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Renewables to surpass natural gas by 2016? IEA report does not make sense

July 3, 2013

The IEA has gathered a lot of attention since the release last week of its Medium Term Renewable Energy Market Report (MTRMR).  The report claims that global “(p)ower generation from hydro, wind, solar and other renewable sources worldwide will exceed that from gas and be twice that from nuclear by 2016.”

This is somewhat in conflict with the IEA’s own annual energy outlook report for 2012, released last November.   That detailed document examines the energy outlook from not one, but four alternative scenarios:  The Current Policies Scenario, The New Policies Scenario, the 450 Scenario, and the Efficient World Scenario.  Outlines of these scenarios are:

The Current Policies Scenario is based on the perpetuation, without change, of the government policies and measures that had been enacted by mid-2012.

The New Policies Scenario – our central scenario – takes into account broad policy commitments and plans that have already been implemented to address energy-related challenges as well as those that have been announced, even where the specific measures to implement these commitments have yet to be introduced. It assumes only cautious implementation of current commitments and plans.

 The 450 Scenario sets out an energy pathway that is consistent with a 50% chance of meeting the goal of limiting the increase in average global temperature to 2 °C compared with pre-industrial levels. For the period to 2020, the 450 Scenario assumes more vigorous policy action to implement fully the Cancun Agreements than is assumed in the New Policies Scenario. After 2020, OECD countries and other major economies are assumed to set economy-wide emissions targets for 2035 and beyond to collectively ensure an emissions trajectory consistent with stabilisation of the greenhouse-gas concentration at 450 parts per million.

 The Efficient World Scenario, which has been developed especially for WEO-2012,is based on thecore assumption that policies are put in place to allow the market to realise the potential of all known energy efficiency measures which are economically viable.

Judging by the actual actions of the various national governments around the world, the assumptions embodied in either the 450  or the Efficient World Scenarios are unlikely to be met.  Indeed, many of the assumptions in the New Policies Scenario are questionable.    And, under the New Policies Scenario, the claimed dominance of renewables is not even seen in 2035, let alone nearly two decades earlier:

fuel shares 2035

In the slideshow presentation that accompanied the release of the MTRMR, Maria van der Hoeven, executive director of the IEA, made it clear that the analysis was based on using the 450 Scenario (referenced as the IEA 2 degree C scenario).  Putting aside the unrealistic chances that the Scenario policy assumptions will be met over the next three years, it seems to ignore the Shale Revolution that is driving the cost of natural gas down and providing vast quantities to the market.  Indeed, President Obama’s own Climate Policy released last week relies heavily on the use of natural gas, which creates precisely the opposite policy environment needed for the 450 Scenario assumptions to be met.

 

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