As fossils dominate, more transition spending needed
Fossil fuels like coal and natural gas will dominate the global energy landscape for years, showing the need to invest now in clean energy technologies such as CCS, leaders said at a virtual forum April 28.
Members of OPEC, the International Energy Agency (IEA) and the International Energy Forum (IEF) met virtually for their fifth regular symposium on markets for coal and natural gas.
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Joe McMonigle, the head of the IEF, said the world economy is indeed transitioning to cleaner energy options, though fossil fuels remain prevalent. Global coal use, he said, is expected to see a 5% increase in the global power sector from 2020, after falling off last year by about 4% from 2019 levels.
Natural gas, meanwhile, saw a 2% decrease in 2020 from the previous year, but is set to accelerate by 3% this year, with most of that coming from the expanding and emerging economies in Asia.
But the global economy is transitioning, he said. More cross-sector utilisation of LNG and the switch from coal to gas suggests natural gas could play a more dominant role in the energy transition. Natural gas, McGonigle added, could serve as a bridge to a cleaner future, particularly for economies outside the Organisation for Economic Co-operation and Development.
Short-term, however, the move away from coal is slowing down, at least in some developed economies. In its market report for April, the US Energy Information Administration said gas actually fades from the electric power sector because of elevated market prices. Natural gas is expected to account for 35% of the nation-wide share of power by 2022, down from the 39% recorded in 2020.
And while OPEC and its allies continue to work to bring stability to the energy market by way of oil production restraint, OPEC secretary general Mohammed Barkindo said the energy market is changing.
“At OPEC, we believe that the scale of the challenges that the energy transition presents will require us to utilise all available energies,” he said. “We must seek out cleaner and more efficient technological solutions, such as carbon capture utilisation and storage, while promoting the circular carbon economy, as means to improve overall environmental performance.”
The IEA warned as recently as December that CCS and related technology need to be deployed at a much faster pace for countries to meet their climate goals. It can handle emissions from many industries and can be used to make natural gas-derived hydrogen clean.
Nevertheless, forum participants noted that hydrocarbons will continue to play a dominant role in the global energy mix, meaning the international community needs to focus on rapidly advancing clean energy investments to alleviate climate risks.