Recently, the International Energy Agency (IEA) released the “World Energy Outlook 2022” report, proposing that the world is experiencing an unprecedented energy crisis, and the prices of fossil fuels such as oil, natural gas, and coal have all hit records highs this year. The world’s major economies have successively issued medium- and long-term energy plans, and invariably mentioned low-carbon technologies such as renewable energy, electric vehicles, and nuclear energy to an important position. The IEA predicts that stimulated by government policies, the peak of global fossil fuel demand is coming, and the global energy system is likely to turn a crisis into an opportunity and usher in a turning point towards an energy system dominated by clean energy.
Supply disruptions lead to a surge in energy costs
The IEA pointed out that in the past few decades, the world has experienced multiple rounds of crises caused by energy supply interruptions. This year, the energy crisis experienced by the world is unprecedented in scale, with a wider impact than in previous years and more complex factors.
In the past year, the spot price of natural gas has hit a record high, equivalent to a crude oil price of US$250 per barrel; the crude oil market has also fluctuated constantly, with the highest price exceeding US$100 per barrel; the price of coal also hit a record high. Higher fossil fuel prices have made energy producers a huge profit, with fossil fuel producers raking in more than $2 trillion in “windfalls” this year compared to 2021, data compiled by the IEA show.
However, at the same time, the high fuel prices have led to higher and higher energy consumption by residents, and industrial and commercial energy consumers, especially the surge in natural gas prices, which has directly led to a rapid increase in the cost of energy use in various countries. In addition, the global economy is facing inflationary pressure and the risk of recession. The agency said that this round of energy crisis may cause more than 75 million people worldwide to be without electricity, which will also be the first time the agency has had no electricity since the data was recorded. A year of upswings.
At the same time, the IEA pointed out that due to factors such as the conflict between Russia and Ukraine, the crisis faced by the natural gas market is even more significant, and Europe has become the region most affected by the current energy crisis. To solve the problem of the reduction of natural gas imports through European pipelines, Europe has to increase the import of liquefied natural gas (LNG). Global LNG trade pattern.
Medium- and long-term energy planning may bring about a turnaround
In the face of high energy costs and energy supply gaps, many governments around the world have issued short-term emergency measures, including providing energy subsidies for residents, increasing the proportion of coal and electricity in the energy supply, increasing the level of natural gas storage, and extending nuclear power plants. Years of operation, etc. According to IEA statistics, as of October this year, governments around the world have pledged to provide more than $500 billion in funds to ease energy pressure.
The IEA pointed out that the advent of the energy crisis has pushed the decision-making of governments of various countries to a crucial position. In order to solve this problem for a long time, many governments have also issued policies to seek more diversified sources of oil and gas and increase the proportion of renewable energy supply to change the energy structure and other medium and long-term policies.
The IEA emphasized that, within this year, China, India, Japan, the European Union, the United States, South Korea, and other major global economies have issued corresponding long-term energy policies. The United States introduced the “Inflation Reduction Act”, South Korea proposed to increase the proportion of nuclear energy and renewable energy in the energy system, and the clean energy target set by China will promote structural changes in the energy system.
IEA director Fatih Birol said that under the influence of the Russian-Ukrainian conflict, energy markets and policies have changed, and such changes are likely to have an impact in the next few decades. At present, the policies and measures introduced by various governments have brought the energy system into a historic node. In the future, the energy system will be cleaner, the cost of energy consumption will be lower, and the energy supply will be more secure.
Clean energy investment is estimated to surge by more than 50%
Under this circumstance, the IEA report predicts that the rebound in global coal sales this year may only be a short-term phenomenon, and coal consumption is expected to decline in the next few years; natural gas market demand is also expected to peak around 2030; With the rapid rise of automobiles, global crude oil demand is also expected to peak around 2035.
It is particularly worth noting that the IEA also emphasized that investment in the field of clean energy is expected to usher in a surge. “Energy security is the biggest engine to promote the development of clean energy. At present, the total scale of global clean energy investment is expected to be around 1.3 trillion US dollars. If governments can promote the development of clean energy according to the established energy plans, clean energy investment is expected to rapidly increase to 2.3 trillion US dollars. At the trillion-dollar level, technologies such as clean energy, electric vehicles, hydrogen energy, and nuclear energy will gradually replace fossil fuels,” Fatih Birol said.
The IEA further pointed out that the clean energy industry will promote global economic growth, and will also bring a large number of employment opportunities. From a global perspective, the annual growth rate of renewable energy power generation has far exceeded the growth rate of the world’s total installed power capacity, and clean energy power generation is gradually replacing fossil fuel power generation.
According to the IEA, for example, under the influence of the “Inflation Reduction Act” in the United States, by 2030, the annual installed capacity of wind power and photovoltaics in the United States is expected to reach 2.5 times the current level. China has proposed long-term energy development goals, which will bring about a huge increase in installed renewable energy capacity. In addition, EU countries are also accelerating the deployment of renewable energy, while improvements in energy efficiency are expected to reduce EU oil and gas demand by 20% by 2030.
However, the IEA also reminded that the development of the global energy system is still highly dependent on investment, and called on governments to provide strong guidance for the market, not only need to invest a lot of public funds but also need to introduce private funds to ensure that the energy market has enough energy resources invested. If the development of clean energy is slower than expected, the world is likely to face more volatile fossil fuel markets and the energy system may become more fragile.