Russell: Renewables and gas are gaining ground on coal and oil

The latest review of the International Energy Agency shows that renewables and gas are the most popular energy sources.

In its Global Energy Review published on Monday, the IEA described this growth rate as "faster-than-average".

Electricity, the fastest growing sector, grew 4.3% by 2024 or almost twice the average annual growth rate of the last decade.

In 2024, the IEA reported that renewable power capacity increased by 700 gigawatts. This was a record-breaking annual increase for a 22nd consecutive time. With the increase in nuclear power, 80% of global electricity came from low-emissions sources.

The IEA review has two main themes.

First, renewable energy is driving new electricity capacity.

Second, the emerging economies in Asia will determine which energy sources are most likely to grow and decline in the coming years.

The IEA reported that the global electricity generation will increase by 1,200 terawatt-hours (TWh) by 2024. Solar power is expected to grow by 480 TWh while wind power is expected to rise by 180 TWh.

The IEA also reported that hydropower grew by 190 TWh. However, this was largely due wet weather on several major markets and not to capacity additions.

China, the second largest economy in the world, dominated the addition of renewable energy capacity, accounting for more than two thirds of global renewables connected to grids. This includes 340 GW solar and 80 GW wind.

India, the most populous nation in the world, added 30 GW solar capacity last year, which is triple the increase of the year before.

China's rapid progress in renewable energy is evident from the fact that India's solar additions are less than 10% what China will achieve by 2024.

STEADY COAL

Ironically, China and India also drive the global demand for coal. China gets about 60% of its energy from coal and India almost three quarters.

China consumed 40% more coal in 2024 than the rest the world combined.

The coal share in the global electricity mix fell to 35% by 2024. This is the lowest percentage since the IEA's founding in 1974.

Although coal is still a major source of energy in the world, it's use has been confined to China, India and some countries in Southeast Asia, as well as some African nations, like South Africa.

The global coal market is not likely to benefit from this concentration, since the biggest consumers of coal are now also the largest producers, and they all have a policy or commitment that favors domestic sources over imports.

China and India, the two largest coal importers in the world, are both looking to increase their domestic coal use. India, however, is increasingly reliant on imported metallurgical coke for steel production.

GAS LESSONS

The IEA said that natural gas demand would reach a record high in 2024, increasing 2.7% to 115 billion cubic meters, reversing the 1% rate of growth between 2019 and 2023.

The main growth driver is Asia. Heatwaves in China and the use of LNG trucks are driving the market.

The IEA warns that the growth rate in China of over 7% for 2024 was built in the first half of the year and the demand went negative in the final two months.

The Chinese appetite for LNG was curbed by higher LNG spot prices at the end of last year.

This shows that Asia is keen to increase its LNG consumption, but will only do so at a competitive price. Therefore, LNG producers are forced to choose between a strong price or volume growth.

The IEA's report shows that crude oil is the biggest loser. Demand for crude oil will only rise by 0.8% per year in 2024 and this growth will be driven primarily by the petrochemical industry.

The decline in oil demand is largely structural due to the shift towards electric vehicles in China and other countries, the growth of LNG trucks, and the increase in high-speed rail intercity transport.

The IEA report will be cited by those who support fossil fuels to show that demand for these fuels is still increasing.

Renewables are growing faster and gaining more penetration in fast-growing areas around the world.

These are the views of the columnist, who is also an author. Edwina Gibbs edited this article

(source: Reuters)