IEA WEO extracts: “Fossil fuels — oil, coal and natural gas — remain the dominant energy sources in 2035 in all three scenarios, though their share of the overall primary fuel mix varies markedly.”” The shares of renewables and nuclear power are correspondingly highest in the 450 Scenario and lowest in the Current Policies Scenario. The range of outcomes — and therefore the uncertainty with respect to future energy use — is largest for coal, nuclear power and non-hydro renewable energy sources.”
Emerging economies, led by China and India, will drive global demand higher
….Oil remains the dominant fuel in the primary energy mix during the Outlook period, though its share of the primary fuel mix, which stood at 33% in 2008, drops to 28% ….The use of modern renewable energy — including hydro, wind, solar, geothermal, modern biomass and marine energy — triples over the course of the Outlook period, its share in total primary energy demand increasing from 7% to 14%.
….Non-OECD countries account for 93% of the projected increase in world primary energy demand in the New Policies Scenario, reflecting faster rates of growth of economic activity, industrial production, population and urbanisation. China, where demand has surged over the past decade, contributes 36% to the projected growth in global energy use, its demand rising by 75% between 2008 and 2035. By 2035, China accounts for 22% of world demand, up from 17% today.
It is hard to overstate the growing importance of China in global energy markets.
Our preliminary data suggest that China overtook the United States in 2009 to become the world’s largest energy user.
Will peak oil be a guest or the spectre at the feast?
….Oil demand (excluding biofuels) continues to grow steadily, reaching about 99 million barrels per day (mb/d) by 2035 — 15 mb/d higher than in 2009. All of the net growth comes from non-OECD countries, almost half from China alone, mainly driven by rising use of transport fuels; demand in the OECD falls by over 6 mb/d. Global oil production reaches 96 mb/d, the balance of 3 mb/d coming from processing gains. Crude oil output reaches an undulating plateau of around 68-69 mb/d by 2020, but never regains its all-time peak of 70 mb/d reached in 2006, while production of natural gas liquids (NGLs) and unconventional oil grows strongly.
Total OPEC production rises continually through to 2035 in the New Policies Scenario, boosting its share of global output to over one-half. ….Saudi Arabia regains from Russia its place as the world’s biggest oil producer, its output rising from 9.6 mb/d in 2009 to 14.6 mb/d in 2035. The increasing share of OPEC contributes to the growing dominance of national oil companies: as a group, they account for all of the increase in global production between 2009 and 2035. ….The size of ultimately recoverable resources of both conventional and unconventional oil is a major source of uncertainty for the long-term outlook for world oil production.
Clearly, global oil production will peak one day, but that peak will be determined by factors affecting both demand and supply. In the New Policies Scenario, production in total does not peak before 2035, though it comes close to doing so. By contrast, production does peak, at 86 mb/d, just before 2020 in the 450 Scenario, as a result of weaker demand, falling briskly thereafter. Oil prices are much lower as a result. The message is clear: if governments act more vigorously than currently planned to encourage more efficient use of oil and the development of alternatives, then demand for oil might begin to ease soon and, as a result, we might see a fairly early peak in oil production. That peak would not be caused by resource constraints. But if governments do nothing or little more than at present, then demand will continue to increase, supply costs will rise, the economic burden of oil use will grow, vulnerability to supply disruptions will increase and the global environment will suffer serious damage.
Unconventional oil is abundant but more costly
Unconventional oil is set to play an increasingly important role in world oil supply through to 2035, regardless of what governments do to curb demand. In the New Policies Scenario, output rises from 2.3 mb/d in 2009 to 9.5 mb/d in 2035. Canadian oil sands and Venezuelan extra-heavy oil dominate the mix, but coal-to-liquids, gas-to-liquids and, to a lesser extent, oil shales also make a growing contribution in the second half of the Outlook period. Unconventional oil resources are thought to be huge — several times larger than conventional oil resources. The rate at which they will be exploited will be determined by economic and environmental considerations, including the costs of mitigating their environmental impact. Unconventional sources of oil are among the more expensive available: they require large upfront capital investment, which is typically paid back over long periods. Consequently, they play a key role in setting future oil prices.
