Page 5 - AsiaElec Week 31

AsiaElec COMMENTARY AsiaElec
politicians to pursue the protectionism they promote. Coal, gas and oil are also easy tools for “go-it-alone” politicians to pursue the protec- tionism they promote.
“We forecast coal, gas and oil will still con- tribute around 85% of primary energy supply by 2040, compared with 90% today. Availability of resource, infrastructure and cost competitive- ness (absent a carbon price) keeps fossil fuels resilient. We also see the potential for protec- tionism to creep in to other areas of the econ- omy, hastening the need to focus on domestic resources; including fossil fuels.”
e rise of electric vehicles (EVs) has been heralded as the best way to decarbonise trans- port, a market segment that, along with industry, holds back the wider reduction in fossil fuel use in the economy.
However, the report doubts the EVs can make any signi cant impact, as gains in fuel e - ciency in the automotive industry will mirror the amount of fuel lost owing to substitution. Wood MacKenzie puts this in the 5-6mn bpd range.
Indeed, while the power sector in roaring ahead with renewables – with green energy reaching 24% by 2040 from 7% in 2018 – indus- try, manufacturing, housing, aviation, shipping and agriculture are woefully lagging behind.
e report criticises these industries for mak- ing little to no progress in commercialising tech- nologies, and regards carbon capture and storage (CCS) and hydrogen as merely panaceas.
It highlights the global steel industry, where competing national champions in China, South Korea and Japan are unlikely to develop green steel if the returns are not visible.
e report nds that for temperature growth to be limited to 2 degrees by 2040, zero-carbon energy needs to account for 40% of the total energy mix by 2040, compared with the more likely 20%, which would push up temperature growth to 3 degrees.
Asia Paci c
Despite this sceptical global outlook, a separate recent report from Wood MacKenzie painted a much more rosy picture of the power sector in the Asia-Paci c region.
It found that across Asia as a whole, falling costs mean that wind and solar will finally under- cut coal in terms of levelised cost of electricity (LCOE) by 2027, compared with a 29% pre- mium today.
India leads the way with solar costs of $38 per MWh, with Australia the next cheapest at $48 per MWh. In Australia, solar is set to undercut coal by 2020, while in India, solar is already beat- ing coal, with the $38 per MWh price 14% less than coal- red power.
Good solar resources, market scale and com- petition have pushed India’s solar costs down to half the level of other Asia-Paci c countries.
Japan, Malaysia and Indonesia will continue to o er cheaper coal than renewables by 2030, showing how many economies will still be dom- inated by fossil fuels by 2040, the major point of Wood MacKenzie’s Energy Transition Outlook 2019.
Looking ahead
In order to limit temperature rises to 2 degrees, the report calls for urgent policy and regulatory initiatives, including tax policy and subsidies that incentivise R&D and capital allocation into zero-carbon technologies.
This will require continued support for investment in renewables and in transforma- tional technologies – CCS, batteries and energy storage, hydrogen and alternatives in non-power – to turn them into commercial propositions.
Otherwise, too many governments and energy companies will continue to favour cheaper and more pro table fossil fuels despite the laudable but patchy regulatory and technical progress being made towards renewables.™
Competing national champions in China, South Korea and Japan are unlikely to develop green steel if the returns are not visible
Week 31 06 •August•2019 w w w . N E W S B A S E . c o m
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