Nick Butler: There have been gains in efficiency but global demand is still growing. Despite all the international dialogue around climate change and the Paris accord signed four years ago, the world is no closer to balancing its energy needs against the risks of global climate instability. The latest figures from the International Energy Agency suggest we are heading for at least a 2C increase in global mean temperatures. This is well beyond the 1.5C now regarded by the Intergovernmental Panel on Climate Change as the threshold at which a serious impact on climatic conditions is likely. Technically, solutions are available. Economically, it can be argued that the benefits will outweigh the costs in a shift to a radically different energy mix. But, as yet, there is no material transition to a lower carbon economy. An excellent primer on the changes that are taking place in the energy market worldwide – and equally, if not more important, on what is not happening – is the “Global Energy and Emissions Status Report” published at the end of last month by the IEA. One strong message from the IEA’s report is the impact of prices on consumer behaviour, and the price mechanism is crucial if the energy transition is to become reality. The IEA shows that the strongest growth in consumption came from electricity, which grew by 4 per cent worldwide and by 8.5 per cent in China. Renewables – led by wind and solar – now supply 25 per cent of that electricity. Generation from solar grew by 31 per cent in 2018 and has doubled since 2015. The long-term shift from coal to natural gas continued. Natural gas consumption grew by 4.6 per cent, with coal use falling in both the US and Europe. Across the sector there are continuing gains in efficiency. The amount of energy used per unit of gross domestic product declined by 1.3 per cent year on year. In some areas, such as Germany, total demand fell by more than 2 per cent despite economic growth of 1.5 per cent. But these numbers cannot disguise the fact that much more remains unchanged. Energy demand continues to rise – it was up by 2.3 per cent globally in 2018 and has grown by almost 20 per cent over the past decade. The “easternisation” of the energy market continues, with most of the growth in demand in 2018 coming from Asia, where the use of coal continues to increase.
FT 8th April 2019 read more »