Insecure and Unsustainable Energy Use Concerns IEA (WEO 2011)

Oil demand rises with all the net growth over the next 25 years coming from the transport sector in emerging economies

The International Energy Agency (IEA) has published its annual report World Energy Outlook 2011 (WEO). In it the IEA warns that without a bold change of policy direction, the world will lock itself into an insecure, inefficient and high-carbon energy system which would have far-reaching consequences. At the London release, the report says there is still time to act, but the window of opportunity is closing.  Uncertainty abounds: oil prices remain high with significant upward pressure while oil demand rises with all the net growth over the next 25 years coming from the transport sector in emerging economies, but in the IEA’s words “the future for natural gas is more certain”. In fact, natural gas is the only fossil fuel to increase its share in the global mix over the period to 2035.

“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.”

The natural gas share in the energy mix rises and gas use almost catches up with coal consumption, underscoring key findings from a recent WEO Special Report which examined whether the world is entering a “Golden Age of Gas”. In that special report, a precursor to WEO 2011, the IEA declared, “CNG vehicles may emit less CO2 per km than electric vehicles (EV) and plug-in hybrid vehicles (PHEV), depending on the fuels used to produce electricity. In 2020, CNG cars are expected to emit less CO2 per km than PHEVs in all regions shown in Figure 3.7, assuming 10% of the vehicle-kilometres of PHEVs is electrically driven.” (Page 96)

The transport sector in emerging economies drives all the net oil demand growth. Non-OECD car markets expand substantially; car sales there exceed those in the OECD by 2020, and the global passenger car fleet is set to double, reaching almost 1.7 billion by 2035, driving up oil consumption despite impressive gains in vehicle fuel economy and increased supplies of biofuels. Alternative vehicle technologies are emerging but it will take time and concerted policy and industry action for them to become commercially viable and penetrate markets.

Nevertheless, “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.

Both World Energy Outlook 2011 and Are We Entering a Golden Age of Gas are available through the IEA bookshop.

(This article primarily compiled using information from an IEA press release)

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