Without a bold
change of policy direction, the world will lock itself into an
insecure, inefficient and high-carbon energy system, the
International Energy Agency warned as it launched the 2011 edition
of the World Energy Outlook (WEO).

The agency’s flagship publication, released today in London,
said there is still time to act, but the window of opportunity is
closing. Growth, prosperity and rising population will inevitably
push up energy needs over the coming decades.

But we cannot continue to rely on insecure and environmentally
unsustainable uses of energy, said IEA Executive Director Maria van
der Hoeven.

‘Governments need to introduce stronger measures to drive
investment in efficient and low-carbon technologies. The Fukushima
nuclear accident, the turmoil in parts of the Middle East and North
Africa and a sharp rebound in energy demand in 2010 which pushed
CO2 emissions to a record high, highlight the urgency and the scale
of the challenge.”

In the WEO’s central New Policies Scenario, which assumes that
recent government commitments are implemented in a cautious manner,
primary energy demand increases by one-third between 2010 and 2035,
with 90% of the growth in non-OECD economies.

China consolidates its position as the world’s largest energy
consumer: it consumes nearly 70% more energy than the United States
by 2035, even though, by then, per capita demand in China is still
less than half the level in the United States.

The share of fossil fuels in
global primary energy consumption falls from around 81% today to
75% in 2035. Renewables increase from 13% of the mix today to 18%
in 2035; the growth in renewables is underpinned by subsidies that
rise from $64 billion in 2010 to $250 billion in 2035, support that
in some cases cannot be taken for granted in this age of fiscal
austerity. By contrast, subsidies for fossil fuels amounted to $409
billion in 2010.

Short-term pressures on oil markets are easing with the economic
slowdown and the expected return of Libyan supply. But the average
oil price remains high, approaching $120/barrel (in year-2010
dollars) in 2035.

Reliance grows on a small number of producers: the increase in
output from Middle East and North Africa (MENA) is over 90% of the
required growth in world oil output to 2035. If, between 2011 and
2015, investment in the MENA region runs one-third lower than the
$100 billion per year required, consumers could face a near-term
rise in the oil price to $150/barrel.

Oil demand rises from 87 million barrels per day (mb/d) in 2010
to 99 mb/d in 2035, with all the net growth coming from the
transport sector in emerging economies. The passenger vehicle fleet
doubles to almost 1.7 billion in 2035. Alternative technologies,
such as hybrid and electric vehicles that use oil more efficiently
or not at all, continue to advance but they take time to penetrate
markets.

The use of coal, which met almost half of the increase in global
energy demand over the last decade, rises 65% by 2035. Prospects
for coal are especially sensitive to energy policies, notably in
China, which today accounts for almost half of global demand. More
efficient power plants and carbon capture and storage (CCS)
technology could boost prospects for coal, but the latter still
faces significant regulatory, policy and technical barriers that
make its deployment uncertain.

Fukushima Daiichi has raised questions about the future role of
nuclear power. In the New Policies Scenario, nuclear output rises
by over 70% by 2035, only slightly less than projected last year,
as most countries with nuclear programs have reaffirmed their
commitment to them. But given the increased uncertainty, that could
change.

A special Low Nuclear Case
examines what would happen if the anticipated contribution of
nuclear to future energy supply were to be halved. While providing
a boost to renewables, such a slowdown would
increase import bills, heighten energy security concerns and make
it harder and more expensive to combat climate
change.

The future for natural gas is more certain: its share in the
energy mix rises and gas use almost catches up with coal
consumption, underscoring key findings from a recent
WEO Special Report that
examines whether the world is entering a “Golden Age of
Gas”.

”Golden Age of
Gas”.

One country set to benefit from increased
demand for gas is Russia, which is the subject of a special
in-depth study in
WEO-2011. Key challenges for
Russia are to finance a new generation of higher-cost oil and gas
fields and to improve its energy efficiency. While Russia remains
an important supplier to its traditional markets in Europe, a shift
in its fossil fuel exports towards China and the Asia-Pacific
gathers momentum.

If Russia improved its energy efficiency to the levels of
comparable OECD countries, it could reduce its primary energy use
by almost one-third, an amount similar to the consumption of the
United Kingdom. Potential savings of natural gas alone, at 180 bcm,
are close to Russia‟s net exports in 2010.

In the New Policies Scenario,
cumulative CO2 emissions over the next 25 years amount to
three-quarters of the total from the past 110 years, leading to a
long-term average temperature rise of 3.5°C. China‟s per-capita
emissions match the OECD average in 2035. Were the new policies not
implemented, we are on an even more dangerous track, to an increase
of 6°C.

“As each year passes without clear signals to drive investment
in clean energy, the “lock-in‟ of high-carbon infrastructure is
making it harder and more expensive to meet our energy security and
climate goals,” said Fatih Birol, IEA Chief
Economist.

The WEO
presents a 450
Scenario, which traces an energy path
consistent with meeting the globally agreed goal of limiting the
temperature rise to 2°C.

Four-fifths of the total energy-related
CO2 emissions permitted to 2035 in the
450 Scenario are already locked-in by existing capital stock,
including power stations, buildings and factories. Without further
action by 2017, the energy-related infrastructure then in place
would generate all the CO2 emissions allowed in
the 450 Scenario up to 2035.

Delaying action is a false economy: for every $1 of
investment in cleaner technology that is avoided in the power
sector before 2020, an additional $4.30 would need to be spent
after 2020 to compensate for the increased emissions.