IEA electricity report july 2021_cover_cabecera

World electricity demand outpaces renewables driving strong push in fossil fuels generation and greenhouse gas emissions, IEA warns

Renewables are expanding quickly but not enough to satisfy a strong rebound in global electricity demand this year, resulting in a sharp rise in the use of coal power that risks pushing carbon dioxide emissions from the electricity sector to record levels next year, says a new report from the International Energy Agency (IEA).

IEA electricity report july 2021_china hike in demand and energy mix

According to the latest edition of the IEA’s semi-annual Electricity Market Report released today, after falling by about 1% in 2020 due to the impacts of the Covid-19 pandemic, global electricity demand is set to grow by close to 5% in 2021 and 4% in 2022 driven by the global economic recovery and the majority of the increase in electric power demand is expected to come from the Asia Pacific region, primarily China and India.

IEA electricity report july 2021_India coal fired electric power generation

“Renewable power is growing impressively in many parts of the world, but it still isn’t where it needs to be to put us on a path to reaching net-zero emissions by mid-century,” said Keisuke Sadamori, the IEA Director of Energy Markets and Security. “As the economy rebounds after the pandemic, we’ve seen a surge in electrical generation from fossil fuels. To shift to a sustainable trajectory, we need to massively step up investment in clean energy technologies, especially renewables and energy efficiency.”

Fossil fuel-based electricity generation is set to cover 45% of additional demand in 2021 and 40% in 2022

Based on current policy settings and economic trends, electricity generation from renewables (including hydropower, wind and solar PV) is on track to grow strongly around the world over the next two years, by 8% in 2021 and by more than 6% in 2022.
The problem is that, even with this strong growth, renewables will only be able to meet around half the projected increase in global electricity demand over those two years, according to the new IEA report.

IEA electricity report july 2021_global changes in electricity demand

Fossil fuel-based electricity generation is set to cover 45% of additional demand in 2021 and 40% in 2022, with nuclear power accounting for the rest. As a result, CO2 emissions from the electricity sector, which fell in both 2019 and 2020 – are forecast to increase by 3.5% in 2021 and by 2.5% in 2022, which would take them to an all-time high.

Coal-fired electricity generation is set to increase by almost 5% this year and Gas-fired generation 1% in 2021

In the pathway set out in IEA’s recent Roadmap to Net Zero by 2050, nearly three-quarters of global emissions reductions between 2020 and 2025 take place in the electricity sector. To achieve this decline, the pathway calls for coal-fired electricity generation to fall by more than 6% a year.

IEA electricity report july 2021_changes in electricity generation

However, coal-fired electricity generation is set to increase by almost 5% this year and by a further 3% in 2022, potentially reaching an all-time high, according to the Electricity Market Report. Gas-fired generation, which declined 2% in 2020, is expected to increase by 1% in 2021 and by nearly 2% in 2022. The growth of gas lags that of coal because it plays a smaller role in the fast-growing economies in the Asia Pacific region and it faces competition from renewables in Europe and North America.

Disruptions in demand and supply shortfalls by climate extreme conditions, another big problem

Another problem is that extreme cold, heat and drought have caused serious strains and disruptions to the electric power system worldwide.
In countries ranging from the United States and Mexico to China and Iraq this climate extreme situations have caused a tremendous hike in electric power consumption or even severe shortfalls.

IEA electricity report july 2021_emissions evolution

In response, the IEA is establishing an Electricity Security Event Scale to track and classify major power outages, based on the duration of the disruption and the number of affected customers. The Texas power crisis in February, where millions of customers were without power for up to four days because of icy weather, was assigned the most severe rating on this scale.

More flexible generation systems are needed

Analysis of selected markets shows that the hourly changes in demand that have to be matched by flexible generation and consumption are increasing. Additionally, the gap between the maximum and minimum levels of flexible generation required each day is growing. This is making it increasingly important for electricity systems to become more flexible to complement generation from variable renewables like wind and solar PV.

Image over the headline.- IEA’s semi-annual Electricity Market Report (july 2021), cover detail.© IEA

Related external links:

To download IEA’s semi-annual Electricity Market Report (july 2021) click here

The world’s electricity systems must be ready to counter the growing climate threat, by Fatih Birol (IEA Executive Director)

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EU new green tax on not decarbonized imports, potentially damaging both developing and developed economies, UNCTAD warns

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