In 25 years, more than half of the world’s energy-generating capacity will come from zero-emission sources and renewables will generate twice as much power, but atmospheric concentrations of carbon dioxide will likely still push the world past the ubiquitous 2-degree-Celsius goal, according to analysis released today by Bloomberg New Energy Finance (BNEF).
The BNEF report, whose authors assumed "renewables globally will see no further policy support" after 2018, beyond subsides for offshore wind installations, does not consider long-term implications from U.S. EPA’s Clean Power Plan.
Nonetheless, the U.S. energy market will look dramatically different just five years from now, with natural gas facilities, buoyed by low wholesale fuel prices and the phasing out of coal-fired power plants, making up 90 percent of new construction, the report reads.
Global markets will see $12.2 trillion worth of new investment to finance power-generation infrastructure — more than the gross domestic product of China in 2013 — through 2040, with 78 percent of that growth coming from the developing world. Renewable energy sources will attract two-thirds of that money in the next 25 years, the BNEF report found, with coal, natural gas and nuclear sources taking in more than $1 trillion apiece.
Despite the renewable surge, fossil fuels will account for 44 percent of generation capacity worldwide in 2040, a drop from about two-thirds in 2014, and CO2 emissions will tick up 13 percent by 2040 in the same period.
"We will see tremendous progress towards a decarbonised power system," said Michael Liebreich, chairman of the advisory board at BNEF, in a statement.
Coal remains a big power source without further regulations
"Despite this, coal will continue to play a big part in world power, with emissions continuing to rise for another decade and a half, unless further radical policy action is taken," he said.
Emissions from energy generation worldwide will peak in 2029, with many economies opting to double down on solar and coal power, analysts concluded.
In April, Royal Dutch Shell PLC announced a $70 billion offer for BG Group, a British oil and gas firm, which the companies have said will close early next year.
The deal, to which the U.S. Federal Trade Commission gave initial antitrust approval last week, would combine the world’s two largest liquefied natural gas producers. If today’s BNEF report proves accurate, however, the merged energy giant may not have clear markets to tap into.
Markets will add about 1,400 gigawatts’ worth of natural gas capacity — out of roughly 14,000 GW in total for new capacity of all energy types from 2014 to 2040 — with the vast majority (86 percent) coming in developing countries.
"Its role as a ‘transitional fuel’ looks more and more doubtful outside the US where the shale gas revolution and environmental regulations seem set to push coal out of the market," the executive summary reads.
Emerging markets will experience a power infrastructure glut, according to BNEF, with developing nations building close to three times as much new capacity as developed nations. Through 2040, China alone will have taken in $3.3 trillion in new energy financing, double that of the Americas.
And coal and utility-scale photovoltaic market penetration "will be neck and neck for additions as power-hungry countries use their low-cost domestic fossil-fuel reserves in the absence of strict pollution regulations," the report reads.
"The CO2 content of the atmosphere is on course to exceed 450 parts per million by 2035 even if emissions stay constant," Seb Henbest, the report’s lead author, said in a statement. "So the trend we show of rising emissions to 2029 makes it very unlikely that the world will be able to limit temperature increases to less than two degrees Centigrade."
