INDUSTRY REPORT
Image : Shutterstock . com .
In the first half of 2022 , according to the IEA , average natural gas prices in Europe were four times as high as in the same period in 2021 while coal prices were more than three times as high
tightness ” in markets and driving up prices at exactly the same time as tensions were rising over Ukraine .
Following Russia ’ s attack on Ukraine in February , the IEA has responded rapidly with vital analysis , policy advice and support for governments , including the 10-Point Plan to “ Reduce the European Union ’ s Reliance on Russian Natural Gas ” that was published a week after the invasion .
“ Renewable power generation is growing faster than overall demand in 2022 , leading to a slight decline in global power sector CO₂ emissions , despite the rising coal use in Europe amid gas crisis ,” said the IEA .
The world ’ s electricity demand growth is slowing sharply in 2022 from its strong recovery the previous year as economic growth weakens and energy prices soar following Russia ’ s invasion of Ukraine , according to the IEA ’ s latest Electricity Market Report .
“ Global electricity demand is expected to grow by 2.4 % in 2022 after last year ’ s 6 % increase , bringing it in line with its average growth rate over the five years prior to the COVID-19 pandemic ,” the new report says . “ While electricity demand is currently expected to continue on a similar growth path into 2023 , the outlook is clouded by economic turbulence and uncertainty over how fuel prices could impact the generation mix .
“ Strong capacity additions are set to push up global renewable power generation by more than 10 % in 2022 , displacing some fossil fuel generation . Despite nuclear ’ s 3 % decline , low-carbon generation is set to rise by 7 % overall , leading to a 1 % drop in total fossil fuel-based generation . As a result , carbon dioxide ( CO₂ ) emissions from the global electricity sector are set to decline in 2022 from the all-time high they reached in 2021 , albeit by less than 1 %,” it added .
In the first half of 2022 , according to the IEA , average natural gas prices in Europe were four times as high as in the same period in 2021 while coal prices were more than three times as high , resulting in wholesale electricity prices more than tripling in many markets . The IEA ’ s price index for major global electricity wholesale markets reached levels that were twice the first-half average of the 2016-2021 period .
Due to high gas prices and supply constraints , coal is replacing
Image : Shutterstock . com . natural gas for power generation in markets with spare coal plant capacity , particularly in European countries seeking to end their reliance on Russian gas imports . To secure energy supplies following Russia ’ s invasion of Ukraine , some European countries have delayed coal phaseout plans and lifted previously imposed restrictions on coal .
Globally , coal use for power is expected to increase slightly in 2022 as growth in Europe is balanced by contractions in China , due to strong renewables ’ growth and only a modest rise in electricity demand , and the United States , due to constraints on supply and coal power plant capacity . Gas power is expected to fall by 2.6 % as declines in Europe and South America outweigh growth in North America and the Middle East .
“ The world is in the midst of the first truly global energy crisis , triggered by Russia ’ s invasion of Ukraine , and the electricity sector is one of the most heavily affected ,” said IEA Director of Energy Markets and Security , Keisuke Sadamori . “ This is especially evident in Europe , which is experiencing severe energy market turmoil , and in emerging and developing economies , where supply disruptions and soaring fuel prices are putting huge strains on fragile power systems and resulting in blackouts . Governments are having to resort to emergency measures to tackle the immediate challenges , but they also need to focus on accelerating investment in clean energy transitions as the most effective lasting response to the current crisis .”
Record level of clean energy spending
Driven by renewables and energy efficiency – as well as rising costs – today ’ s levels of capital spending are still far from sufficient to tackle the energy and climate crises .
Global energy investment is set to increase by 8 % in 2022 to reach US $ 2.4 trillion , with the anticipated rise coming mainly in clean energy , according to a new report by the International Energy Agency . Although encouraging , the growth investment is still far from enough to tackle the multiple dimensions of today ’ s energy crisis and pave the way towards a cleaner and more secure energy future , added the IEA .
The fastest growth in energy investment is coming from the power sector – mainly in renewables and grids – and from energy efficiency , according to the IEA ’ s World Energy Investment 2022 report . The rise in clean energy spending is not evenly spread , however , with most of it taking place in advanced economies and China . And in some markets , energy security concerns and high prices are prompting higher investment in fossil fuel supplies , most notably on coal .
“ We cannot afford to ignore either today ’ s global energy crisis or the climate crisis , but the good news is that we do not need to choose between them – we can tackle both at the same time ,” said IEA Executive Director , Fatih Birol . “ A massive surge in investment to