A transformation in the way the world uses energy has a long way to go to adhere to an emerging global energy economy, according to the International Energy Agency (IEA).
The IEA’s World Energy Outlook report released earlier this month found that renewable energy in the form of wind and solar photo-voltaic (PV) continued to grow rapidly even as the world reeled from the impacts of COVID-19.
The report said the new energy economy would be more electrified, efficient, interconnected and clean.
“Its emergence is the product of a virtuous circle of policy action and technology innovation, and its momentum is now sustained by lower costs,” the report said.
“In most markets, solar PV or wind now represents the cheapest available source of new electricity generation.
“Clean energy technology is becoming a major new area for investment and employment – and a dynamic arena for international collaboration and competition.”
However, with the emergence of renewable energy also came a resurgence of coal and oil use as the global energy system became strained.
According to the report, these strains on the system were unlikely to relent in the coming decades and a low emissions revolution was long overdue.
“The energy sector is responsible for almost three-quarters of the emissions that have already pushed global average temperatures 1.1 degrees higher since the pre-industrial age,” it said.
“The energy sector has to be at the heart of the solution to climate change.”
The report said electricity was taking on a central role in the lives of consumers and promised to become the energy source which most households relied on for all their everyday needs.
It said electricity’s share of the world’s consumption of energy now stands at 20 per cent.
However, with this rise came increased variability on both demand and supply of the energy.
“The variability of electricity supply will be affected by rising shares of wind and solar PV, putting a huge premium on robust grids and other sources of supply flexibility,”
the report said.
“The variability of demand will be shaped by an increasing in the deployment of heat pumps and air conditioners and could be exacerbated by poorly sequenced recharging of electric vehicle fleets or by cold snaps, heat waves or other extreme weather events.
“Without effective policies to prepare for and manage these fluctuations, the daily variation of demand could increase.”
At the AFR Energy and Climate summit, Federal Energy and Emissions Reduction Minister Angus Taylor said that terrible stories of human suffering were buried under the mountain of statistics around energy supply crises.
Mr Taylor said that in the UK, reliance on gas imports, constrained gas supplies and a prolonged wind drought plunged the country into an extraordinary crisis which saw people forced to ask the question of whether to heat or eat.
Australia was not immune, with 2021 marking five years since South Australia was plunged into a state-wide electricity blackout, leaving 850,000 customers without power, some for nearly two weeks, and a loss of $387 million due to business disruptions.
“We are determined that these problems and this suffering not be repeated,” Mr Taylor said.
“Accountability in energy policy means keeping the interests and wellbeing of consumers and the Australian people front and centre in everything you do.”
He said that taking a starry-eyed approach to the challenge of energy security, such as the integration of Australia’s record level of renewables investment, would be a betrayal of the Australian people.
“If we are going to reach the amount of on-demand, dispatchable power called for by the Australian Energy Market Operator, we have to get the market settings right,” he said.
“Our focus on Australian consumers is likewise evident in our support for gas as a key transition fuel.”
Mr Taylor mentioned the manufacturing sector’s dependence on gas, given it makes up 42 per cent of the sector’s total energy use.
“The sector needs reliable and affordable energy to continue its growth, and gas plays this role,” he said.
“Under our government, the manufacturing sector has grown to numbers not seen in more than a decade.
“Despite the impacts of COVID-19, there are now 80,000 more jobs in manufacturing than at the start of the pandemic.
“This is why our gas-fired recovery is so critical. It is a key enabler of our sovereign capabilities and growth.”
According to Mr Taylor, investment in abatement technology rather than a focus on taxes would reduce emissions without imposing new costs on households, businesses or the economy.
“To deliver through technology, we need to get more horses in the race and bring a portfolio of technologies to commercial parity with higher emitting alternatives.”
While solar still played a major role, Mr Taylor said Australia would also need offsetting technologies such as CCUS, blue hydrogen and healthy soil technologies.