The International Energy Agency (IEA) has published the latest edition of its electricity market outlook research, the aim of which is to track and forecast trends in the global energy space from 2022-2025. The new research has identified the critical role that both renewable and nuclear energy sources will play in the next three years. The study predicts that these energy sources will account for more than 90% of additional electricity generation globally.[i] The latest forecasts follow research released by the IEA in summer last year, which suggested that nuclear energy can ‘stage a comeback’, helping countries shift away from fossil fuels & reach net zero.
The IEAs report found that despite both the war in Ukraine and the cost of living crisis, the trend for growth in energy demand only slowed slightly when compared with more recent years- last year saw demand grow by 2%, compared with the average 2.4% growth seen before the pandemic, between 2015-2019. The energy sector is a major contributor towards GHG (greenhouse gas) emissions, and it is paramount that these are reduced if we are to limit the global temperature increase to 1.5C, as per the Paris Agreement. To do so, the IPCC estimates that global emissions across all sectors must decrease by at least 45% by 2030. However, the latest data from the IEA shows that their previous prediction for global energy emissions to fall from 2022 to 2025 is no longer set to pass; rather, the IEA now expects emissions to plateau over the same period before falling from 2025 onwards. Instead of declining in 2022 as the IEA had predicted, emissions rose by 1.3% year on year, this was however far lower than the 6% rise observed in 2021- the cause of which was the economic boom seen as the world exited the coronavirus pandemic.
The rise in emissions has been partially attributed to the EU, where 2022 saw the second-highest percentage growth in CO2 emissions since the 1970s oil crises, with an increase of 4.5% YoY. Further, if we exclude the post-pandemic rebound in 2021, 2022 saw the highest growth in power generation emissions in the EU since 2003. The IEA attributes this to the rise in coal-fired generation in response to the war in Ukraine. Whereas the EU had seen an average annual decline in coal use pre-pandemic of around 8%, 2022 saw growth exceeding 6%. However, the near-term outlook is more positive, with the IEA concluding that coal and gas will decline by more than 10% annually across the bloc in the next three years. Further, on a global scale, the share held by coal and gas will also fall, as renewables in the power generation mix are forecast to rise from 29% in 2022 to 35% in 2025. The research finds that from 2022 to 2025, it will be China who installs the highest levels of renewable energy generation capacity, followed by the EU.
Whilst the IEA expects gas generation to fall in some regions (estimated to be as much as 12% in the EU), this is forecast to be almost entirely nullified by “significant growth” in gas-fired generation in the Middle East. The Agency also expects that the near-term decrease in coal-fired generation in Europe, North America and South America will be matched by an increase in the Asia-Pacific region.
Further, a similar trend is emerging around energy consumption and efficiency. In the drive to reduce reliance on imports of Russian oil and gas, as well as resist the threat of blackouts as energy supplies were squeezed, and prices hiked, the EU achieved a 3.5% decrease in electricity consumption year-on-year in 2022. Yet India saw an 8.4% increase in electricity demand from 2021 to 2022. Increases were also recorded in the US (2.6%) and China (2.6%). From now through to 2025, the IEA expects more than 70% of the growth in global electricity demand to come from China, India and Southeast Asia.
IEA Executive Director Fatih Birol summarises:
“The world’s growing demand for electricity is set to accelerate, adding more than double Japan’s current electricity consumption over the next three years. The good news is that renewables and nuclear power are growing quickly enough to meet almost all this additional appetite, suggesting we are close to a tipping point for power sector emissions. Governments now need to enable low-emissions sources to grow even faster and drive down emissions so that the world can ensure secure electricity supplies while reaching climate goals.”[iii]
Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”