The worldwide energy crisis triggered by the Russian invasion of Ukraine can accelerate the transition to more sustainable energy sources. Many countries take short-term measures to protect consumers against peaking energy prices, but the crisis also forces countries to accelerate the implementation of structural changes. That is the conclusion of the International Energy Agency’s annual report.
Today’s energy crisis has mainly been felt in the markets for gas, coal, and electricity. The energy markets remain extremely vulnerable, and the crisis is a reminder of the fragility and unsustainability of the current global energy system, the World Energy Outlook 2022 (WEO) report warns.
The global energy crisis has far-reaching consequences for families, businesses, and entire economies. However, poor(er) households carry the heaviest burden as they spend a larger share of their income on energy. Meanwhile, governments already have taken short-term initiatives to shield consumers from the crisis, and now they’re also taking longer-term steps.
“Energy markets and policies have changed as a result of Russia’s invasion of Ukraine, not just for the time being, but for decades to come,” said IEA Executive Director Fatih Birol. “Even with today’s policy settings, the energy world is shifting dramatically before our eyes. Government responses around the world promise to make this a historic and definitive turning point toward a cleaner, more affordable, and more secure energy system.”
Demand for fossil fuels will go down
Global fossil fuel use has grown alongside GDP since the start of the Industrial Revolution in the 18th century. According to the analysis of the IEA, global demand for fossil fuels will reach a peak or a plateau. The use of coal is expected to decrease in the coming years, and by the end of the decade, the use of gas will reach a plateau.
The rising popularity of electric cars will bring down demand of oil by the mid-30s. The share of fossil fuels in the global energy mix will fall from around 80% to just above 60% by 2050.
Global CO2 emissions fall back slowly from a high point of 37 billion tons per year to 32 billion tons by 2050. This would be associated with a rise of around 2,5°C in global average temperatures by 2100, far from enough to avoid severe climate change impacts.
Full achievement of all climate pledges would move the world toward safer ground, but there is still a large gap between today’s pledges and a stabilisation of the rise in global temperatures around 1,5°C.
Reorientation of global energy trade
Stronger policies will be essential to drive the huge increase in energy investment that is needed to reduce the risks of future price spikes and volatility, according to this year’s WEO. And major international efforts are still urgently required to narrow the worrying divide in clean energy investment levels between advanced economies and emerging and developing economies.
Russia has been by far the world’s largest exporter of fossil fuels, but its invasion of Ukraine is prompting a wholesale reorientation of global energy trade, leaving it with a much-diminished position. Now the rupture has come with a speed that few imagined possible. Russian fossil fuel exports will never return – in any of the scenarios in this year’s WEO – to the levels seen in 2021.
This year’s WEO provides policymakers with ten guidelines to help them through the period when declining fossil fuels and expanding clean energy systems co-exist, since both systems are required to deliver the energy services needed by consumers,” Director Birol said.
“As the world moves on from today’s energy crisis, it needs to avoid new vulnerabilities arising from high and volatile critical mineral prices or highly concentrated clean energy supply chains.”