The IEA World Energy Outlook 2016 gives an overview of how the international Paris Agreement on Climate change. The agreement which entered into force in 2016 will affect the global energy system in the next decades. Such report dives into such topics and analyzes how the energy sector could be transformed, thanks to its energy projections to 2040. DFGE provides here the main highlights of the reports and checks how companies can also take part in reducing CO2 emissions.
A focus on the transformation induced by the Paris Agreement
The Paris Agreement launched a target: global warming should be curbed well below 2°C, and ideally below 1.5°C compared to the pre-industrial era. Based on this, all countries are supposed to develop their own matching climate targets.
According to the World Energy Outlook 2016, “Countries are generally on track to achieve, and even exceed in some instances, many of the targets set in their Paris Agreement pledges. This is sufficient to slow the projected rise in global energy-related CO2 emissions. However, it is not nearly enough to limit warming to less than 2 °C.” Companies can take part in this movement by setting science-based targets, e.g. targets based on these scenarios, enabling to curb climate change
An expected growth in renewable energy and gas
The World Energy Outlook 2016 also analyses in details the nature of the energy sector, and how to reach such targets.
According to the previsions, the world’s energy needs keep growing. However millions of people will still lack a proper access to energy.
- Renewable energy sees the biggest growth
- The rate of growth in natural gas demand is healthy compared to other fossil fuel
- The fossil fuels are still important: “While all fossil fuels see continued growth in our main scenario, by 2040 oil demand returns to the levels of the late 1990s in the 450 Scenario, at under 75 mb/d;”, highlights the report. The oil markets could be in for another boom by early 2020, due to estimated demand and supply. Indeed, the level of development approval for conventional crude oil resources was very low in 2015 and 2016.
Finally, the report focus on the inter-dependencies between energy and water, which are likely to keep growing.
How can the countries reach such targets?
- According to the report, a focus on energy-efficiency is expected on the path to decarbonization. “In the industrial sector alone, additional cumulative investment of around $300 billion in a given scenario reduces 2040 global electricity demand by about 5% and avoids $450 billion in investment in power generation.”
- In addition, in the main scenario by the IEA, a new division of capital is planned with 60% going to oil, gas and coal extraction, and nearly 20% to renewable energy,
- Finally, structural changes are expected in the design and operation of the power system. The goal is have proper incentives for investments.
Companies: what can you do?
DFGE strongly believes that companies are key in the path to decarbonization. What can be done?
- Assess the carbon footprint to find where to reduce emissions and to set a basis for defining targets
- Define science-based targets
- Implement emissions reduction initiatives. For example switch to energy-efficient equipment, to renewable energy sources, implement processes to save energy. You can also purchase materials which are less energy-intensive, reduce business travel,…
- Communicate your progress, for example through internationally recognized standards such as CDP.
For more information, you can read the executive summary of the report http://www.iea.org/publications/freepublications/publication/WorldEnergyOutlook2016ExecutiveSummaryEnglish.pdf