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'India, China driving global energy market transition'
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SME Times News Bureau | 12 Sep, 2018
Emerging markets India and China are driving growth in energy demand and
choosing renewables over fossil fuels. Both are already choosing solar
and wind over fossil fuels, a new report said on Tuesday.
Globally,
the rapid growth of clean technologies will see fossil fuel demand peak
in the 2020s, putting trillions at risk for unsavvy investors oblivious
to the speed of the unfolding energy transition, said the Carbon
Tracker report released here.
The report was released in the
run-up to the three-day Global Climate Action Summit here from September
12 that will see 4,000-plus business leaders, investors, citizens and
government representatives from all over the world, coming together with
the united resolve to "take ambition to the next level".
The
report says demand for coal, gas and oil is stalling because the cost of
renewables and battery storage is falling fast, emerging economies are
pursuing clean energy, and governmental policy is being driven by the
need to slash emissions, control climate change and reduce air
pollution.
It says China overtook the US as the largest deployer of solar and wind capacity in 2012 and electric cars in 2016.
Quoting
the International Energy Agency, the report says 27 per cent of
energy-demand growth in the next 25 years will come from India and 19
per cent from China.
The report, '2020 Vision: Why You Should See
Peak Fossil Fuels Coming', shows solar and wind will displace all
growth in fossil fuels globally as they continue to expand against a
backdrop of falling energy demand.
With global energy demand
expected to grow at one to 1.5 per cent and solar and wind at 15-20 per
cent a year, fossil fuel demand will peak between 2020 and 2027, most
likely 2023.
"The 2020s will be the decade of fossil fuel demand
peaks, as one bastion after another is stormed and overwhelmed by the
rising renewable tide," Carbon Tracker New Energy Strategist and report
author Kingsmill Bond said in a statement.
"This will inevitably
lead to trillions of dollars of stranded assets across the corporate
sector and hit petro-states that fail to reinvent themselves."
The
report foresees that the impact of the energy transition will be
colossal, especially fossil fuel exporting countries like Russia.
The
average global cost of solar PV electricity has fallen from $350 per
MWh in 2010 to $80 in 2018, with auction results indicating it will fall
to $50 by 2020.
In certain locations such as the Middle East and India the cost has fallen still lower.
In
October 2017, Acme solar PV won a bid for the Bhadla solar park in
Rajasthan at $36 per MWh. In May 2018, Masdar officially launched the
phase 3 of the MBR Solar Park near Dubai, with a cost of $30 per MWh.
According
to Bloomberg New Energy Finance (BNEF), the price of solar panels is
likely to fall by over 20 per cent this year to 24 cents per watt of
capacity -- and the panel industry is on a learning curve of 29 per
cent.
The peak in fossil fuel demand will have a dramatic impact
on financial markets in the 2020s. It will be supercharged by an
emerging market leapfrog. Emerging markets have all the energy demand
growth and will choose renewables over fossils as their path to
development.
China has already overtaken the US, and India will follow.
India
has just increased its 2022 target level of renewable energy deployment
from 175 GW (a level which once seemed far beyond reach) to 228 GW.
Over
the last 12 months, the cost of solar PV electricity in India has
fallen to $36 per MWh, a level well below that of new coal-fired power
stations.
India also has ambitions for all new car sales to be electric by 2030.
The
peaking of global coal demand was little anticipated by the industry,
which believed that coal demand growth would continue as India and other
emerging markets replaced China as the driver of demand.
As a result, companies built capacity for demand that never materialised.
And
the overcapacity caused price falls, which in turn caused bankruptcy or
significant share price falls in a number of major coal companies.
The
Carbon Tracker report finds the tipping point for fossil fuel demand
will come when the challenging technologies of solar and wind make up
around six per cent of total energy supply and 14 per cent of global
electricity supply -- far below levels of penetration in many countries
in Europe.
One of the factors driving the energy transition is
costs of solar PV, wind and battery storage that are falling fast and
they are now able to compete with fossil fuels without subsidies.
Costs have fallen at around 20 per cent for each doubling in capacity and this is expected to continue.
By
2020, renewables will be cheaper than fossil fuels in every major
region of the world, according to the International Renewable Energy
Agency.
Carbon Tracker says coal-fired and gas-fired power plants
in Europe and parts of the US are already being closed down because
they are uneconomic; in the last 12 months, China has halted
construction of 100GW of coal power.
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