Carbon Cuts Require Big Shift by Power Industry: Study
CNBC Executive News Editor
The shift toward low carbon energy sources will take time and require a major change in the electricity industry, a new study says.
The study by IHS CERA and the World Economic Forum looks at the challenges of the shift to renewables and other energy sources, as the world attempts to actively push an energy transition for the first time. It was presented Tuesday at the IHS CERAWeek in Houston.
Significant changes by the industry would be necessary to make the shift, the study said.
(Read More: Obama Cabinet Picks Could Take On Climate Policy)
Wind, solar and biomass have less energy density than other sources and are more geographically dispersed. That would require a system based more on local production, requiring significant investments in transmission to get the power where it is needed.
Another challenge for the power industry is the variability of wind and solar power. Generators would have to compensate for these sources and have backups.
(Read More: Oil Supplies Are Key Topic at Annual CERA Week)
As of now, 87 percent of total world energy demand is met by oil, coal and natural gas. Nuclear accounts for 5 percent.
The renewable resources—wind, solar, geothermal, biofuels and other non-hydro renewable resources—are just 1.6 percent of total world energy but their use is increasing rapidly.
"Although overall consumption will grow and the share of low-carbon and no-carbon sources will also grow significantly, the energy mix in 2030 will not be too different from what it is today," Daniel Yergin, IHS vice chairman, said in a statement. "Beyond 2030, the impact of innovation and research and development, as well as prices and government policies, will have an increasingly large impact in terms of altering the mix."
The study notes that since the start of this century, climate change has been a deep concern and there's been growing demand for energy, particularly in developing countries. Some 1.3 billion people still do not have access to modern energy sources.
"The general assumption is that we will gravitate towards a world dominated by renewable," said Roberto Bocca, senior director, head of energy industries, World Economic Forum.
"Surprisingly, though, this transition will be different than in the past where the energy mix moved from one fuel to another, like from wood to coal," Bocca said in a statement. "What we'll see in the future instead will be a transition from some energy sources to many energy sources, i.e. from a diverse energy mix to a set of diversified energy mixes."