As a rule, global energy prices – much like other non-energetic commodities – are governed by a balance between supply and demand. In times of rising inventories and lower demand, such as under the coronavirus pandemic in 2020, prices sink. Meanwhile, when demand is at a high, prices soar. In 2020, primary energy consumption worldwide recorded the first annual decline in over a decade. As a result, that year, the weighted index of energy prices dropped by more than 30 percent. While the future of demand is still uncertain, and highly dependent on the pandemic’s development, the price index of energy is expected to grow continually in the next decade, reaching 87 U.S. dollars in 2035, compared to 2010 prices.
The future of fossil energy prices
In the beginning of the century, oil prices increased very sharply, with WTI and Brent crude spot prices averaging at around 100 U.S. dollars per barrel in 2011 and 2012. A few years later, however, prices plummeted, with a full recovery to the early 2010’s level yet to be seen. Although global oil consumption has mostly increased over the past years, an enduring growth in demand is threatened by increasing pressures to move towards clean energy sources, in an attempt to reach the zero net greenhouse gas emissions goal set by the Paris Agreement.
Coal prices have undergone a similar trend in the past decade. Despite being the most polluting of the three fossil fuels, the price of Australian coal (the benchmark for thermal coal prices) peaked at 107 U.S. dollars per metric ton in 2018. That year, coal accounted for nearly 40 percent of the global electricity generation. Nevertheless, as many countries vow to phase-out coal power plants in the coming years, prices are forecast to see a drop in the long-term, dipping below 60 dollars per ton by 2035. In contrast, seen as a cleaner alternative to coal in the short run, natural gas prices are expected to remain more or less stable in the period, with the price of U.S. natural gas recording a slight increase.
Renewables gain competitiveness
For many years, the development of renewable energy highly depended on government subsidies. In the past decade, however, technological advancements combined with consumer adoption, have driven prices to all-time lows. The levelized cost of electricity for solar PV saw a decline of 84 percent in one decade, averaging 0.06 U.S. dollars per kilowatt hour in 2020. In the same period, onshore wind power went on to yield the lowest renewable electricity cost, ranking above long-established hydropower. With renewable capacity additions estimated at some 200 GW in 2021, demand is unlikely to slow down in the near future.
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In the following 6 chapters, you will quickly find the 27 most important statistics relating to "Global energy prices".