World Energy Outlook - 2008
GLOBE-Net - The world’s craving for energy will grow 45 percent by 2030 with coal accounting for more than a third of the overall rise, according to the latest edition of the annual World Energy Outlook published by the International Energy Agency (IEA). But current trends in energy supply and consumption are patently unsustainable - environmentally, economically and socially - they can and must be altered, said Nobuo Tanaka Executive Director of the IEA.
“Rising imports of oil and gas into OECD regions and developing Asia, together with the growing concentration of production in a small number of countries, would increase our susceptibility to supply disruptions and sharp price hikes,” he said at the launch of the new report in London.
The World Energy Outlook 2008 says China and India account for over half of this increase and the Middle East for 11 percent because of their continuing strong economic growth forecast to last through the next two decades.
Experts at the Paris-based organization think that non-hydro renewable energy sources - wind, solar, geothermal, tide and wave energy - will grow faster than any other source. They predict that renewable technologies will overtake gas to become the second-largest source of electricity in the world, behind coal, soon after 2010.
Demand for oil, on the other hand, will keep growing from 85 million barrels per day currently to 106 million barrels by 2030. Most of the increase in oil supply will come from the Organization of the Petroleum Exporting Countries (OPEC), whose share is projected to rise from 44 percent in 2007 to 51 percent in 2030. “Non-OPEC conventional oil production is already at plateau and is projected to start to decline by around the middle of the next decade,” says the report.
Renewable energy technologies will overtake gas to become the second-largest source of electricity in the world, behind coal, after 2010
The increase in oil production hinges on adequate and timely investments. The fear is that oil companies, affected by the credit crunch, will be unable to invest in new projects which would mean less available oil at affordable prices in the years to come. The agency says energy firms need to invest more than $26 trillion by 2030 - nearly $1 trillion a year - to meet world demand without triggering an economic slowdown.
But that might prove difficult. Two companies, ConocoPhillips and Saudi Aramco, have already postponed construction of a multibillion-dollar refinery in Saudi Arabia because of uncertain market conditions, according to the Associated Press. Marathon Oil has also delayed the expansion of a refinery in Detroit.
“It is not an exaggeration to claim that the future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of a reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply. What is needed is nothing short of an energy revolution,” says the report.
It calls for households, businesses and those who drive vehicles to change the way they use energy. At the same time it wants governments to create financial incentives and modify regulations so that energy suppliers look into low-carbon technologies. The IEA suggests lifting the billions of dollars in subsidies that help people pay less for their daily consumption of energy - the 20 largest non-OECD countries, for instance, flooded their markets with $310 billion in subsidies in 2007.
The world, however, is not running out of oil and gas. The IEA says conventional oil reserves are large enough to support the projected rise in demand beyond 2030. And that does not even take into account non-conventional oil resources which have been barely developed to date. “Between 1 and 2 trillion barrels of oil sands and extra-heavy oil may be ultimately recoverable economically,” says the report.
Despite price volatility - the price of a barrel of oil peaked at $147 in July before closing in on $50 in November - the fossil fuel remains the dominant source of energy for the next several years. The trick will be to find a balance between producing enough oil to meet demand and finding other sources of energy without altering the world economy.
The report also analyses policy options for tackling climate change after 2012, when a new global agreement - to be negotiated at the UN Conference of the Parties in Copenhagen next year - is due to take effect. Using two basic models or scenarios for energy growth, the analysis argues a hybrid policy approach, comprising a combination of cap-and-trade systems, sectoral agreements and national measures will be needed to keep greenhouse gas emission levels - and corresponding global temperature increases - at acceptable levels.
“We cannot let the financial and economic crisis delay the policy action that is urgently needed to ensure secure energy supplies and to curtail rising emissions of greenhouse gases. We must usher in a global energy revolution by improving energy efficiency and increasing the deployment of low-carbon energy.” Nobuo Tanaka, Executive Director of the International Energy Agency (IEA)
If nothing is done, says the report, “Energy-related emissions of carbon dioxide and other greenhouse gases will rise inexorably, pushing up average global temperature by as much as six degrees Celsius.”
Mr. Tanaka noted. “It is clear that the energy sector will have to play the central role in tackling climate change.” The analysis set out in this Outlook will provide a solid basis for all countries seeking to negotiate a new global climate deal in Copenhagen, he added.
The report clearly indicates that both industry and governments must act quickly to steer the world toward a cleaner, cleverer and more competitive global energy system. Nothing less than the future of the planet depends on it!
You can return to the main Market News page, or press the Back button on your browser.
