Green Transition: IEA Expects Electricity To Overtake Oil As Key Fuel Source In 10 Years
Currently, around half of total consumer energy expenditure is on oil products, and another third on electricity, an IEA report said.
The world's rapid green transition goals will lead to electricity overtaking oil as the leading fuel source in final consumption by 2030 as governments, businesses and households take advantage of cost savings, the International Energy Agency said.
The benefit of a faster energy transition and growing shares of renewables—such as solar and wind, which have lower operating costs than fossil fuel alternatives—would filter down to consumers as retail electricity prices are typically less volatile than oil product prices, according to the report, titled Strategies for Affordable and Fair Clean Energy Transitions, issued on Thursday.
"In rapid transitions, electricity prices become the main benchmark for consumers and households. Oil products are largely replaced by electricity as EVs, heat pumps and electric motors take a larger share of transport, buildings and industry demand," the report said.
Currently, around half of total consumer energy expenditure is on oil products, and another third on electricity, it said.
Transition to clean sources will make energy more cost-effective for governments, businesses and households. Incentives and greater support, particularly targeted at poorer households, can improve the uptake of clean energy technologies, the IEA said.
Global commitments made in successive climate summits, after the landmark 2015 Paris agreement to meet net zero emissions by 2050, requires additional investment, it said.
Nonetheless, governments worldwide collectively spent around $620 billion last year in subsidising fossil fuels, higher than the $70 billion spent on support for consumer-facing clean energy investments, according to the IEA report.
India, at the 26th session of the United Nations' COP 26 summit in 2021, announced its target to achieve net zero by 2070. Under the plan, the country aims to reach a non-fossil fuel energy capacity of 500 GW by 2030—fulfilling at least half of its energy requirements via renewable energy by the end of the decade.
