NEF - Energy round-up: Writing on the wall for fossil fuels?
16 Jun 2014 12:59 PM
Blog posted by: SIMONE OSBORN , CO-EDITOR, ENERGY CRUNCH (JUNE
13, 2014).
Three things you shouldn't miss this
week
- Chart: Mapping the US carbon cap -
necessary emission reductions for existing power plants broken down by
state:
Sour
ce: SNL
- Article: Solar to match coal in China by 2016,
threatening fossil dominance - Wuxi Suntech Power expects the cost of
electricity from solar modules match to coal-powered stations in China as soon
as 2016.
- Commentary: The Global Energy Market’s Moment of
Truth - this is not a temporary market blip but a fundamental
shift.
Is
the writing finally on the wall for fossil fuels? In the last fortnight
we’ve seen new rules on coal emissions in the US, the prospect of a cap
on coal consumption in China, and a report from the International Energy Agency
(IEA) highlighting the risks to fossil fuel investment.
Though the focus of the IEA report was energy
investment, what came across was the spectre of peak oil. The agency sees the
brief US shale boom “running out of steam” in the 2020s, forcing
the world back into the arms of the Middle East where there is a risk that
“investment fails to pick up in time to avert a shortfall in
supply”. The numbers show the oil and gas industry sprinting to stand
still: “More than 80% of the cumulative $17.5 trillion in upstream oil
and gas spending is required to compensate for decline at existing oil and gas
fields.” Other analysts have shown that without the recent rise in US
output, global oil production would have stagnated already. Any interruption of
exports from Iraq – where al-Qaida-linked insurgents are advancing on
Baghdad – would drive the oil price higher.
Coal is in greater abundance and remains cheaper to
extract than oil and gas, yet the cost in terms of emissions and pollution is
extraordinarily high. The US EPA ruling that coal and gas plants must cut
CO2 emissions to 30 percent below 2005 levels by 2030 may prove
a tipping point. The US target is a long way short of what’s needed to
keep global emissions below 2oC, but it is a landmark decision.
China quickly followed suit by announcing a potential future cap on its coal
use.
There was good news too from the International Renewable
Energy Agency (IRENA), which claimed that renewables could top 30% of the
global energy mix by 2030. And the falling cost of renewables is starting to
disrupt markets, as demonstrated by Barclays’ recent downgrade of the
entire US utilities sector in the face of the solar ‘threat’. In
China, the cost of power from solar could match coal within two years,
according to one manufacturer.
Slowly but surely, it would seem the tables are
turning.