The transformation of the energy industry is one of the greatest challenges that the world faces, considering that it is the industry that produces the most greenhouse gas emissions and is the main cause of climate change. Scientists at the Intergovernmental Panel on Climate Change (IPCC) have warned about the dangers of global warming produced by human activity.
All governments are looking into means of mitigating climate change, particularly that which is anthropogenic (i.e. human-induced). In fact, a key outcome of the Paris Agreement at COP21 were the Intended Nationally Determined Contributions (INDCs) made by individual countries. Fulfilling the INDCs will trigger a transformation of the world energy system.
Energy industry keys
In this context, in which countries are taking steps to combat climate change, below are some factors and data that will help you to understand the trends in the world energy industry:
- The energy industry accounts for about 60% of total greenhouse gas (GHG) emissions worldwide.
- Energy demand will increase by 32% between 2013 and 2040, basically as a result of population growth and expanding economic activity.
- Subsidies for fossil fuels (coal, oil, natural gas, etc.) totalled $490 billion in 2014, four times the value of subsidies for renewable energy. While low oil prices have helped to reduce subsidies for fossil fuels, they will tend to rise as the current excess supply is gradually absorbed.
- Expanding renewable energy. Nearly half of all new electricity generating capacity installed in 2014 was renewable. The International Energy Agency estimates that, by 2040, renewable energy will account for 50% of power generation in the EU, around 30% in China and Japan, and over 25% in the US and India.
- There will be growing regulatory pressure in the area of energy efficiency. Over one-quarter of world energy consumption is now covered by binding rules in this connection. This is a key factor in limiting the growth of world energy demand.
In short, much remains to be done to decarbonise the economy. It is vital to reduce the use of fossil fuels and increase the use of renewable energies if we want the world to follow a path that is coherent with the goal adopted at COP21: keeping the increase in global average temperatures well below 2 °C, and continuing efforts to limit the temperature rise to 1.5 °C.