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The IEA's projection that China's coal use peaked in 2013 marks a shift away from previous projections. (Reuters: David Gray )
A dramatic shift to renewable energy is underway in
China and India, while Australia continues to lead the way on rooftop
solar, a comprehensive report analysing the global energy market has
found.
Key points:
- The report finds it's an absolute given that China's coal use peaked in 2013
- Australia should be "extremely nervous", an energy expert says
- The number of electric cars on the road doubled last year compared to 2014
The report is seen as a policy guide for governments amid rapid global change in energy markets, and this year's report focusses on renewable energy.
Institute of Energy Economics and Financial Analysis director Tim Buckley said the report reflects a big departure from previous predictions on China's coal use.
"Coal generated 84 per cent of all electricity in China in 2014, the IEA's current policy scenario forecasts that market share is going to drop down to 54 per cent in 2040," Mr Buckley said.
"Under a more aggressive policy scenario where the transition happens faster, that actually has coal dropping to 26 per cent market share by 2040, so you have coal effectively losing two-thirds of its market share in the space of just 25 years which is obviously a profound shift."
The IEA's projecting that China's coal use peaked in 2013 marks a dramatic shift away from its previous projections.
"[The IEA] now take as an absolute given that China's consumption of coal actually peaked three years ago and is now in structural decline," Mr Buckley said.
"It was only a year ago that the IEA concluded that China's consumption of coal was unlikely to peak any time prior to 2020."
'Australia is one of the most exposed countries in the world'
Mr Buckley said Australia should be "extremely nervous" because it has profound implications for our exports."Three of Australia's four biggest exports are coking coal, thermal coal and liquid natural gas," he said.
"China is one of the largest buyers of each of those products, and China's economy is clearly transforming and moving away from its reliance on those imports.
"So Australia is probably one of the most exposed countries in the world to that changing dynamic in the international traded energy market."
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Of that figure, more than 70 per cent was from hydropower and 17 per cent was from variable renewables.
"China and the European Union are the leaders today in terms of total renewables-based electricity generation," the report states."While the likes of Iceland, Norway, Brazil, Canada, Austria and Sweden are in a league of their own when it comes to the share of electricity generated from renewable sources."
What will happen when the Hazelwood power plant shuts down?
The closure will have wide-ranging consequences for Victoria and beyond
Mr Buckley said the take home message for Australia was that the "grid transformation" was happening faster than ever expected.
"It's driven by technology, investment and policy and we need the government to create a policy framework that enables the tens of billions of dollars of investment that Australia can look forward to, and then hundreds of thousands of jobs that will result in the new economy as we move," he said.
The IEA warned that renewable energy is growing quickly, partly due to the expansion of wind and solar developments, grid infrastructure must also be heavily invested in.
"But there is also a risk, if the power system is not well designed to integrate a rising share of wind and solar, that the energy transition could become less efficient and more expensive as a result," the IEA said.
Rise of electric cars
The report took stock of electric cars across the globe, which it says reached 1.3 million in 2015, almost doubling 2014 levels.Looking to the future
With continued questions about the future of the Hazelwood power station, the next generation has its eyes set on renewable energy.
"In our main scenario, this figure rises to more than 30 million by 2025 and exceeds 150 million in 2040, reducing 2040 oil demand by around 1.3 million barrels per day.
"Although battery costs continue to fall, supportive policies — which are far from universal for the moment — are still critical to encourage more consumers to choose electric over conventional vehicles.
"If these policies, including tighter fuel economy and emissions regulations as well as financial incentives, become stronger and more widespread, as they do in the 450 Scenario, the effect is to have some 715 million electric cars on the road by 2040, displacing 6 million barrels per day of oil demand."
The IEA says Australia and Belgium are leading the way on rooftop solar.
"Rapid cost reductions for some power technologies (together with supportive policies) have underpinned the major expansion of the market for renewables-based generation. Many electricity retailers or utilities are also becoming more positive towards distributed generation, notably rooftop PV," the report says.
"To date, markets such as Australia and Belgium have seen among the highest rates of rooftop solar PV adoption in homes."
More than 1.6 million houses now have rooftop solar in Australia, and the IEA says the market can expect a wholesale revolution in battery storage.
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