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The world electrifies – Germany set to start
World Energy Outlook claims demand for electricity is increasingly rapidly – German businesses could benefit

The world’s population is growing. At the same time it is becoming more prosperous. And energy is a core part of this development. Germany can help satisfy the mounting appetite for energy and rein in global emissions as well.

Industrialised nations are among the few that may be able to reduce their energy consumption by 2040, with a small decline in the USA, a bit more in Japan and by far the strongest reduction in the EU. In every other region of the world, the appetite for energy is growing, especially in India and China. At least this is the forecast presented in the latest version of the annual publication World Energy Outlook issued by the International Energy Agency (IEA).

The reasons for this are clear. Whereas the economies and populations of the most developed countries have only been growing moderately for many years now, other parts of the world are booming.

Generally speaking, the populations of the wealthier countries are advocating particularly strongly for more efficient and climate-friendly energy use. The ambitious climate goals set by the European Union (EU) reflect this clearly. They envisage emissions of greenhouse gases being 80 to 95 percent lower in 2050 than they were in 1990.

Germany, the EU and the climate goals

The fact that the EU and its member states have to do more to achieve their climate goals is underlined by economists in the annual report on the global energy markets issued by the British Petroleum Group BP.

At the same time, they also project that demand for primary energy will decrease drastically despite rising GDP, even if the EU continues at the same pace as in recent years: “Improvements in energy intensity continue to play the largest role. In 2040, the EU will consume roughly the same amount of energy as it did in 1975, despite its level of GDP being more than three times bigger.” (BP World Energy Outlook 2018)

A 95 percent greenhouse gas reduction would push the boundaries of foreseeable technical feasibility and current social acceptance. Successful implementation seems only imaginable if most other countries pursue similarly lofty ambitions. Bundesverband der Deutschen Industrie e.V.

Balanced result for the energy transition

In a broad-based study entitled ‘Climate Paths for Germany’, the Federation of German Industry (BDI) presents plans for how Germany could reduce its emissions of greenhouse gases by 80 percent in a particularly efficient manner. “In economic terms, this kind of goal can be represented with a balanced final result.”

One prerequisite for achieving this, however, is a technology-neutral energy transition covering all sectors involved, i.e. buildings, agriculture and transport in particular, in addition to the energy sector and industry.

At the same time, the BDI clearly states, “A 95 percent greenhouse gas reduction would push the boundaries of foreseeable technical feasibility and current social acceptance. Successful implementation seems only imaginable if most other countries pursue similarly lofty ambitions.” The study also notes that at least the G20 countries would have to have to pursue similarly ambitious implementation.

Fossil fuels continue to lead

However, this is not looking very likely right now. If annual economic output continues to expand as it has recently, it will have more than doubled in 2040. Nevertheless, according to BP and IEA calculations, global energy consumption will only have risen by around one third. And renewables will account for the lion’s share of this growth.

Currently, however, there are few signs that the consumption of any one individual energy source will decline in absolute terms by 2040. Driven by the boom in the USA, oil consumption will continue to rise. The analysts foresee an even rosier future for natural gas. In just a few years, gas may overtake coal as the second-most important source of primary energy. The BP study concludes that, overall, fossil fuels will still deliver around 75 percent of energy in 2040.

The world electrifies

Of course, all of this does not mean that there is no shift in the energy sector outside of Europe as well. “When China changes, everything changes” runs the subtitle of one IEA outlook chapter. And things actually are changing right now in China. With the ‘energy revolution’ declared in 2014, the Chinese government wants to transform the country into a services economy. China is pushing its entire energy sector in a different direction. According to the IEA report, “… the transition towards a more services-based economic model is moving the energy sector in a new direction – with the emphasis in energy policy now firmly on electricity, natural gas and cleaner, high-efficiency and digital technologies.”

When it comes to the trend towards electrification, China is not alone. E-mobility will also play a role in this development. From around 2 million vehicles at present, the global fleet of electric vehicles is expected to number around 300 million in 2040. An even more important factor will be demand for electrical industrial machines and household appliances, air conditioning and heating. The authors of the BP report are certain that electricity usage will increase twice as fast as overall energy consumption, rising by almost 70 percent.

Photo credits: Lukassek, shutterstock.com, Di Ma, shutterstock.com

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