The International Energy Agency (IEA) has found that the current uptick in fossil fuel usage is likely to be temporary as renewable energy use continues to grow.
According to the group’s World Energy Outlook 2022 report, every scenario explored found that global demand for each fossil fuel showed a peak or plateau in the coming years.
Furthermore, the WEO’s analysis found scant evidence to support claims from some quarters that climate policies and net zero commitments contributed to the run-up in energy prices.
In the most affected regions, higher shares of renewables were correlated with lower electricity prices – and more efficient homes and electrified heat have provided an important buffer for some consumers, albeit far from enough.
The energy crisis caused by Russia’s invasion of Ukraine, and the subsequent drop in Russian gas exports, has had a significant effect on reshaping the world energy order.
Alongside short-term measures to try to shield consumers from the impacts of the crisis, many governments are now taking longer-term steps.
Some are seeking to increase or diversify oil and gas supplies, and many are looking to accelerate structural changes.
The most notable responses include the US Inflation Reduction Act, the EU’s Fit for 55 package and REPowerEU, Japan’s Green Transformation (GX) programme, South Korea’s aim to increase the share of nuclear and renewables in its energy mix, and ambitious clean energy targets in China and India.
In the WEO’s Stated Policies Scenario, which is based on the latest policy settings worldwide, these new measures help propel global clean energy investment to more than US$2tn a year by 2030, a rise of more than 50% from today.
As markets rebalance, the upside for coal from today’s crisis is temporary as renewables, supported by nuclear power, see sustained gains.
As a result, a high point for global emissions is reached in 2025. At the same time, international energy markets undergo a profound reorientation in the 2020s as countries adjust to the rupture of Russia-Europe flows.