As the world strives for energy transition, a large increase is expected in renewable energy sector development, while the demand for fossil fuels will be flat, Trend reports via Commodities Market research from the World Bank (WB).
However, according to the WB, this increase will require improvements in energy storage, or backup generating capacity, due to solar and wind power being more irregular and seasonal than hydropower.
"Demand for fossil fuels is expected to be flat or decline over the next few decades, while demand for metals is likely to rise due to the higher metals content of renewable energy infrastructure," the report said.
As the WB forecasts, the installed capacity is expected to grow rapidly over the next five years, and costs are expected to continue to decline as technology improves, further increasing the competitiveness of renewables, compared to traditional fossil fuels.
However, as the report noted, if investments in fossil fuels production decrease faster than investments in renewable rise, global energy shortage could emerge.
"Investment in oil and gas production is currently at a level broadly in line with the International Energy Agency scenario for a net-zero transition. Investment in low-carbon technology, however, is currently around one-third of what is required. The surge in energy prices in 2021 is a reminder of how rapidly fossil fuel prices increase when demand outstrips supply," the report explained.
Thus, unexpectedly high energy prices or supply disruptions may weaken political support for the energy transition, the WB added.