Even with policy measures to tackle climate change enacted by governments around ...

Even with policy measures to tackle climate change enacted by governments around the world, global primary energy demand will increase by around 36% between 2008 and 2035, at a rate of 1.2% per year on average. This is a central finding of the International Energy Agency’s (IEA) annual World Energy Outlook (WEO). This growth, as projected under the IEA’s New Policies Scenario, would represent a slowing down of growth, from the 2% per year over the previous 27-year period. Interestingly, Non-OECD countries would account for more than 90% of the projected increase in world primary energy demand, including 36% from China alone. ‘The Copenhagen Accord and the agreement among G20 countries to phase out subsidies [for fossil fuels] 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 IEA at the launch of the flagship publication. ‘The energy world is facing unprecedented uncertainty,’ added Tanaka. 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. ‘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.’ The central scenario in this year’s WEO - the New Policies Scenario - takes account of the broad policy commitments and plans that have been announced by countries around the world. ‘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.’ IEA preliminary data suggests that China overtook the US in 2009 to become the world’s largest energy user, despite its very low per capita 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,’ said Tanaka. Globally, fossil fuels remain dominant over the WEO period in the New Policies Scenario, though their share of the overall energy mix falls in favour of renewable energy sources and nuclear power. Oil nonetheless remains the leading fuel in the energy mix by 2035, followed by coal. Of the three fossil fuels, gas consumption grows most rapidly, its share of total energy use almost reaching that of coal. The oil price is set to rise, reflecting the growing insensitivity of both demand and supply to price, says the IEA. 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. Oil demand continues to grow steadily too, reaching about 99mn barrels per day (mb/d) by 2035 — 15 mb/d barrels per day higher than in 2009. All of the net growth comes from non-OECD countries, almost half from China alone; demand in the OECD actually falls, by over 6 mb/d barrels per day. Crude oil output is projected to reach an undulating plateau of just under 69 mb/d by 2020, while production of natural gas liquids (NGLs) and unconventional oil - notably Canadian oil sands - grows strongly. OPEC countries account for a growing share of global production, with the biggest increases coming from Saudi Arabia and Iraq. ‘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 $57bn in 2009 to $205bn (in 2009 dollars) by 2035. The share of modern renewable energy sources, including hydro, wind, solar, geothermal, modern biomass and marine energy in global primary energy use triples between 2008 and 2035 and their combined share in total primary energy demand increases from 7% to 14%. 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 2ºC. Rising demand for fossil fuels would continue to drive up energy-related carbon-dioxide emissions through to 2035, making it all but impossible to achieve the 2ºC goal, as the required reductions in emissions after 2020 would be too steep, says the IEA. The New Policy Scenario trends are in line with stabilising the concentration of greenhouse gases at over 650 parts per million (ppm) of carbon dioxideequivalent, resulting in a likely temperature rise of more than 3.5ºC in the long term. Meeting the 2ºC rise goal, described in a ‘450 Scenario’ under which greenhouse gas emissions are stabilised at a level no higher than 450 ppm, would require a rather different evolution of the energy sector. 450 Scenario assumes implementation of measures to realise the more ambitious end of target ranges announced under the Copenhagen Accord, and more rapid implementation of the removal of fossil fuel subsidies agreed by the G-20 than assumed in the New Policies Scenario. This action brings about a much faster transformation of the global energy system and a correspondingly faster slowdown in global carbon dioxide emissions. For example, 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. Coal demand peaks before 2020. Demand for gas also reaches a peak before the end of the 2020s. Renewables and nuclear double their current combined share to 38% in 2035. Achieving this would require a ‘phenomenal policy push’ by governments around the world, adds the IEA, and the required rate of technological transformation would be unprecedented.

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