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Market Snapshot: Grids in transition – 50 years of global electricity supply mix trends

Release date: 2019-05-01

An energy transition is a shift in the type of energy sources that fuel an economy. Historically, energy transitions were driven by technological, economic, and political factors. The energy transition happening today is also being driven by those factors, and also by the drive to reduce global greenhouse gas (GHG) emissions.

One of the pillars of today’s global energy transition is the decarbonization of the electricity grid as many nations move away from coal and oil-fired generation and move towards renewable, nuclear, and natural gas-fired generation.Footnote 1

Electricity can be produced in many ways. GHG-emitting sources include coal, oil, and natural gas, while non-emitting sources include nuclear, hydroelectricity, wind, and solar. Biomass, if used sustainably, can also be considered non-emitting.Footnote 2

In Canada, most electricity is produced from hydroelectricity.Footnote 3 Nuclear energy is the second largest source of generation in Canada, but it is produced only in Ontario and New Brunswick. With 80% of electricity generation considered non-emitting, Canada’s electricity sector is one of the lowest emitting in the world, with an emissions intensityFootnote 4 nearly one-third the average in other OECD (Organization for Economic Cooperation and Development) nations.Footnote 5

The transition to a decarbonized electricity grid has its challenges and opportunities. New, large-scale hydroelectric and nuclear generating stations can be challenging to site and costly to construct. However, non-hydro renewables, including wind, solar, and geothermal, typically face less economic, regulatory, and public opposition relative to larger-scale energy projects. Therefore, two commonly used indicators of how the energy transition is unfolding are the growth in renewables (particularly non-hydro renewables) and the decline in coal-fired generation.Footnote 6

In the history of electricity generation, decarbonization through the deployment of non-hydro renewables is a relatively recent trend. Many nations only crossed the 5% threshold for generation by non-hydro renewables in the mid to late 2000s or early 2010s. At the same time, coal and other hydrocarbons remain a significant source of fuel for generation in many economies. While the recent trend shows declining coal-fired generation in many economies, some countries are exceptions—most notably Japan and South Korea.

The interactive graph compares 55 years of electricity generation in OECD nations and in newly industrialized countries (including Brazil, China, India, and Russia). The graph illustrates the progress made by nations integrating non-emitting sources into their electricity mix.

Percentage of Electricity Generation

Source and Description

Source: The World Bank, NEB calculations

Description: This interactive graph illustrates electricity generation proportions by fuel source at the national level for OECD nations and newly industrialized countries between 1960 and 2015. Data for some countries may be truncated and start after 1960. Fuel sources displayed include: coal, oil, natural gas, nuclear, hydroelectric, and non-hydro renewables. The graph also allows for the display of data by emitting or non-emitting sources.

Note: Because of data inconsistences, Finland and Estonia have been excluded.

In Canada, the percentage of electricity generated from coal peaked in 2000 at 20%. In 2015, coal accounted for approximately 10% of Canada’s electricity generation. Over that same 15-year period, the share generated from non-hydro renewables grew from 1.4% to 6.3%, and natural gas-fired generation increased from 5.5% to 10%.

In the United States (U.S.), coal provided over 50% of the electricity generation mix in 1990, but that share declined to 34% by 2015. Natural gas’ share increased from 12% to 32%, while non-hydro renewables have increased from 3.0% to 7.4%.

In several European Union (E.U.) nations, the phase out of coal and the deployment of renewables is occurring even faster. In 1990, 97% of Denmark’s electricity generation was from fossil fuels, primarily coal. The remaining 3% was from non-hydro renewables, primarily wind. By 2015, fossil fuels accounted for 35% while non-hydro renewables accounted for 65% of the generation mix. In 2016, Belgium became the first E.U. nation to phase out coal. Between 2000 and 2015, Belgium increased its share of non-hydro renewables from less than 1% to 21% and increased its share of natural-gas fired generation from 20% to 33%. These changes caused the emission intensities of generation for both nations to decline by over 50% between 1990 and 2015.Footnote 7

An important caveat is that electricity is a tradeable commodity, and generation does not necessarily equal consumption. For example, Canada is a net exporter of electricity with the U.S.; with most exports originating from the hydro-rich provinces of Newfoundland and Labrador, Quebec, Manitoba, and British Columbia. These hydro-sourced exports reduce the carbon intensity of electricity consumed in the U.S. while not being accounted for in emissions intensity of U.S. generation. Similarly, significant cross-border electricity trade occurs throughout the E.U. Exports from nuclear-based France or hydro-based Norway would lower the carbon intensity of electricity consumed in nearby importing nations with higher generation intensities. Exports from coal-based Poland would have the opposite effect, by increasing the carbon intensity of electricity consumed in importing nations.

Decades ago, the electricity mix in countries was determined by geography and trade. Countries with abundant domestic fossil fuel or hydroelectric resources would rely on those resources for power. Countries lacking resources would either purchase electricity from neighbouring nations, or purchase fossil fuels or uranium to power domestic plants. However, the rules for new electricity generation have changed. Policies at the national and international levels increasingly push decarbonization, and in combination with declining costs and improving economies of scale, are supporting the global proliferation of wind and solar.

Decarbonizing the electricity grid is just one aspect of an energy transition. The NEB’s latest report, Canada’s Energy Transition: Historical and Future Changes to Energy Systems, describes other elements of an energy transition. The report also offers a look at how global and national energy production and consumption have changed in the past and how they could evolve in the future.

 

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