2016 was a year of transition. This is one of the observations made by ENGIE in the 2016 edition of “A World of Energy”. A transition towards lower-carbon energy, but also towards new ways of producing and consuming, as ratified in particular by international agreements and national regulations.
The first observation with regard to 2016 is that a slowdown in economic growth has impacted worldwide demand for energy.
With world powers such as China losing momentum and emerging markets struggling, energy demand has seen a global slump.
In fact, the majority of the major consuming regions have reported reduced consumption: Brazil, Russia, Japan, the United States. Only the European Union and India have experienced positive growth.
The consequence has been overproduction, which has impacted prices, causing a sharp fall in fossil energy prices to levels close to breakeven for many producers, particular shale oil and coal producers in the United States.
Since the end of 2015, fossil energy prices have fallen to their lowest level for ten years.
In spite of the decline in prices and weak global economic growth, renewable sources of electricity are still continuing to make sustained progress. They constitute one half of global additional net capacity in 2015, and as much as 90% of the additional capacity in the European electricity mix. The spectacular fall in production costs of wind and solar energy explains this change and the new records being achieved for the installation of renewable capacities around the world.
The key factors in changes in energy consumption in 2015 and 2016 are a slowdown in demand for fossil energies and the development of renewable energies:
2016, like 2015, was marked by strong international environmental commitments. The Paris Agreement on the climate (COP21), ratified in November 2016, brought together every country on the planet to achieve a common environmental objective. The increased number of carbon markets around the world, along with efforts made by civil society to develop a more local and digital energy model, made it possible to reduce CO2 levels for the first time in 2015 and probably in 2016.
Alongside this trend, production costs for renewables (chiefly wind and solar energy) have seen a remarkable fall, as a result of which they could compete with thermal projects in certain cases. Investments primarily concern hydroelectricity and solar and wind power. They maintained their rapid rate of growth in spite of lower prices for fossil energies and pressure on budgets.
In France, the first phases of new legislation on the energy transition came into effect in 2016. It consists of concrete measures with forecasts for future years, which should result in reinforcing the share of renewables in the energy mix.
The headline targets of the new law include the following:
These targets call for still greater efforts: production of electricity from renewable sources fell 3.9% in 2015, owing to a 13% decline in hydroelectricity and in spite of increases in the photovoltaic and solar sectors of 23% each. The biogas sector has also made steady progress in France over the last ten years (a rise of 29% in 2015).