The International Energy Agency (IEA) has called for urgent government action and major investment in order to halt 'unsustainable' patterns of energy supply and use across the world.
In its latest World Energy Outlook – published on 12th November – the IEA paints a picture of an energy future dominated by demand for fossil fuels and an 'inexorable' rise in greenhouse gas emissions. Decisive action is required to secure supplies of affordable, reliable energy and create an environmentally benign energy system, says the report.
Failure to implement revolutionary policies and a massive increase in investment levels will have stark consequences, warns the Paris-based organisation: increased risk of supply disruptions and energy price hikes, as well as 'catastrophic and irreversible' damage to the global climate.
But the IEA is concerned that the investments required in the world’s energy systems – amounting to over $1 trillion/year – will be delayed due to the current financial crisis. The result would be a supply-crunch that could choke economic recovery.
'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.
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' said Tanaka. 'We must usher in a global energy revolution by improving energy efficiency and increasing the deployment of low-carbon energy.'
The IEA’s Reference Scenario – based on current energy trends and existing government policies – shows that the looming global recession has little overall impact on energy demand in the long-term and that energy prices are likely to remain high. Fossil fuels will account for 80 per cent of the world’s primary energy mix in 2030, down only slightly on today’s levels.
Oil will remain dominant, says the IEA, although demand for coal will rise more rapidly than for any other fuel in absolute terms. World electricity demand in the Reference Scenario is projected to grow at an annual rate of 3.2 per cent to 2015, slowing to two per cent per year from 2016-2030.
The energy sector will play a decisive role in the fight against climate change, says the report, as it accounts for 61 per cent of global greenhouse gas emissions. The delivery of deep cuts in emissions will require government and industry to 'face up to the reality of early capital replacement' particularly in the power sector.
The majority of the growth in electricity demand will occur outside OECD countries, reflecting the deployment of energy efficiency technologies in the OECD as well as a shift in those countries’ economies away from heavy manufacturing. The total investment required by the power sector to meet demand over the 2007-2030 period is projected to be $13.6 trillion – just over half of all projected energy sector investments.
Some $6.8 trillion of investment will be required for capacity additions, which will amount to 4530 GW over the report’s period. The IEA notes that the cost of building power stations has increased sharply over the past few years, and this fact, combined with projected high fuel costs, points to continued increases in end-user electricity prices.
Coal will remain the main fuel for power generation, says the IEA, with its share in total generation increasing from 41 to 44 per cent. Non-OECD countries will account for most of the growth in coal-fired generation. The share of natural gas in power generation falls, while nuclear power also loses market share.
The share of renewable energy in total electricity generation will rise significantly, from 18 per cent in 2006 to 20 per cent in 2015 and 23 per cent by 2030. The IEA forecasts that power plants equipped with carbon capture and storage (CCS) technology will only make a minor contribution to generation in 2030, although the overall efficiency of coal-fired generation is expected to rise from 34 per cent in 2006 to 38 per cent in 2030.
These trends indicate a rise in greenhouse gas emissions from the power generation sector, which currently account for around 39 per cent of all CO2 emissions. The IEA believes that the sector will account for 44 per cent of all CO2 emissions in 2020 and 45 per cent in 2030.
Much stronger policies need to be put in place for this trend to be reversed and for barriers to advanced technology deployment to be broken down, says the IEA. Overall, energy sector-related CO2 emissions are set to increase by 45 per cent between 2006 and 2030, reaching 41 Gt.
Three-quarters of this increase arises in China, India and the Middle East, and 97 per cent in non-OECD countries as a whole.
Stabilising greenhouse gas concentration at 550 ppm of CO2-equivalent would require emissions to rise to no more than 33 Gt in 2030 and to fall in the longer term. To achieve this, the share of low-carbon energy – hydropower, nuclear, biomass, other renewables and CCS-equipped power plants – in the world primary energy mix would need to expand from 19 per cent in 2006 to 26 per cent in 2030.
This would call for $4.1 trillion more investment in energy-related infrastructure and equipment than in the Reference Scenario – equal to 0.2 per cent of annual world GDP – and would limit the global temperature increase to 3°, says the IEA.
Limiting the global temperature rise to just 2° would require stabilising greenhouse gas concentrations to 450 ppm of CO2 equivalent and is a far greater challenge, according to the report. World energy-related CO2 emissions would need to drop sharply from 2020 onwards, reaching less than 26 Gt in 2030.
Achieving such an outcome would require even faster growth in the use of low-carbon energy – to account for 36 per cent of global primary energy mix by 2030. In this case, global energy investment needs are $9.3 trillion (0.6 per cent of annual world GDP) higher than in the Reference Scenario.
'We would need concerted action from all major emitters. Our analysis shows that OECD countries alone cannot put the world onto a 450-ppm trajectory, even if they were to reduce their emissions to zero' said Tanaka.
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