POWER January 2014 - 8

IEA's World Energy
Outlook 2013: Renewables
and Natural Gas to Surge
Through 2035
By 2035, renewables will hold a 30% share
of the global power mix, but only 1% of
the world's fossil fuel-fired power plants
will be equipped with carbon capture and
storage (CCS), reports the International
Energy Agency (IEA) in its newly released
World Energy Outlook (WEO-2013).
The annual report presents a central
scenario in which global energy demand
rises one-third by 2035, driven higher by
the growing populations and expanding
economies of India and Southeast Asian
countries rather than by China. Meanwhile,
more than half of the projected
increase in global primary energy demand
will come from the power sector (Figure
1), the agency projects.
Coal is expected to remain a cheaper
option than natural gas for power generation
in many regions, though that could
change, depending on policy interventions
to improve efficiency, curb air pollution,
and mitigate climate change. Coal demand
is set to increase 17% by 2035, with twothirds
of that increase occurring by 2020.
While coal use will decline by half in Europe
(despite current price dynamics) and
plateau in China by 2035, India is poised
to become the world's largest coal importer
by 2025. In the U.S., coal use is
expected to decline by 14%.
Though several initiatives to mitigate
climate change are under way-as with
the U.S. Climate Action Plan, China's plans
to limit coal's share in its domestic energy
mix, Europe's debate on 2030 energy and
climate targets, and Japan's discussion of
a new energy plan that may or may not
include nuclear power-global energyrelated
carbon dioxide emissions will still
rise by 20% by 2035. That means, according
to the IEA's New Policies Scenario,
which takes into account the impact of already
announced climate change measures
and other policies, the world will be on
a " trajectory consistent with a long-term
average temperature increase of 3.6C, far
above the internationally agreed 2C target, "
the report says.
Though the global average efficiency of
fossil fuel conversion in power plants is forecast
to improve by 15%, the IEA makes the
significant, if dismal, admission that widespread
deployment of CCS technology could
stall. Only about 1% of global fossil fired-
power plants (about 67 GW) will be equipped
with CCS by 2035, mostly in the U.S., China,
and the European Union (EU). CCS appears
" well-suited " to resolving at least some
of the tension between rapidly increasing
power demand and the need to limit carbon
emissions and local pollution, " yet many
significant challenges have still to be overcome, "
the agency says. These include the
need to " integrate component technologies
effectively into large-scale projects, identify
viable storage sites and put the necessary
financial incentives in place. "
By 2035, natural gas demand will outpace
that of any other individual fuel and
end up nearly 50% higher than in 2011.
Demand for gas will come mostly from
the Middle East-driven by new power
generation-but also from Asian countries,
including China, India, and Indonesia,
and Latin America. Power generation
1. The changing face of world power generation by source. The power generation
mix (in TWh) in member countries of the Organisation for Economic Co-operation and
Development (OECD) and non-members is expected to evolve variedly. Source: IEA
OECD (2011)
10,000
8,000
6,000
4,000
2,000
8
OECD (2035)
Non-OECD (2011)
Non-OECD (2035)
continues to be the largest source of gas
demand, accounting for around 40% of
global demand over the period. New gas
plants, meanwhile, are expected to make
up around a quarter (or 1,000 GW) of net
capacity additions in the world's power
sector through 2035.
Nuclear generation will also increase by
two-thirds, reaching 4,300 TWh in 2035,
led by China, South Korea, India, and Russia.
But demand for nuclear power will
be driven mostly by expansion in just a
few countries. China accounts for around
half the global increase, while South Korea
will see the next-largest increase, followed
by India and Russia. The prospects
for nuclear power are less uncertain than
after Fukushima in 2011, the IEA notes.
What remains murky, however, is how the
sector could be affected by further policy
changes, implications of the ongoing safety
upgrades for plant economics and public
confidence, and notably, the impact of
increased competition from shale gas.
Nearly half of the increase in global
power generation will be from renewables-and
generation from wind, solar,
and hydro will make up an expected 30%
share of the global power mix by 2035.
That will put it ahead of natural gas and
just behind coal as the leading fuel.
China will lead the world in renewables
installations by 2035, its total renewable
output totaling more than in the EU, the
U.S., and Japan combined. Overall, the
massive renewables increase will likely
create challenges, the IEA foresees, raising
questions about current market design
and its ability to " ensure adequate investment
and long-term reliability of supply. "
Electricity prices will also vary, the
agency forecasts. By 2035, average Japanese,
European-and even Chinese-industrial
consumers will pay twice as much
for power as their counterparts in the U.S.,
" which could have important ramifications
for competitiveness, " the report says.
The report also notes that substantial
Coal
Gas
Oil
Nuclear
Hydro
www.powermag.com
Other
renewables
investments in the power sector will be
required over the projection period to satisfy
rising power demand and to replace
or refurbish aging infrastructure. By 2035,
around 50% of today's grid infrastructure
will have reached 40 years of age, the
agency notes. Cumulative global investment
could amount to as much as $17 trillion
through that period, averaging $740
billion per year. New plants will account
for 58% of the total, while the rest will be
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