Low prices for coal and gas are likely to persist, but will fail to prevent a fundamental transformation of the world electricity system over coming decades towards renewable sources such as wind and solar, and towards balancing options such as batteries.
The latest long-term forecast from Bloomberg New Energy Finance, entitled New Energy Outlook 2016, charts a significantly lower track for global coal, gas and oil prices than did the equivalent projection a year ago. Crucially, however, it also shows a steeper decline for wind and solar costs.
The forecast, covering the 2016-40 period, has mixed news on carbon emissions. Weaker GDP growth in China and a rebalancing of its economy will mean emissions there peak as early as 2025. However, rising coal-fired generation in India and other Asian emerging markets indicate that the global emissions figure in 2040 will still be some 700 megatonnes, or 5%, above 2015 levels.
Seb Henbest, head of Europe, Middle East and Africa for BNEF, and lead author of NEO 2016, commented: “Some $7.8 trillion will be invested globally in renewables between 2016 and 2040, two thirds of the investment in all power generating capacity, but it would require trillions more to bring world emissions onto a track compatible with the United Nations 2°C climate target.”
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