The world energy demand will record a 25 per cent spike by 2040; this will require more than $2 trillion a year investment to meet, a publication by the International Energy Agency has revealed.
According to the scenario-based analysis publication dubbed World Energy Outlook 2018 that outlines different possible futures for the energy system; the world’s oil consumption will grow in future decades due to rising petrochemicals, trucking and aviation demand but meeting the surge will require conventional oil projects double their current production levels.
Similarly, the report indicates that the use of renewable energy will increase worldwide by 40 per cent in 2040 up from 25 per cent in 2018 as a result of falling costs and supportive government policies. Renewable energy will also constitute two-thirds of global energy additions by the year 2040.
Furthermore, electricity markets will undergo a unique transformation by 2040 with higher demand brought about by the digital economy, use of electric vehicles and other technological innovations.
The report also states that governments will have a critical role to play in determining the direction future energy systems take.
“Our analysis shows that over 70 per cent of global energy investments will be government-driven and as such the message is clear – the world’s energy destiny lies with government decisions,” said Dr Fatih Birol, the IEA’s Executive Director in the publication.
“Crafting the right policies and proper incentives will be critical to meeting our common goals of securing energy supplies, reducing carbon emissions, improving air quality in urban centers, and expanding basic access to energy in Africa and elsewhere.”
The report however cautions that the increased change will bring with it a new set of challenges that policy makers will need to address.
“With higher variability in supplies, power systems will need to make flexibility the cornerstone of future electricity markets in order to keep the lights on. The issue is of growing urgency as countries around the world are quickly ramping up their share of solar PV and wind will require market reforms, grid investments, as well as improving demand-response technologies, such as smart meters and battery storage technologies,” the report says.