September 26, 2019 / 2:30 PM / 25 days ago

Rising energy use to push CO2 far above target through 2050: Kemp

(John Kemp is a Reuters market analyst. The views expressed are his own.)

By John Kemp

LONDON (Reuters) - Global energy consumption will rise nearly 50% by the middle of the century, according to projections published by the U.S. government’s Energy Information Administration (EIA) this week.

Energy consumption is set to increase by 15% in the industrialized member countries of the Organisation for Economic Cooperation and Development and by almost 70% in non-OECD economies by 2050.

The projections highlight the enormous policy and technology challenge of providing more energy, especially in developing countries as living standards rise, while simultaneously reducing emissions of greenhouse gases.

EIA projections show increased consumption of energy from all sources, including oil, gas, coal, nuclear and renewables, by 2050 (“International Energy Outlook”, EIA, Sept. 24).

The projections show the fastest growth in renewables (+166%) and natural gas (+44%) but also continued increases in nuclear (+36%), oil (+22%) and even coal (+12%).

Declining consumption of coal, oil and nuclear in the OECD countries will be more than offset by increases in the faster-growing economies of the developing world.

Long-term, multi-decade projections are notoriously error-prone because they are sensitive to small changes in assumptions about population growth, economic growth and energy intensity, as well as changes in technology.

But producing them is a good intellectual discipline. They provide a useful framework for thinking about the various forces driving change and the policy challenges involved in altering them.

ENERGY DEMAND

The experience of the last 250 years suggests economic development is always accompanied by a huge increase in energy consumption (“Power to the people”, Kander et al, 2013).

The same pattern has been evident across North America and Western Europe and is now being repeated in the fast-growing economies of Asia, the Middle East and other regions.

Energy consumption rises as increased demand for energy services such as heating, cooling, lighting, power and transportation more than offsets improvements in energy efficiency.

Demand for energy services has tended to rise especially fast in middle-income countries, where rapidly growing numbers of households are emerging from subsistence level and reaching middle-class status.

In every case, middle-class households have prioritized more comfort at home, time-saving and labor-saving devices, more non-essential consumption items, and more opportunity to travel especially for leisure.

In every case, the result has been a huge increase in underlying demand for energy services that far outstrips significant improvements in energy efficiency (“Heat, power and light”, Fouquet, 2008).

Even the most advanced economies, which have moved furthest along the path from manufacturing to services, have struggled to decouple energy consumption from economic growth.

The EIA projects OECD economies will see average population growth of 0.3% per year through 2050 and per-capita output growth of 1.2%, which will offset a 1.1% decrease in energy intensity. (tmsnrt.rs/2ljCcMb).

For faster-growing non-OECD economies, however, many of which have entered or will enter middle-income status, population growth of 0.8% and per-capita GDP growth of 2.9% will outweigh a 2.0% reduction in energy intensity.

The result is that OECD energy consumption is projected to rise by 0.4% per year through mid-century while non-OECD consumption increases by 1.6%.

OECD energy consumption will be around 15% higher in 2050 compared with 2018, though its share of the world total will have declined to 30% from 40% at present.

Non-OECD energy consumption will increase by almost 70%, and its share of the world total will grow to 70% from 60%.

EMISSIONS GROWTH

The EIA’s assumptions about population, output per capita and energy intensity can be challenged but these are long-term forces with tremendous inertia that are difficult to influence over timescales of a couple of decades.

For that reason, it is safe to assume global energy consumption will be substantially higher in 2050 — whether the actual increase turns out to be nearer 35%, 45% or 55%.

There is more uncertainty about what share of consumption will be met by fossil energy from oil, gas and coal or non-fossil energy from nuclear, hydropower, solar and wind.

But the projected increase in energy consumption is so large it dominates the projected shift from fossil to non-fossil sources in the EIA’s baseline case.

The EIA assumes the carbon dioxide (CO2) intensity of energy consumption can be reduced by an average of 0.6% per year in OECD and non-OECD economies through 2050.

In OECD economies, decarbonisation of 0.6% is just more than enough to offset increased energy consumption of 0.4%, resulting in a net reduction in emissions of 0.2% per year.

In non-OECD economies, however, decarbonisation of 0.6% is nowhere near enough to offset increased energy consumption of 1.6%, leaving emissions growing at 1.0% a year.

Once again, the assumptions about the pace of decarbonisation can be challenged, but the projection underscores the scale of the technology and policy changes that would be required to stabilize, let alone cut, emissions.

POLICY IMPLICATIONS

Under plausible assumptions, the increase in global energy consumption over the next three decades will be so large it will lift consumption from both fossil and non-fossil sources.

Energy consumption from renewables such as hydro, wind and solar may show the fastest growth in relative terms, but consumption from oil, gas and even coal is also set to increase (albeit marginally in the case of coal).

The projection says nothing about the desirability of these changes, but it does show the scale of the task if policymakers and voters want to change the outcome.

Global CO2 emissions will increase substantially by 2050 unless energy consumption growth is curbed sharply (which seems unlikely given historical trends) or there is an even faster switch to non-CO2-emitting energy sources (which also seems unlikely given the lack of policy action).

With current policies and technologies, atmospheric CO2 will continue rising through mid-century, taking it far above the target set by policymakers as part of the 2015 Paris Agreement, with associated implications for the climate.

Editing by Dale Hudson

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