Tuesday, June 14, 2016

Coal and Gas to Begin ‘Terminal Decline’ in Less than a Decade, Bloomberg Says - by Joe Romm

Wind and Solar (Credit: Shutterstock) Click to Enlarge.
A stunning new forecast on “peak fossil fuels for electricity” by Bloomberg New Energy Finance (BNEF) concludes that “coal and gas will begin their terminal decline in less than a decade.”

It’s been clear for a while that coal demand is plateauing, if it hasn’t already peaked.  But BNEF explains that of the “eight massive shifts coming soon to power markets,” #1 is “There Will Be No Golden Age of Gas.”

Here is the core finding of BNEF’s “annual long-term view of how the world’s power markets will evolve in the future,” their New Energy Outlook (NEO):
Cheaper coal and cheaper gas will not derail the transformation and decarbonisation of the world’s power systems.  By 2040, zero-emission energy sources will make up 60% of installed capacity.  Wind and solar will account for 64% of the 8.6TW [1 Terawatt = 1,000 Gigawatts] of new power generating capacity added worldwide over the next 25 years, and for almost 60% of the $11.4 trillion invested.
These conclusions may come as a surprise to the vast majority of U.S. policy- and opinion-makers, but all the way back in November the International Energy Agency came to a similar conclusion:  “Driven by continued policy support, renewables account for half of additional global generation, overtaking coal around 2030 to become the largest power source.”
Solar and Wind Prices Plummet
In a section headlined, “Solar and Wind Prices Plummet,” BNEF says “The chart below is arguably the most important chart in energy markets.  It describes a pattern so consistent, and so powerful, that industries set their clocks by it.”

(Credit: BNEF) Click to Enlarge.
“Wind-power prices are also falling fast — 19 percent for every doubling,” explains BNEF.  They project that over the next quarter-century, dropping prices and improving performance (see below) will drive the world to a stunning $3.4 trillion investment in solar, and $3.1 trillion for wind — and both of those exceed the cumulative investment of $2.1 trillion projected for all fossil fuels through 2040.  BNEF expects an investment in new hydropower of some $900 billion through 2040, and an investment of about $1.1 trillion in new nuclear.

The result of these investments and the continued learning by solar and wind means make “these two technologies the cheapest ways of producing electricity in many countries during the 2020s and in most of the world in the 2030s.”

Significantly, the $7.8 trillion investment in renewables and ongoing price drops are all just what BNEF expects to happen on our current path.  It’s “business as usual.”  It does not assume the world embraces the policies needed to drive the investments necessary to stabilize below the 2°C (3.6°F), as the nations of the world have unanimously agreed to do in Paris last December.  In the below-2 degrees Celsius scenario, “the world would need to invest another $5.3 trillion in zero-carbon power by 2040.”

Also, given how increasingly cost competitive solar and wind are on their own over the next decade or two, the trend to put a price on carbon in a growing number of countries around the world means that, for those nations, renewables will be competitive even sooner.

Read more at Coal and Gas to Begin ‘Terminal Decline’ in Less than a Decade, Bloomberg Says

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