In Part II of our Bloomberg 360: Energy roundtable, Eric asks the panels about the global energy realities and climate change (View Part I here). Fossil fuels account for over 80% of the total global energy mix today, just as they did 25 years ago. And in the next 25 years, as economic growth and expanding populations in developing countries drive a rise in global energy demand, the International Energy Agency estimates that 75% of that demand will still be met by oil, gas and coal. The sheer scale of the existing asset base, $544 billion in annual fossil fuel subsidies, sometime misguided clean energy regulation, the challenges of acting across national borders, and a whole host of other factors have all contributed to our continued addiction to fossil fuels.
Fossil fuel combustion accounts for about 65% of the anthropogenic greenhouse gas emissions that the Intergovernmental Panel on Climate Change says are highly likely to be causing observed warming of the atmosphere and oceans. If IEA estimates of the 2040 energy mix prove correct, the planet is likely on track to warm well beyond the 2 degree ceiling thought needed to avoid the most serious effects of global warming.
Ironically, a warming climate will, in turn, create critical risks for the energy sector. Decreased water availability will impact cooling at power plants; coastal energy infrastructure is vulnerable to higher sea levels, storm surges and flooding; distribution systems are at risk of physical damage from more frequent and intense weather events; higher temperatures and heat waves will bring more demand for air conditioning; all told, the risks of blackouts and brownouts will rise.
Disrupting this trajectory is a formidable challenge, but there is convincing evidence that it can be done. More than 40% of the cuts needed to contain greenhouse gas emissions to safe levels could come from energy efficiency alone according to the International Energy Agency. Here, industry has been leading the way – over 1200 public companies with resource use data in Bloomberg cut median energy consumption per $ revenue generated by 22% from 2008 to 2012.
Yet under current government initiatives, investment in efficiency through 2035 is projected to be just one-third of what is currently economically viable.
Renewable energy adoption has also been limited by regulation that has stifled competition and kept prices unnecessarily high, according to Bloomberg New Energy Finance. In the right circumstances, wind, solar, geothermal, waste-to-energy and a number of other clean energy technologies can be cost competitive with fossil fuels. Better interconnectivity of the grid and improvements in power storage could help renewables take a much larger share of the future energy mix.
The energy holy grail, as envisaged by Bloomberg New Energy Finance, is a digitally-controlled smart grid which will provide the ability to seamlessly shift demand to match supply, realizing the potential for both efficiencies and renewables. Just as data is enabling more informed decision making in many other industries, so it has the power to transform the way we consume energy and limit the environmental impacts of our consumption. The technology and the vision exist; combined with policy that unleashes competitive activity and disruptive business partners to deliver on the potential, today’s global energy realities and climate change fears have the potential to be entirely re-written. –Barbara Pomfret, ESG Analyst, Bloomberg BI
Barbara explains how the environmental hurdles will be a significant challenge in Europe.
Eric Roston asks the panelists if the US will begin to export coal as national demand decreases.
About Bloomberg 360
Ahead of the Bloomberg New Energy Finance summit beginning April 7th, we have pulled together a panel of Bloomberg’s energy experts, to discuss some of these issues. On this version of Bloomberg 360: Energy, Eric Roston (@eroston), Bloomberg Sustainability Editor sits down with Rob Barnett ( @barnettenergy), Bloomberg Government’s Senior Energy Economist, Barbara Pomfret, Bloomberg Industries’ Environment Social & Governance Analyst, and Ethan Zindler (@ethanall), Bloomberg New Energy Finance Head of Americas.
Join the conversation on Twitter: #BNEF2014.