China could lead us into a golden age for gas
Natural gas is certainly set to play a central role in meeting the world’s energy needs for at least the next two-and-a-half decades. Global natural gas demand, which fell in 2009 with the economic downturn, is set to resume its long-term upward trajectory from 2010. It is the only fossil fuel for which demand is higher in 2035 than in 2008 in all scenarios, though it grows at markedly different rates. In the New Policies Scenario, demand reaches 4.5 trillion cubic metres (tcm) in 2035 — an increase of 1.4 tcm, or 44%, over 2008 and an average rate of increase of 1.4% per year. China’s demand grows fastest, at an average rate of almost 6% per year, and the most in volume terms, accounting for more than one-fifth of the increase in global demand to 2035. There is potential for Chinese gas demand to grow even faster than this, especially if coal use is restrained for environmental reasons. ….Around 35% of the global increase in gas production in the New Policies Scenario comes from unconventional sources — shale gas, coalbed methane and tight gas — in the United States and, increasingly, from other regions, notably Asia-Pacific.
The glut of global gas-supply capacity that has emerged as a result of the economic crisis (which depressed gas demand), the boom in US unconventional gas production and a surge in liquefied natural gas (LNG) capacity, could persist for longer than many expect.
A profound change in the way we generate electricity is at hand
World electricity demand is expected to continue to grow more strongly than any other final form of energy. In the New Policies Scenario, it is projected to grow by 2.2% per year between 2008 and 2035, with more than 80% of the increase occurring in non-OECD countries.
The future of renewables hinges critically on strong government support
….The Middle East and North Africa region holds enormous potential for large-scale development of solar power, but there are many market, technical and political challenges that need to be overcome.
….We estimate that government support worldwide for both electricity from renewables and for biofuels totalled $57 billion in 2009, of which $37 billion was for the former. In the New Policies Scenario, total support grows to $205 billion (in year-2009 dollars), or 0.17% of global GDP, by 2035. Between 2010 and 2035, 63% of the support goes to renewables-based electricity.
Copenhagen pledges are collectively far less ambitious than the overall goal
….These trends are in line with stabilising the concentration of greenhouse gases at over 650 ppm CO2-eq, resulting in a likely temperature rise of more than 3.5°C in the long term.
The 2°C goal can only be achieved with vigorous implementation of commitments in the period to 2020 and much stronger action thereafter. According to climate experts, in order to have a reasonable chance of achieving the goal, the concentration of greenhouse gases would need to be stabilised at a level no higher than 450 ppm CO2-eq. The 450 Scenario describes how the energy sector could evolve were this objective to be achieved. ….Cutting emissions sufficiently to meet the 2°C goal would require a far-reaching transformation of the global energy system. In the 450 Scenario, oil demand peaks just before 2020 at 88 mb/d, only 4 mb/d above current levels, and declines to 81 mb/d in 2035. There is still a need to build almost 50 mb/d of new capacity to compensate for falling production from existing fields, but the volume of oil which has to be found and developed from new sources by 2035 is only two-thirds that in the New Policies Scenario, allowing the oil industry to shelve some of the more costly and more environmentally sensitive prospective projects.
Failure at Copenhagen has cost us at least $1 trillion…
Even if the commitments under the Copenhagen Accord were fully implemented, the emissions reductions that would be needed after 2020 would cost more than if more ambitious earlier targets had been pledged. The emissions reductions that those commitments would yield by 2020 are such that much bigger reductions would be needed thereafter to get on track to meet the 2°C goal. In the 450 Scenario in this year’s Outlook, the additional spending on low-carbon energy technologies (business investment and consumer spending) amounts to $18 trillion (in year-2009 dollars) more than in the Current Policies Scenario in the period 2010-2035, and around $13.5 trillion more than in the New Policies Scenario. The additional spending compared with the Current Policies Scenario to 2030 is $11.6 trillion — about $1 trillion more than we estimated last year.
…though reaching the Copenhagen goal is still (just about) achievable
The modest nature of the pledges to cut greenhouse-gas emissions under the Copenhagen Accord has undoubtedly made it less likely that the 2°C goal will actually be achieved. Reaching that goal would require a phenomenal policy push by governments around the world. An indicator of just how big an effort is needed is the rate of decline in carbon intensity — the amount of CO2 emitted per dollar of GDP — required in the 450 Scenario. Intensity would have to fall in 2008-2020 at twice the rate of 1990-2008; between 2020 and 2035, the rate would have to be almost four times faster. The technology that exists today could enable such a change, but such a rate of technological transformation would be unprecedented. And there are major doubts about the implementation of the commitments for 2020, as many of them are ambiguous and may well be interpreted in a far less ambitious manner than assumed in the 450 Scenario. A number of countries, for instance, have proposed ranges for emissions reductions, or have set targets based on carbon or energy intensity and/or a baseline of GDP that differs from that assumed in our projections. Overall, we estimate that the uncertainty related to these factors equates to 3.9 Gt of energy-related CO2 emissions in 2020, or about 12% of projected emissions in the 450 Scenario. It is vitally important that these commitments are interpreted in the strongest way possible and that much stronger commitments are adopted and acted upon after 2020, if not before. Otherwise, the 2°C goal would probably be out of reach for good.
