Renewables, natural gas 'the big winners'

The IEA's 2016 World Energy Outlook suggested Wednesday that the use of renewable sources plus natural gas would increase dramatically by 2040 as a result of major transformations in the global energy system.

The report acknowledged that a detailed analysis of the pledges made for the Paris Agreement on Climate Change did not herald a speedy end to the ear of fossil fuels. But it reckoned that government policies as well as cost reduction pressures across the energy sector would lead to big leaps in the use of renewables and also to major improvements in energy efficiency over the next 25 years.

Natural gas would continue to expand its role, while the shares of coal and oil in the global energy mix would shrink, the report predicted.

"We see clear winners for the next 25 years - natural gas but especially wind and solar," IEA Executive Director Fatih Birol said in a statement. "But there is no single story about the future of global energy; in practice, government policies will determine where to go from here."

Investment decisions closely watched

Birol warned of a period of greater oil price volatility. "If oil prices rise in the short term, then shale producers can react quite quickly to put more oil on the market," he said. "But if we continue to see subdued investment in conventional oil projects, this could have profound consequences in the longer term."

The IEA report says oil demand will not go down quickly, mostly because of the lack of easy alternatives to oil in road freight operations, aviation and petrochemicals.

"Renewables will make very large strides in coming decades, but their gains remain largely confined to electricity generation," Birol argued. "The next frontier for the renewables story is to expand their use in the industrial and building sectors where enormous potential for growth exists."

hg/sgb (AFP, Reuters)