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Mat Hope

29.12.2014 | 10:10am
EnergyEnergy trends in 2014 and how they affect climate change
ENERGY | December 29. 2014. 10:10
Energy trends in 2014 and how they affect climate change

Perhaps inspired by clear messages from the world’s scientific community, 2014 brought the sight of politicians across the globe speaking of the need to transition away from fossil fuels, and acknowledging the scale of that challenge.

Here are the trends that defined the global climate and energy debate over the past 12 months.

Renewables records keep breaking, and need to continue to do so

Renewable power records were shattered all over the world this year. But the vast majority of human society remains fossil-fuelled, and nothing seems to be changing that rapidly.

In December, the equivalent of 43 per cent of the UK’s homes were powered by wind turbines, a new record. Germany’s renewables produced 31 per cent of the country’s power in the first sixth months of 2014, a new record. At the same time, Denmark’s wind turbines provided for 41 per cent of the country’s electricity consumption, a new record. In Asia-Pacific, solar panels are projected to account for 19 per cent more demand in 2014 than last year, a new record.

You get the idea.

The International Energy Agency says the twin drivers of growing electricity demand and an ever-growing renewables industry means low carbon power generation records are likely to continue to tumble for some time.

Screen Shot 2014-12-17 at 14.19.10.png
Power generated by renewables in the UK. Source: BP Statistical Review of World Energy 2014. Graph by Carbon Brief.

The question isn’t whether renewables will keep growing. Rather, policymakers need to ask whether they’ll grow quickly enough to limit global warming. The Intergovernmental Panel on Climate Change (IPCC) says the world’s energy system need to be zero emissions by 2100 if policymakers are going to prevent warming of more than two degrees above pre-industrial levels.

Given renewables’ relatively minor contribution to the world’s energy mix – about five per cent at the end of last year – generation records will need to keep being obliterated, and fast.

Carbon bubble message goes mainstream, but coal power persists

2014 was the year the carbon bubble concept – that companies could be sitting on fossil fuel assets they can’t burn if the world tackles climate change – went mainstream.

At the start of December, the Bank of England announced it would launch an enquiry into the financial risks companies were taking as the world tries to agree ways to cut emissions. Six months earlier, the IEA warned that companies’ assets could become ‘stranded’ if politicians chose to tackle climate change.

The Carbon Tracker Initiative thinktank first floated the idea of a carbon bubble back in 2012. Since then, climate campaigners have been pressuring investors to pull their backing for energy companies on the basis that most of the world’s fossil fuels will need to stay in the ground.

But 2014 was the first time such weighty institutions backed the concept. Perhaps the IPCC’s decision to include a carbon budget in its landmark report at the end of 2013, which showed the world could emit enough carbon dioxide to push global warming above two degrees within the next two decades, jolted their imaginations.

Screen Shot 2014-12-17 at 14.49.00.pngGraphic by Carbon Brief. Click for full infographic.

Despite such backing, fossil fuel companies remained bullish. In May, Shell wrote a 30-page letter to its investors explaining exactly why it was unconcerned about the carbon bubble. In July, we asked 76 oil, gas and coal companies for their take on the carbon bubble research. 58 companies didn’t respond, and we got no response from the coal industry.

The world’s most polluting fossil fuel, coal, certainly doesn’t seem to be going away any time soon. The IEA expects global demand for coal to grow over the next five years, breaking nine billion tonnes by 2019.

Coal demand is expected to stay strong across the world. India is expected to double its coal consumption by 2035. Despite China’s pledge for its emissions to peak by 2030, coal is expected to continue to be its main fuel source well until at least 2035. Likewise, the Energy Information Administration expects about 40 per cent of the US’s power in 2035, despite the President’s much lauded plans to curb coal power generation.

The only region bucking that trend is Europe. The European Commission expects the region’s energy consumption from coal to halve by 2050. But that would still mean eight per cent of the EU’s demand is met by coal. If there is a carbon bubble, it doesn’t look like it’s going to burst just yet.

