Renewables are not expanding quickly enough to meet the global electricity demand. In fact, renewables only meet around 50% of power requirements in 2021. Unfortunately, fossil fuels, notably coal, have to satisfy the remaining half. Consequently, the power sector is set to produce record levels of CO2 next year, severely threatening global emission targets.
Global electricity demand is too high
In 2020, electricity demand fell by roughly 1%, impacted mainly by the global Covid 19 pandemic. However, the rebound effect in the years ahead will cause a rise in carbon dioxide emissions to record highs in 2021 and 2022, where expected electricity demand growth is 5 and 4 per cent, respectively.
According to the IEA, we will see the majority of this increase in demand in South East Asia, primarily in China and India. China is the world’s biggest electricity consumer, India the third largest.
Renewable electricity generation grows continuously
Renewable energy generating technologies grew by 7% in 2020, and are set to grow even faster in 2021. The forecasted increase of 8% in 2021 and 6% in 2022 in renewable electricity generation is however still not enough to cover our global increase in electricity demand. In order to be able to cover this rise in demand, renewables would need to grow at twice the current rate, and that is only to cover the additional demand.
If we were to substitute current fossil fuel production with renewables and meet our climate goals, growth rates would need to be equivalent to adding the entire US power sector every third year.
Fossil fuel growth rates
Fossil fuels will cover 45% of additional electricity demand in 2021 and 40% in 2022, whereas coal fired electricity generation is growing almost 5 and 3 percent respectively in the years ahead. On top, gas-fired generation is expected to grow 1 per cent and 2 per cent until 2022.
There is no doubt that these statistics are concerning! Unfortunately, this is the reality if we are not able to reduce electricity demand or speed up the deployment of renewable technologies.
For those wondering what is happening with nuclear power, it is set to be phased-out by 2030 in Belgium, Germany, Spain, and Switzerland. Italy has already closed all of its functioning nuclear plants as of 2020. Nevertheless, electricity sourced from nuclear power stations will grow 1% in 2021 and even 2% in 2022.
The below graph summarizes global changes in electricity generation between 2015 and 2022
Increasing electricity demand increases CO2 emissions
With fossil-based electricity generation increasing, carbon emissions are increasing as well. After declining in 2019 and 2020 (1% & 3.5% respectively), carbon emissions will reach all-time highs by 2022.
This is not the way to achieve carbon neutrality in the years ahead. In fact, we are moving further and further away from achieving our climate goals, at least within the power sector, whose emissions are attributable to around 70% of all emissions.
How to reach climate goals?
Unsurprisingly, according to the IEA, there are a number of changes required. We have identified those that are the most urgent and tangible.
Most importantly, we need stronger policy measures, forcing coal-fired power plants to shut down and enable renewables to grow at a faster pace. Therefore, given the goal of reducing CO2 emissions, nuclear power plants cannot shut down; quite the opposite, they need to expand in capacity to also cover the ever-increasing demand due to an expanding share for EVs.
Further, wholesale electricity prices would need to increase, especially compared to 2020 levels, where prices were 35% lower than in the same month in 2021. As we know, variations in fossil fuel prices caused this volatility in electricity prices.
We have already written multiple times about this last point we highlight here, but it is definitely one of the most important ones! Electricity systems need to become more flexible to complement the increasing impact of variable energy sources. This is especially true for solar PV and wind.
Check out some of our following posts to this topic:
However, the primary message is this: it is simply not enough to rely on others to address these issues. We all need to reduce our carbon emissions, optimize and reduce our energy and electricity usage. Further, we need to actively address climate change in order to achieve our climate goals.