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A World of Energy – 2016 edition : the main highlights for energy industries

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.

“A World of Energy” details changes that occurred in the energy universe in 2015 and 2016 – including the battle against climate change, new technologies and efforts by governments to produce cleaner energy – and highlights transformations underway in the global energy arena.

>> A World of Energy – 2016 Edition

Increasing producing of renewables in a world where growth is slowing

 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.

Changes in energy consumption

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:

  • Oil has suffered a substantial price fall, which has triggered a rise in worldwide consumption, with a 2% rise in 2015, in a context of production that remains extremely sustained.
  • Coal continues to decline. In early 2016 it fell to its lowest price since 2003 against a background of doubts over industrial investments in this energy that emits high levels of greenhouse gases.
  • Natural gas has also been affected by the sluggish global economic climate. Consumption rose only by 1% in 2015 and 2016, resulting in lower prices.
  • Worldwide demand for electricity has seen a slowdown in growth since 2015: the average annual increase has been 3% since 2000 but was only 0.5% in 2015. At the same time there has been a sharp fall in high-carbon energies in the global electricity mix (the share of coal has fallen to 39%, while that of gas remains at 23%). Renewable energies continue to make ground in the global electricity mix, accounting for 23% (including 16% for hydroelectricity).
  • Finally, CO2 emissions have begun to decline: after 2014 and 2015, 2016 is the third successive year to have seen a halt, not to say a fall, following continuous growth since 1990.

2016: a year of strong environmental commitments

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.

Focus on France: targets remain distant despite encouraging progress

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:

  • A 40% reduction in greenhouse gas emissions by 2030 by comparison with 1990 levels
  • A fourfold increase in the price of a tonne of coal by 2030
  • A 20% cut in final energy consumption by 2030 by comparison with 2012
  • A 30% reduction in the consumption of fossil energies by 2030 by comparison with 2012
  • An increase in the share of renewables in final consumption to 23% by 2020 and to 32% by 2030 (as against 14% in 2015)

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).

A world of Energy - 2016 EditionCONTENTS

1. Introduction

2. Economy and energy mix

3. Energy prices & costs

4. Oil

5. Coal

6. Natural gas

7. Electricity

8. CO2

9. Focus on France

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