We know we need energy efficiency, now we need to do it

Efficiency improvements have the potential to save huge amounts of energy, and appear to be starting to curb demand in some parts of the world. But over the past 12 months, experts have repeatedly called on policymakers to step up efforts to cut energy demand.

In July, Russia’s annexation of the Crimea focused bureaucrats’ minds as they sought to set a new energy efficiency target for the region. If the EU could use less energy, it would be in a better position to negotiate with Russia over its gas supply, they figured. In the end, they settled on the aim of cutting the region’s energy use 30 per cent by 2030.

In November, the United Nations Environment Programme (UNEP) released a report showing energy efficiency could be responsible for up to a fifth of the cuts countries need to make to stick to the IPCC’s carbon budget. Energy efficiency improvements could prevent 22 to 24 gigatonnes of carbon dioxide emissions between 2015 and 2030, UNEP estimates, with new energy efficiency policies reducing energy demand by about five to seven per cent.

Energy security and cutting emissions aren’t the only reasons to invest in energy efficiency, the IEA said in September, it can also boost GDP, create jobs and improve trade balances by reducing costly imports of fossil fuels. If that’s the case, then it’s perhaps fair to ask, why aren’t we doing more of it?

The answer could be that some countries simply aren’t that good at incentivising people to make such long term investments. Britain’s schemes continue to struggle, with the UK falling from first to sixth on a list of energy efficiency leaders in July.

Screen Shot 2014-12-17 at 15.37.07.png
Energy use in the UK’s homes. Electricity on the left axis, gas on the right axis. Data from the Department of Energy and Climate Change. Graph by Carbon Brief.

Labour has promised to fix the schemes if it gets into government next May, though it’s not clear where it’ll get the money from to do so. Maybe the UK could learn some lessons from France and, in particular, Germany. Both countries have implemented considerably more successful schemes to get people to insulate their homes and upgrade boilers.

But it would be fair to say that 2014 saw policymakers commit to the idea that switching to low carbon energy generation won’t be enough on its own – countries also need to do much more to cut demand.

The implications of a low oil price for climate change are far from clear, yet

The biggest energy story of the second half of 2014 has been the plummeting oil price. But it’s still too early to really assess what it might mean for the global energy sector and greenhouse gas emissions.

The oil price fell from $115 dollars a barrel in June to under $70 this month. Relatively sluggish demand due to the economic recession, increased US production, and Saudi Arabia’s desire to see Russia and Iran suffer are all partially responsible for the price drop.

Screen Shot 2014-12-17 at 15.30.17.png
Oil price in 2014. Source: MoneyWeek

There are two conflicting schools of thought on whether or not this is a positive thing for countries’ efforts to cut emissions.

The first argues that low prices mean people use more oil, particularly in the transport and agriculture sectors. It also potentially means countries that are large exporters of oil, such as Mexico, have less money, and so spend less on renewables. Both are those are bad news for emissions.

The alternative argument is that a low oil price presents some opportunities to boost low carbon energy in the long term. If oil is cheap, energy companies can’t afford to undertake risky extraction projects such as those planned in certain tar sands or the Arctic. It could also give countries an opportunity to cut fossil fuel subsidies and implement carbon taxes, encouraging more efficient, low carbon, energy use, the IEA says.

The oil price’s volatility could also serve as a reminder of an advantage of switching to low carbon fuel sources: their lack of sensitivity to the international fuel markets’ swings. But switching to low carbon energy sources is easier said than done. The New Yorker argues, that cheap fossil fuels have become “like an industrial form of crack. It doesn’t really matter how much damage it causes, because we simply don’t have the power to walk away.”

Powering through 2015

In 2014 a plethora of reports contributed to identifying how the world’s energy supply needs to change if countries are going to cut emissions and tackle climate change over the past year. Such information is going to be invaluable as negotiators head towards their self-imposed deadline to agree a new global climate deal by the end of next year.

With that in mind, we leave you with this image – the energy sector certainly has some changing to do next year, and for many years after that, if the world is going to prevent temperatures rising by more than two degrees:

Source: Data from the International Energy Agency. Graphic by Carbon Brief.

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