The Drivers of the Global Energy Mix

Several factors influence how much energy is used around the world. Policy, technology, and consumer preferences are all drivers of energy use. These factors influence each other and are interrelated, and the dynamics are constantly in flux.

Natural gas

There is no question that natural gas will play a more prominent role in the global energy mix over the next few decades, thanks to a growing resource base and relatively low carbon emissions. According to the IRENA PES, the world’s total natural gas demand will rise by 51 tcf by 2040, exceeding the growth rate of the past decade. However, this increase will be slower than expected in the US EIA Reference scenario, based on higher coal use projections and slower natural gas growth in the power sector.

Demand for natural gas will grow faster than any other primary energy source. With two-thirds of the increase coming from electricity generation, the remainder going to industrial and residential uses. Meanwhile, natural gas is increasingly used for heating, a trend that will only accelerate as it becomes more prevalent as a cleaner alternative to coal. In the Asia Pacific, gas demand will double, but coal will continue to play a significant role. However, despite its rapid growth, gas still has a long way to go to replace coal.

Coal

The ICSC TCP provides independent information on coal-related trends. It balances the security of supply, affordability, and environmental concerns. The topics include coal’s potential to reduce greenhouse gas emissions, improve efficiency, reduce water stress, and promote socially-led goals. Developed and developing countries, including China, the U.S., and India, have different energy mixes, but both share a common goal of producing enough energy to meet growing global demand.

Between 1990 and 2020, coal’s share of primary energy production nearly quadrupled. However, demand for coal dropped in all scenarios, except for the High Economic Growth scenario. Under the Low Economic Growth scenario, coal’s share of energy fell by two-thirds, while the high-growth scenario saw it rise to 56 percent. By 2021, coal will account for 36% of the world’s electricity. Despite its decline, it is still the most significant contributor to global energy consumption.

Coal continues to dominate the global electricity generation industry, with China accounting for nearly half of the world’s total. However, coal’s role in power generation will diminish under all scenarios, including the Ambitious Climate scenario. But coal’s role in the power sector remains significant, even as more countries begin deploying renewable energy, including solar and wind.

The growth of coal use was responsible for almost half of the overall increase in CO2 emissions in 2021, despite its lower share in the energy mix. China increased its use of coal by 330 TWh and accounted for nearly half of the increase. In addition, China had the highest share of industry in the global economy, and the emissions intensity of GDP was higher than average across major economies.

Nuclear

Nuclear energy is far from limited to electricity generation, and it can be used in desalination and hydrogen production, space heating, and industrial processes. In addition, nuclear energy can remove carbon from CO2 and combine it with hydrogen to form synthetic liquid fuels. The technology can also be used in remote locations that do not have an electric grid, and these applications all work well in tandem with electricity production.

However, there are significant challenges to its use as a global energy source. For example, many nuclear-weapons states are reluctant to build nuclear power plants, which cost hundreds of billions of dollars. On the other hand, renewable energy technologies are still in their infancy and are cheaper to develop and regulate. It is difficult to predict whether nuclear energy will become the predominant power source in the global energy mix in the coming decades. Still, there are some promising signs that it will be a vital part of the energy mix in the future.

Aside from providing carbon-free electricity, nuclear energy also provides power for space exploration. In addition to powering space exploration, nuclear energy also sterilizes medical equipment, provides potable water through desalination, and supplies radioisotopes for cancer treatment. By 2030, over 50 new nuclear reactors are planned for construction. Furthermore, the U.S. and China are pursuing a move away from fossil fuels and toward cleaner energy sources.

Wind and solar

In 2020, wind and solar will make up about 10% of the world’s electricity supply. However, overall emissions are expected to rise. Power demand rallied after successive coronavirus-driven lockdowns, driving a rise in coal power generation. However, renewable energy will still contribute to a lower global carbon footprint. 

Renewable energy is mainly variable, meaning that its output is highly dependent on wind speed and sunlight. These renewables cannot be directly tied to peak power demand, and this puts added costs on generating systems, such as adequacy and balancing costs. As a result, wind and solar have limited potential to displace baseload generators worldwide. 

Renewable energy resources are not easily transported, and they are typically located far from load centers, which can increase the costs of connection. The growing demand for energy in developing nations forces policymakers to focus on clean energy investments. A global policy on renewable energy can go a long way to ensuring a reliable energy supply. 

Electricity generation

The energy mix refers to the primary energy resources used in a region. While fossil fuels heavily dominate the energy mix in the United States, it varies across the world. For example, coal makes up almost 60% of the energy mix in India and China, two of the fastest-growing economies. While these countries have ambitious plans to use renewable energy, coal still dominates the mix. However, the rapid growth of these economies makes it difficult to decrease the use of coal.

The IRENA study found that coal is the most prevalent source of electricity in the world. While coal usage remains a large proportion of the power mix under all scenarios, it falls sharply from more than 100 percent in the IRENA 1.5C scenario. In most more aggressive climate scenarios, coal use drops below 40 percent, and the energy mix is entirely decarbonized. Coal is still a significant source of electricity, but its share will be more than doubled by 2050.

The IRENA report expands the roadmap to include more renewables and more electrification. It also highlights cost-effective alternatives that can help the world reach its climate goals by 2050. It shows that a combination of renewables and electrification will help limit the rise in global temperatures, reduce net costs, and provide significant socio-economic benefits. Whether it’s a wind turbine or solar panel, the IRENA report outlines some of the options available and how they will fit into the global energy mix.