WEO-2010 Predicts Future Energy Patterns and Actions?

THE International Energy Authority's (IEA) 2010 edition of the World Energy Outlook (WEO-2010) was released in London today.

“The Copenhagen Accord and the agreement among G20 countries to phase out subsidies are important steps forward. But, these moves still fall a very long way short of what is required to set us on the path to a truly sustainable energy system”, said Nobuo Tanaka, Executive Director of the International Energy Agency today in London at the launch of the WEO-2010.

“The energy world is facing unprecedented uncertainty,” Tanaka said.

The strength of the economic recovery holds the key to how energy markets will evolve over the next few years. But WEO-2010 demonstrates that it is what governments do, and how that action affects technology, the price of energy services and end-user behaviour, that will shape the future of energy in the longer term.

Tanaka added: “We need to use energy more efficiently and we need to wean ourselves off fossil fuels by adopting technologies that leave a much smaller carbon footprint.”

WEO-2010 provides updated projections of energy demand, production, trade and investment, fuel by fuel and region by region through to 2035. For the first time it includes a new scenario that anticipates future actions by governments to meet the commitments they have made to tackle climate change and growing energy insecurity.

WEO-2010 also puts the spotlight on several topical issues, including what more must be done and spent post-Copenhagen to limit the global temperature increase to 2°C and how these actions would impact oil markets; how emerging economies – led by China and India – will increasingly shape the global energy landscape; the costs and benefits of increasing renewable energy, the outlook for Caspian energy markets and their implications for global energy supply, the future role for unconventional oil and the crucial importance of energy in achieving the UN Millennium Development Goals.

According to WEO-2010 recent policy moves by various governments and international organisations are a start, but much stronger action is needed to accelerate the transformation of the global energy system.

“We have taken governments at their word, in assuming that they will actually implement the policies and measures, albeit in a cautious manner, to ensure that the goals they have set are met” said Tanaka.

In that scenario, world primary energy demand increases by 36% between 2008 and 2035, or 1.2% per year on average. The assumed policies make a tangible difference to energy trends: demand grew by 2% per year over the previous 27-year period.

In the New Policies Scenario, Non-OECD (Organisation for Economic Co-operation and Development) countries account for 93% of the projected increase in world primary energy demand.

China – which the IEA preliminary data suggests overtook the United States in 2009 to become the world’s largest energy user despite its low per capita energy use – contributes 36% to the projected growth in global energy use.

“It is hard to overstate the growing importance of China in global energy. How the country responds to the threats to global energy security and climate posed by rising fossil-fuel use will have far-reaching consequences for the rest of the world,” Tanaka added.

The oil price is set to rise, reflecting the growing insensitivity of both demand and supply to price. In the New Policies Scenario, the average IEA crude oil price rises from just over $60 in 2009 to $113 per barrel (in year-2009 dollars) in 2035.

“Renewable energy can play a central role in reducing carbon-dioxide emissions and diversifying energy supplies, but only if strong and sustained support is made available,” Tanaka said.

In the New Policies Scenario, government intervention in support of renewables (electricity from renewables and biofuels) increases from $57 billion in 2009 to $205 billion (in 2009 dollars) by 2035.

The energy trends envisioned in the New Policies Scenario imply that national commitments to reduce greenhouse-gas emissions, while expected to have some impact, are collectively inadequate to meet the Copenhagen Accord’s overall goal of holding the global temperature increase to below 2°C.

Rising demand for fossil fuels would continue to drive up energy-related carbon-dioxide (CO2) emissions through to 2035, making it all but impossible to achieve the 2°C goal, as the required reductions in emissions after 2020 would be too steep.

A lack of ambition in the Copenhagen Accord pledges has increased our estimated cost of reaching the 2°C goal by $1 trillion and undoubtedly made it less likely that the goal will actually be achieved.

Doing so would require a phenomenal policy push by governments around the world. The technology exists today to enable such a change, but the required rate of technological transformation would be unprecedented.

“The message here is clear. We must act now to ensure that climate commitments are interpreted in the strongest way possible and that much stronger commitments are adopted and taken up after 2020, if not before. Otherwise, the 2°C goal could be out of reach for good,” Tanaka said.

After the release of WEO-2010 the World Wildlife Fund (WWF) announced it is reasonably satisfied that energy action is being highlighted.

WWF stated that these latest energy forecasts show the continuing mainstreaming of the view that effective climate action is clearly linked to future sustainable energy security WWF commented today.

“While we don’t necessarily endorse all the detail, WWF is highly gratified with the IEA’s growing emphasis on energy efficiency and renewable energy to enhance effective carbon abatement regimes,” said Dr Stephan Singer, Director of Global Energy Policy for WWF International.

“We are pleased that they highlight the need to overcome the approximate annual $US700 billion in fossil fuel subsidies. This money, about one per cent of global GDP, needs to go to support renewable and  energy conservation and help the poor.”

Tuesday 9th November 2010

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