Up to one fifth more energy will be consumed by the world in 2025 compared to today –from a noticeably different mix of sources, especially in the power sector.
The transition is mainly being driven by:
- Cost pressures in the oil and gas industry;
- The imperative to reduce anthropogenic CO2 emissions;
- The rapid decline in the cost of electricity generated from solar and wind; and
- The emergence of a more distributed and consumer-centric power system.
These factors will drive technology development, and so too will new policy and regulatory measures that will influence energy source preferences and spur deployment of new solutions.
These forces are likely to result in the following changes in global energy flows between 2015 and 2025:
- Strong growth in natural gas production;
- Growth in nuclear power generation;
- More than 50% growth in the use of biomass and waste for power generation and biofuels;
- The peak and decline of coal production;
- A sharp decline in oil-fired power generation; and
- A booming renewable power generation sector, more than doubling global capacity.
The pace and strength of these energy flows are delicately balanced on the fulcrum of policy and regulation. This is especially the case for the transition to renewables, and the associated reductions in annual GHG emissions relative to a ‘business as usual’ trajectory, which is strongly dependent on policy intervention.