a reserve.
Commenting that “some would say that this is how the use of fossil fuels is maintained”, Juen wonders: “But then what is the compromise between people who have enough energy and those who do not. Is not it? And that means that, perhaps, carbon capture should still be on the table, until the system is reliable enough that you no longer need fossil fuels. “
Carbon capture refers to technology designed to capture carbon dioxide from high-emission activities, such as electricity generation or industrial facilities, that use either fossil fuels or biomass as fuel.
What does this mean for climate goals?
During 2021, $ 750 billion will be spent globally on clean energy technologies. But that “remains far below” what is needed for climate goals, the IEA said.
Such consumption would have to double during the 2020s to keep temperatures “well below” the 2.0 degree Celsius rise. And they should more than triple, to stay at a rise of 1.5 degrees Celsius.
The countries that signed the 2015 Paris Agreement have agreed to limit the rise in global temperatures to 1.5 degrees Celsius – a threshold that scientists say could prevent the worst impact of global warming.
Putting the world on track for net zero emissions by 2050 – a goal set in the Paris Agreement that requires investment in a transition to clean energy, to accelerate from current levels to about $ 4 trillion a year by 2030. The IEA marked this as an increase of more than three times the current investment.
Lack of metal
Lithium, cobalt and nickel are metals necessary for the production of renewable energy, as well as for the production of electric vehicles.
UBS stated in a recent assessment that the demand for lithium will increase 11 times, three times for cobalt and twice for nickel in the next decade.
“However, there is not enough supply to meet this demand projection, we conclude based on our knowledge of well-known projects today,” the bank said.
According to these estimates, the deficit in the supply of lithium will appear in 2024, cobalt in 2023, and nickel already this year, in 2021.
UBS predicted that the current problems with electricity in China will make those shortages clear.
“The supply chain for electric vehicle parts depends almost entirely on China. Problems with the supply of materials and long-term power shortages could lead to shortages “upstream” (materials and parts needed in the car production phase), the bank said in an October note.
E2 portal (Energy of the Balkans)
Source: E2 Portal by www.e2.rs.
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