Getting rid of fossil-fuel subsidies is a triple-win solution
Emerging economies, led by China and India, will drive global demand higher
….Oil remains the dominant fuel in the primary energy mix during the Outlook period, though its share of the primary fuel mix, which stood at 33% in 2008, drops to 28% ….The use of modern renewable energy — including hydro, wind, solar, geothermal, modern biomass and marine energy — triples over the course of the Outlook period, its share in total primary energy demand increasing from 7% to 14%.
….Non-OECD countries account for 93% of the projected increase in world primary energy demand in the New Policies Scenario, reflecting faster rates of growth of economic activity, industrial production, population and urbanisation. China, where demand has surged over the past decade, contributes 36% to the projected growth in global energy use, its demand rising by 75% between 2008 and 2035. By 2035, China accounts for 22% of world demand, up from 17% today.
It is hard to overstate the growing importance of China in global energy markets.
Our preliminary data suggest that China overtook the United States in 2009 to become the world’s largest energy user.
Will peak oil be a guest or the spectre at the feast?
….Oil demand (excluding biofuels) continues to grow steadily, reaching about 99 million barrels per day (mb/d) by 2035 — 15 mb/d higher than in 2009. All of the net growth comes from non-OECD countries, almost half from China alone, mainly driven by rising use of transport fuels; demand in the OECD falls by over 6 mb/d. Global oil production reaches 96 mb/d, the balance of 3 mb/d coming from processing gains. Crude oil output reaches an undulating plateau of around 68-69 mb/d by 2020, but never regains its all-time peak of 70 mb/d reached in 2006, while production of natural gas liquids (NGLs) and unconventional oil grows strongly.
Total OPEC production rises continually through to 2035 in the New Policies Scenario, boosting its share of global output to over one-half. ….Saudi Arabia regains from Russia its place as the world’s biggest oil producer, its output rising from 9.6 mb/d in 2009 to 14.6 mb/d in 2035. The increasing share of OPEC contributes to the growing dominance of national oil companies: as a group, they account for all of the increase in global production between 2009 and 2035. ….The size of ultimately recoverable resources of both conventional and unconventional oil is a major source of uncertainty for the long-term outlook for world oil production.
Clearly, global oil production will peak one day, but that peak will be determined by factors affecting both demand and supply. In the New Policies Scenario, production in total does not peak before 2035, though it comes close to doing so. By contrast, production does peak, at 86 mb/d, just before 2020 in the 450 Scenario, as a result of weaker demand, falling briskly thereafter. Oil prices are much lower as a result. The message is clear: if governments act more vigorously than currently planned to encourage more efficient use of oil and the development of alternatives, then demand for oil might begin to ease soon and, as a result, we might see a fairly early peak in oil production. That peak would not be caused by resource constraints. But if governments do nothing or little more than at present, then demand will continue to increase, supply costs will rise, the economic burden of oil use will grow, vulnerability to supply disruptions will increase and the global environment will suffer serious damage.
Unconventional oil is abundant but more costly
Unconventional oil is set to play an increasingly important role in world oil supply through to 2035, regardless of what governments do to curb demand. In the New Policies Scenario, output rises from 2.3 mb/d in 2009 to 9.5 mb/d in 2035. Canadian oil sands and Venezuelan extra-heavy oil dominate the mix, but coal-to-liquids, gas-to-liquids and, to a lesser extent, oil shales also make a growing contribution in the second half of the Outlook period. Unconventional oil resources are thought to be huge — several times larger than conventional oil resources. The rate at which they will be exploited will be determined by economic and environmental considerations, including the costs of mitigating their environmental impact. Unconventional sources of oil are among the more expensive available: they require large upfront capital investment, which is typically paid back over long periods. Consequently, they play a key role in setting future oil prices.
China could lead us into a golden age for gas
Natural gas is certainly set to play a central role in meeting the world’s energy needs for at least the next two-and-a-half decades. Global natural gas demand, which fell in 2009 with the economic downturn, is set to resume its long-term upward trajectory from 2010. It is the only fossil fuel for which demand is higher in 2035 than in 2008 in all scenarios, though it grows at markedly different rates. In the New Policies Scenario, demand reaches 4.5 trillion cubic metres (tcm) in 2035 — an increase of 1.4 tcm, or 44%, over 2008 and an average rate of increase of 1.4% per year. China’s demand grows fastest, at an average rate of almost 6% per year, and the most in volume terms, accounting for more than one-fifth of the increase in global demand to 2035. There is potential for Chinese gas demand to grow even faster than this, especially if coal use is restrained for environmental reasons. ….Around 35% of the global increase in gas production in the New Policies Scenario comes from unconventional sources — shale gas, coalbed methane and tight gas — in the United States and, increasingly, from other regions, notably Asia-Pacific.
