- According to a recent report, fossil fuel electricity generation has peaked worldwide as emerging markets seize the opportunities of low-cost renewables.
- The Report was published by India’s Council on Energy, Environment and Water (CEEW) and the financial think tank Carbon Tracker (both are not-for-profit organisations).
- Emerging markets are key to the global energy transition, accounting for 88% of all expected growth in electricity demand from 2019-2040.
- Overall, 82% of current emerging market electricity demand and 86% of expected demand growth comes from countries that import coal and gas, and they have powerful incentives to switch to solar and wind.
- With the right policies in place, technology and cost barriers to change can be crossed.
- The transition is different in emerging markets because they have electricity demand growth from a lower base as well as the need to provide access to hundreds of millions of people.
- In developed markets, demand for fossil fuels for electricity generation has fallen by 20% since it peaked in 2007.
- China, which is nearly half the electricity demand, and 39% of the expected growth.
- Other importers of coal and gas such as India or Vietnam, which are a third of the demand and nearly half the growth.
- Coal and gas exporters such as Russia or Indonesia, which are 16% of demand but only around 10% of the growth.
- Resistance to the energy transition is likely to be more entrenched in coal and gas exporting countries.
- ‘Fragile’ states such as Nigeria or Iraq which are 3% of demand and around the same share of growth.
- India, which accounts for 9% of emerging market electricity demand and 20% of expected demand growth, illustrates the speed and scale of change.
- From less than 20GW of solar in 2010, it has grown to 96GW of solar, wind biomass and small hydro in May 2021.
- Including large hydropower, renewables now provide 142GW or 37% of the country’s power capacity, and it has a target of 450GW by 2030.
- Demand for fossil fuel generation reached a plateau in 2018, and fell in 2019 and 2020.
- While fossil fuel demand might again increase in the near-term to meet latent electricity demand, India has demonstrated how a double leapfrog – connecting nearly all households to electricity and its renewable energy rollout – can be driven with policy priorities and market design.
- A supportive policy environment is the key to driving growth in renewables.
- If countries liberalise markets and introduce competitive auctions, they can cut costs and attract international finance as capital markets turn their backs on fossil fuels.
- Auctions have helped India drive the cost of solar down to one of the world’s lowest levels.
- Developed countries can speed up the transition to renewables in emerging markets by providing policy support, technology expertise and by using development finance to reduce the cost of capital.
SOURCE: THE HINDU,THE ECONOMIC TIMES,MINT