2015 proved to be an interesting year for energy and climate issues both globally and in the UK. Will 2016 hold more of the same?
Forecasting is a dangerous business, but here are six predictions you should keep an eye on.
1) The showdown on oil prices between Saudi Arabia and the US will intensify, and the Saudis will eventually break.
It looks like oil and gas prices are going to remain low for the foreseeable future, panicking both the oil industry in Saudi Arabia and the shale gas industry in the US.
The big question is whether Saudi Arabia can keep production high and prices low long enough to bankrupt enough of the American shale industry. The answer may come by the end of 2016 and several factors point to the Saudis breaking first.
For one, despite losses for the oil industry, low oil prices benefit many sectors in the US, especially as consumers now have more spending money in their pockets. However for Saudi Arabia, an oil-dependent economy, low prices are a clear loser.
Despite low fossil fuel prices (including coal), wind and solar will set new records in 2016 for installations and generation on every continent. This is a pretty safe bet. For many markets, including the important US market, the year-to-year change in 2016 may set records too.
Why is this? To some degree renewables and fossil fuels (especially oil) are not actually in competition. Oil is more important for transport whereas renewables are being integrated for electricity, so are in different markets. The costs of renewables are also rapidly declining, and there’s no reason to think the costs could ever go back up.
3) More investment in renewables will come from developing countries than developed countries.
This transition may have happened for the first time in 2015, the data is still coming in, but it will almost certainly be the case in 2016. One striking example is China’s ambitions for offshore wind – the graph below shows the dramatic increase in projected installations given the government’s announced policies.
4) Hybrid sales will fall; electric vehicle sales will boom and become the hot energy news item of 2016.
More so than renewables, low-carbon vehicles are an area where you might expect low oil prices to present a difficulty as they will encourage more people to stick with their regular car.
Sales of hybrid vehicles, which many people do compare to standard combustion vehicles in purchasing decisions, will likely fall. Conversely, electric vehicle purchases tend to be made by consumers who are less sensitive to price changes, evidenced by increased EV sales in 2015 despite low oil prices. In addition, a significant portion of EV sales are in industrial, commercial and public sectors where EV mandates play a strong role.
Importantly, it is the amount of total emissions in the atmosphere (the stock) rather than the increase or decrease in annual emissions (the flow) that is causing climate change, so any celebration is premature. Still, expect both the total emissions in the atmosphere and our annual emissions to increase in 2016.
6) 2016 will be the hottest year on record and sceptics will abandon the “global warming pause”.