IEEE Energy prospects

[Andre Kesteloot]

  The Next 25 Years in Energy

*POSTED BY:* Bill Sweet  /  Fri, November 11, 2011


The latest annual energy outlook by the International Energy Agency 
<http://iea.org/index_info.asp?id=2153>, though not radically different 
from earlier editions in broad outline, nonetheless paints a very 
dramatic picture of the next quarter century.

The global oil market will remain tight, with prices trending toward 
$120 per barrel, and with all new net demand coming from the transport 
sector in rapidly developing countries. Though Russia's role as an oil 
producer and exporter will decline somewhat, its position in natural gas 
will be more pivotal than ever, with a fast-growing share going to China 
and a somewhat shrinking share to Europe. So crucial is the role of 
Russia, the report contains for the first time a special section devoted 
to it and has posted that section, in Russian, on the report's homepage 
<http://iea.org/index_info.asp?id=2153>.

Like previous outlooks, this one distinguishes between a business as 
usual scenario and a New Policies Scenario in which governments 
generally try to curtail consumption of fossil fuels and promote green 
energy; it appears to consider the New Policies Scenario (NPS) the more 
likely one. Even in NPS, however, fossil fuels remain dominant for the 
next 25 years and renewables continue to account for only about 10 
percent of total world primary energy demand, thought their share of 
electricity production grows sharply.

Some of the report's most compelling highlights are displayed in a 
free-standing document containing ten charts 
<http://iea.org/index_info.asp?id=2153>, which is well worth a look even 
if time is lacking to study the whole report. For example, those 
subscribing to that theory that oil accounted for the decision of George 
W. Bush's administration to launch a second Gulf War will find Figure 
3.17 arresting: Among the countries expected to make large additions to 
the world's liquid fuel supplies in the next quarter century, Iraq leads 
the pack by a healthy margin and is well of ahead of Saudia Arabia and 
total world biofuels. Other highlights incude:

. with oil production declining in all existing fields, an increasing 
share of liquid fuels will come from natural gas liquids and oil sands

. despite all the current concern about the prospect of declining 
subsidies for renewable energy, the 2011 NPS  predicts that total 
renewables subsidies will increase to $250 billion in 2035, from $66 
billion in 2010; European subsidies will increase only modestly from a 
big base, U.S. subsidies more rapidly from a smaller base, and "rest of 
world" subsidies more rapidly still from an even smaller base

. in terms of power generation, NPS expects additions of renewable 
energy to roughly equal additions of gas and coal combined, with nuclear 
accounting for a considerably smaller share of increases

. even so, NPS sees a relatively robust future for nuclear, with the 
long-term Fukushima impact rather surprisingly small

. looking at where we are right now and how we got here, the Outlook 
finds that in the last decade, coal has met almost half of new demand 
for energy, roughly equally all other sources of energy

Mainly because coal is still so dominant, the Outlook finds prospects 
for greenhouse gas reduction rather grim. While the world is supposedly 
still committed to limiting the additional increase in global 
temperatures to 2 degrees Celsius, the Outlook concludes that on a 
business as usual scenario, the increase will be 6 °C. In the NPS 
scenario, the temperature rise is held to 3.5 °C, a prospect that is not 
comforting. Accordingly, the IEA also evaluates a third scenario, a 
450-ppm one--that is, one in which the atmospheric concentrations of 
carbon dioxide goes no higher than 445 ppm, and the rise in temperature 
no higher than 2 °C.

Achieving the NPS scenario, implying a temperature rise almost twice as 
great as what the world supposedly wants, would require energy 
investment of $38 trillion over the next 25 years. The 450-ppm scenario 
requires a $15 trillion more--that is, $53 rather than 38 trillion.

Even at that level of investment, in the 450 scenario four-fifths of 
total CO2 emissions in 2035 already are "locked in" by capital stock 
existing today. "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 future energy needs 
and climate goals," said Fatih Birol, IEA Chief Economist.


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