The era of fossil fuel dominance in power generation “is coming to an end,” concludes Bloomberg NEF in its new forecast: “Cheap renewable energy and batteries fundamentally remake electricity systems around the world.”
Bloomberg’s 150-page New Energy Outlook (NEO) 2018 released Tuesday projects that wind and solar will combine to provide 48 percent of global power generation in 2050, while coal will slump to 11 percent. And this will happen without any new climate policies, simply because renewables are becoming the cheapest power source.
“Coal is the biggest loser,” notes Bloomberg in the new forecast. This is a complete reversal from historical trends.
The on-going revolutions in renewables and batteries are driving this reversal.
First, the stunning drop in solar and wind prices of the last three decades is expected to continue for the next three, says Bloomberg. By 2050, the cost of electricity from solar farms will drop another 71 percent, and for wind power, it will fall another 58 percent.
Second, Bloomberg NEF projects that lithium-ion battery prices — which dropped almost 80 percent since 2010, will drop another 66 percent by 2030. This is driven by a quantum leap in global electric vehicle (EV) sales, from a record 1.1 million last year to a projected 30 million in 2030.
“The economic case for building new coal and gas capacity is crumbling,” warns Bloomberg, as batteries begin to provide renewables more flexibility, including the ability to shift power to peak usage times.
The result is “coal gets squeezed out,” with total consumption in the power sector dropping by more than half in the next three decades.
Meanwhile, “gas consumption for power generation remains flat out to 2050.” But gas does play “a key role, however, in backing up renewables.”
As a result of all of these shifts, heat-trapping carbon dioxide emissions from the power sector are expected to remain flat for the next decade and then drop nearly 40 percent by 2050.
But despite all this, Bloomberg notes, emissions would still be much too high to keep total warming below 2°C (3.6°F), which is the point at which impacts from climate change shift rapidly from dangerous to catastrophic (see chart).
In fact, if the world phased-out all coal plants between 2025 to 2035, “the power sector would still be tracking above a climate-safe trajectory,” explains Bloomberg NEF energy economics analyst, Matthias Kimmel. We’d still be “burning too much unabated gas.”
Such a phase-out, would, however, keep us close to a 2-degree pathway. It would also help ensure that the shift toward vehicles running on electricity would be accompanied by a significant reduction in CO2 emissions, too.
But the fact is that we are going to have to start phasing out natural gas by the mid-2030s. The renewable energy revolution and the battery revolution are remarkable, but they don’t replace strong national and global climate policy if we are to avoid catastrophic climate impacts.