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An energy transition is underway. Solar and wind are being added in ever-greater numbers. Electric vehicles are becoming more commonplace. Meanwhile, policymakers are grappling with the right mix of policies to pay for it all.
Industry executives, policymakers and bankers recently tackled some of the big questions surrounding energy at a conference in sponsored by Bloomberg New Energy Finance.
Here are some trends to watch.
EVs are here to stay
Electic vehicles have become a key element of the energy transition, with as many as 530 million on the road around the world by 2040, according to forecasts. Moreover, researchers expect more electric buses and trucks as that segment of the transportation market becomes more attractive for electrification.
Long-term, EVs will likely account for 8 percent of total vehicle sales by 2025, 24 percent by 2030 and 54 percent by 2040, according to Bloomberg New Energy Finance. If the forecasts are right, electric vehicles could displace 8 million barrels of daily oil demand by 2040.
Iteration or innovation?
Some energy economists and policymakers say dramatic breakthroughs are needed to achieve the reduction in emissions needed to stave off the worst impact of global warming. But don't expect any huge development in the imminent future. Rather, clean energy technologies like solar and wind will continue to eke out gains by becoming cheaper and more efficient, or in the case of batteries, able to store more energy in the same amount of space.
Storage is key
Battery costs are coming down, and energy densities are increasing. In turn, battery manufacturers are ramping up capacity - good news for Asia, where most of the battery capacity is centered.
Asia's lead is about to get even bigger. Contemporary Amperex Technology plans to raise as much as $2 billion through an IPO in China, enabling makers of electric vehicle batteries to expand capacity. Japan is also moving ahead in that area.
LNG to stay in the mix
Natural gas still has an important role to play in the energy transition, with China, Japan and South Korea expected to account for a significant increase in demand by 2030. On the supply side, North America and Australia are set to play a bigger role.
LNG will play a crucial role in the energy mix for some time to come, especially when other sources fail, according to Bloomberg New Energy Finance analyst Ashish Sethia.
But the transition won't be easy
The momentum is clearly in favor of more renewableds. But challenges remain.
In the electric vehicle market, for example, a shortage of charging infrastructure, policy changes less supportive of EVs or a slowdown in the price declines for lithium-ion batteries could slow the advance. Falling prices for renewables will spur wider acceptance by consumers. The transition will be easier if politicians don't try to protect traditional energy generators from competition, Kaberger said.