The glut of global gas-supply capacity that has emerged as a result of the economic crisis (which depressed gas demand), the boom in US unconventional gas production and a surge in liquefied natural gas (LNG) capacity, could persist for longer than many expect.
A profound change in the way we generate electricity is at hand
World electricity demand is expected to continue to grow more strongly than any other final form of energy. In the New Policies Scenario, it is projected to grow by 2.2% per year between 2008 and 2035, with more than 80% of the increase occurring in non-OECD countries.
The future of renewables hinges critically on strong government support
….The Middle East and North Africa region holds enormous potential for large-scale development of solar power, but there are many market, technical and political challenges that need to be overcome.
….We estimate that government support worldwide for both electricity from renewables and for biofuels totalled $57 billion in 2009, of which $37 billion was for the former. In the New Policies Scenario, total support grows to $205 billion (in year-2009 dollars), or 0.17% of global GDP, by 2035. Between 2010 and 2035, 63% of the support goes to renewables-based electricity.
Copenhagen pledges are collectively far less ambitious than the overall goal
….These trends are in line with stabilising the concentration of greenhouse gases at over 650 ppm CO2-eq, resulting in a likely temperature rise of more than 3.5°C in the long term.
The 2°C goal can only be achieved with vigorous implementation of commitments in the period to 2020 and much stronger action thereafter. According to climate experts, in order to have a reasonable chance of achieving the goal, the concentration of greenhouse gases would need to be stabilised at a level no higher than 450 ppm CO2-eq. The 450 Scenario describes how the energy sector could evolve were this objective to be achieved. ….Cutting emissions sufficiently to meet the 2°C goal would require a far-reaching transformation of the global energy system. In the 450 Scenario, oil demand peaks just before 2020 at 88 mb/d, only 4 mb/d above current levels, and declines to 81 mb/d in 2035. There is still a need to build almost 50 mb/d of new capacity to compensate for falling production from existing fields, but the volume of oil which has to be found and developed from new sources by 2035 is only two-thirds that in the New Policies Scenario, allowing the oil industry to shelve some of the more costly and more environmentally sensitive prospective projects.
Failure at Copenhagen has cost us at least $1 trillion…
Even if the commitments under the Copenhagen Accord were fully implemented, the emissions reductions that would be needed after 2020 would cost more than if more ambitious earlier targets had been pledged. The emissions reductions that those commitments would yield by 2020 are such that much bigger reductions would be needed thereafter to get on track to meet the 2°C goal. In the 450 Scenario in this year’s Outlook, the additional spending on low-carbon energy technologies (business investment and consumer spending) amounts to $18 trillion (in year-2009 dollars) more than in the Current Policies Scenario in the period 2010-2035, and around $13.5 trillion more than in the New Policies Scenario. The additional spending compared with the Current Policies Scenario to 2030 is $11.6 trillion — about $1 trillion more than we estimated last year.
…though reaching the Copenhagen goal is still (just about) achievable
The modest nature of the pledges to cut greenhouse-gas emissions under the Copenhagen Accord has undoubtedly made it less likely that the 2°C goal will actually be achieved. Reaching that goal would require a phenomenal policy push by governments around the world. An indicator of just how big an effort is needed is the rate of decline in carbon intensity — the amount of CO2 emitted per dollar of GDP — required in the 450 Scenario. Intensity would have to fall in 2008-2020 at twice the rate of 1990-2008; between 2020 and 2035, the rate would have to be almost four times faster. The technology that exists today could enable such a change, but such a rate of technological transformation would be unprecedented. And there are major doubts about the implementation of the commitments for 2020, as many of them are ambiguous and may well be interpreted in a far less ambitious manner than assumed in the 450 Scenario. A number of countries, for instance, have proposed ranges for emissions reductions, or have set targets based on carbon or energy intensity and/or a baseline of GDP that differs from that assumed in our projections. Overall, we estimate that the uncertainty related to these factors equates to 3.9 Gt of energy-related CO2 emissions in 2020, or about 12% of projected emissions in the 450 Scenario. It is vitally important that these commitments are interpreted in the strongest way possible and that much stronger commitments are adopted and acted upon after 2020, if not before. Otherwise, the 2°C goal would probably be out of reach for good.
Getting rid of fossil-fuel subsidies is a triple-win solution
Energy poverty in the developing world calls for urgent action
