Australia’s clean power growth tops global leaderboard: World Energy Outlook

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Australia has topped the leaderboard for reducing its use of unabated fossil fuels and increase in clean power through electricity generation sources like solar, and faster than electricity demand, according to the International Energy Agency’s (IEA) World Energy Outlook (WEO) 2024 report.

Along with Korea, Japan, Argentina, South Africa, Brazil and Mexico, Australia’s low-emissions sources of electricity grew by over 20% and in Australia’s case, over 100% between 2018 and 2023, outstripping any electricity demand growth, and over double the pace of the European Union, the United States and the United Kingdom.

Institute for Energy Economics and Financial Analysis (IEEFA) Australian Electricity Lead Analyst Johanna Bowyer said Australia is currently at 39% renewables in the east coast grid and aiming for 82% renewables by 2030.

“To reach this goal, significant acceleration is needed in large-scale solar and wind uptake, along with an increase in the uptake of energy efficiency and distributed energy technologies like household batteries,” she said.

The WEO report confirms clean energy is entering the world’s energy systems at an unprecedented rate, including more than 560 GW of new renewables capacity added in 2023, bolstered by $3 trillion (USD 2 trillion) investment in clean energy projects.

The WEO says investments will help capacity rise from today’s 4,250 GW to nearly 10,000 GW in 2030, more than enough to cover the growth in global electricity demand and to push coal-fired generation into decline.

Change in electricity generation by source and power sector CO2 emissions in selected regions, 2018-2023A rise in new energy and climate initiatives between 2010 and 2023 have also seen global solar capacity increase by 40 times.

Australia’s policy announcements, investment plans and regulations include the first New Vehicle Efficiency Standard and domestic direct manufacturing incentive schemes such as the Future Made in Australia Plan and Powering Australia.

Bowyer said the report underscores how renewables are set to be a key player in the coming years.

“With solar and wind now the cheapest electricity sources in most markets, renewables are set to make up four fifths of total capacity additions to 2030,” Bowyer said.

“The IEA WEO has found there is abundant manufacturing capacity for clean energy technologies, notably solar and batteries and existing solar manufacturing capacity allows for deployment almost three times higher than the installations seen in 2023.”

“Battery manufacturing capacity far exceeds current demand. This plentiful supply will support downward pressure on solar and battery prices.”

Independent Australian think tank Climate Energy Finance Director Tim Buckley said global investment in cleantech is forecast in the report to reach $3 trillion (USD 2 trillion) in 2024, double the annual spend on fossil fuels, but the IAE models also show global annual investment needs to be in the vicinity of $4-$7.5 trillion.

“Critical to see the PM Anthony Albanese government showing a vision and strategy with the new Australian Future Made in Australia and the $23 billion of new funding initiatives in Treasurer Jim Chalmers 2024/25 Federal Budget,” Buckley said.

“A good downpayment, but we expect a lot more in the mid-year economic and fiscal outlook (MYEO). Start with a Future Fund $20 billion cleantech mandate for strategic patient public equity investments in value-adding in Australia.”

Coal

The transition away from fossil fuels must move faster to fulfil announced pledges, the report says, including COP28 pledges to triple global renewables capacity by 2030 and to pursue net zero emissions by 2050.

Australia and Indonesia were responsible for over half of global coal exports in 2023, with Australia providing 45% of global coking coal exports, and Indonesia around 40% of steam coal exports.

The WEO projects under the IEA’s Net Zero by 2050 scenario (NZE), the transition away from coal is fast and trade will fall to under 10% of 2023 levels by 2050.

“The fossil fuel era is drawing to an inevitable close. Our future prosperity depends on hastening our energy transition and repositioning as a value-adding trade and investment leader,” Buckley said.

“We should be deploying our solar and wind to process our energy transition materials like green iron and the critical minerals essential for cleantech onshore pre-export.”

IEEFA Global Steel Lead Analyst Simon Nicholas said the Australian coal industry keeps trying to maintain that the outlook for metallurgical coal used in steelmaking is strong.

“The new World Energy Outlook from the IEA doesn’t bear that out. Overall coal demand for industry is already in decline under the IEA’s Stated Policy Scenario (STEPS) and falls much faster in the IEA’s other scenarios,” Nicholas said.

“Almost all Australian metallurgical coal is traded overseas. The IEA sees total global coal trade declining 25% by 2035 in the Stated Policy Scenario with much larger declines in the other scenarios. All this questions the economic wisdom of opening up new metallurgical coal supply in a declining global market.”

Gas

Former President of BP Australasia and Climate Council Councillor Greg Bourne said the IEA has laid out Australia’s energy options and all of them point directly to building out clean sources of energy like solar and wind, which Australia has in abundance.

“Rapidly cutting climate pollution from polluting coal and gas is imperative so Australia keeps up with the global trend,” Bourne said.

“Our own research echoes this, showing that if Australia stopped opening new gas projects today, supply from existing projects could meet our shrinking domestic gas needs for more than six decades — a clear signal that it’s time to power past gas, and turbocharge our switch to clean energy.”

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