Whether you’re bullish or bearish on oil and gas or renewables, when it comes to 2019 growth, there were clear winners and losers, and oil isn’t among the former ...
Over the past three years, the world has recorded relatively high growth for carbon-centric energy sources as well as a marked acceleration in renewable energy developments. According to the International Energy Agency (IEA), renewables spending continues to exceed fossil fuel-based power, with India emerging as the world’s fastest-growing energy market.
The United Nations has predicted that the world’s population will grow from 7.6 billion to 9.8 billion by 2050. Coupled with rapid urbanization, this will continue to drive energy demand.
Global electricity demand has been growing about twice as fast as overall energy use and could climb by more than 50 percent by 2040, with energy demand growing by 25 percent over the timespan.
Meanwhile, the challenge of meeting growing energy demand while reducing harmful emissions and greenhouse gases continues to be a very significant one. Global atmospheric concentrations of carbon dioxide rose 1.4 percent in 2017, the biggest annual rise on record.
And now, without further ado, the brass tacks.
Here are the fastest growing energy sectors, along with those that are shrinking.
Gainers:
#1 Renewables
The renewable energy sector has been on steroids over the past couple of years and is likely to stay that way.
According to the IEA Renewables 2019 report, renewable energy is taking the world by storm and penetrating the global energy system at an unprecedented clip. According to the Solar Energy Industries Association (SEIA), the US installed 4.8 GW of solar PV capacity in the first half of 2019 representing a 2.1 percent Y/Y increase.
About 38 percent of new energy came from solar, making it the second largest contributor to the country’s new energy mix after natural gas.
Source: SEIA
On a global scale, PV installations are expected to hit a new high of 114.5 gigawatts, a 17.5 percent Y/Y increase.
Wind power remains a vastly underused source of energy, supplying a mere 0.3 percent of the world’s energy needs. Nevertheless, the sector is sitting on the cusp of incredible growth with the IEA predicting that offshore wind power is set to become a $1 trillion industry by 2040.
After a brief slowdown in 2018, wind power has bounced back in 2019.
The American Wind Energy Association (AWEA) says 1,927 megawatts of wind power installations were completed in the third quarter bringing the country’s total installed capacity to 100GW. Total installations are on track to grow nearly 8 percent Y/Y. Related: Precious Metals See Record Inflows
Overall, the future of global renewable energy is looking bright indeed, with the IEA forecasting that the sector will increase by 50 percent between 2019 and 2024, to reach 3,700GW. Renewable energy supplied 8.5 percent of the world’s energy needs in 2017 but that figure could reach nearly 30 percent by 2040.
Source: IEA
Here in the U.S., clean energy employs 777,000 people, roughly the same as the telecom industry. Wind and solar energy employ more people than coal energy in 30 states.
Source: Environmental Defense Fund
#2 Natural Gas
Natural gas demand grew at an incredible 4.6 percent clip in 2018, with 314 million tons delivered, and the growth streak has extended to the current year driven by the ongoing transition away from coal-fired electric power, decent economic growth and weather-related demand amid a price slump of historical proportions.
Natural gas now accounts for 45 percent of the increase in energy consumption over the past decade.
Natural gas demand is expected to moderate though, with the IEA saying demand will increase 2 percent in 2019 and 1.6 percent per year on average over the next five years, mainly due to lower Chinese consumption, which is projected to rise just 8 percent per year through 2024 after hitting 18.1 percent in 2018.
The IEA expects natural gas consumption to increase 40 percent to nearly 200 quadrillion Btu by 2050.
Natural gas can play a key role in lowering greenhouse gas emissions. The rapid adoption of natural gas is responsible for the steady decline of coal-fired power in many countries including in the U.S.
Source: CNBC
#3 Nuclear Energy
Nuclear energy continues to make a growing contribution to the quest for clean and reliable energy. Global nuclear generation clocked in at 2,563 TWh from the world’s operable 449 reactors with nine new reactors joining the grid while seven were closed.
A total of 55 reactors are under construction with construction starts on five reactors. The sector is experiencing strong growth, with more than 20 new reactors scheduled to be connected to the global grid before the end of 2020.
Nuclear energy supplies about 10 percent of the world's electricity and is the world's second largest source of low-carbon power. This proportion is expected to remain unchanged through 2050. The US is even more dependent on nuclear energy, with the power source generating 808 TWh of electricity in 2018 or 20 percent of total generation. This trend is expected to hold over the next couple of decades though it has its fair share of critics.
Losers:
#1 Oil
The world’s oil fields have been pumping considerably less oil in the current year compared to the peak last year. According to Y-Charts data, crude oil production clocked in at 82.46 million b/d in August vs. 84.72 million b/d in November 2018, a five-year peak.
Nevertheless, this decline mainly came from OPEC producers, with the United States hitting a record 12.8 million b/d, the most by any country.
Source: Y-Charts
But as much as we would like to rapidly ramp our renewable energy sources and clean energy push, it’s unlikely that we will be able to do so fast enough to keep up with our growing energy demands. Indeed, oil output is expected to keep growing over the next decade, with the United States accounting for 85 percent of that increase.
#2 Coal
In the ongoing race to clean and sustainable energy, coal is emerging as the biggest loser.
According to CarbonBrief, global electricity generated from coal is on track to drop by 300 TWh, or 3 percent, in the current year. The biggest uses of coal are electricity generation, cement manufacturing, steel production and as liquid fuel.
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Record declines are being seen in developed countries, including the EU, Germany and South Korea and are not being matched by increases elsewhere. The largest reduction is in the US with several large coal-fired power plants recently folding.
Source: CarbonBrief
About 38 percent of the world’s electricity comes from coal-power plants, 13 percentage points higher than second-placed renewables.
Source: WorldCoal.Org
The main counteracting force to this growing trend is increasing generation in south east Asia. But with numerous call for a global coal phase out, electricity generation from coal is likely to plunge below 30 percent in less than two decades with renewables taking over as the leading source.
By Anes Alic for Oilprice.com
