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Energy Future Looks Harsh, IEA Says
A more competitive energy future is forecast in a new report which uses recent data to predict the world’s energy consumption, through strong policies to support renewable energy and energy efficiency could avert the energy crunch.
The World Energy Outlook 2006, the annual publication of the International Energy Agency (IEA), shows that the energy market has become harsher and oil and gas prices this year are between three and four times higher than in 2002. Coal is now cheaper than natural gas for electricity generation, while nuclear power may, in some cases, be cheaper than both coal and gas – even where there is no penalty for emitting CO2. Coal has led the recent surge in global energy demand and is on a stronger growth path than in previous reports, according to the IEA.
Based on these figures, the Reference Scenario, a section of the report which provides a baseline vision of how energy markets are likely to evolve without new government measures to alter underlying energy trends, predicts global primary energy demand increases by 53 percent between now and 2030. Over 70 percent of this increase comes from developing countries, led by China and India. Imports of oil and gas in the OECD and developing Asia grow even faster than demand. World oil demand reaches 116 mb/d in 2030, up from 84 mb/d in 2005. Most of the increase in oil supply is met by a small number of major OPEC producers; non-OPEC conventional crude oil output peaks by the middle of the next decade. Global carbon-dioxide (CO2) emissions reach 40 Gt in 2030, a 55 percent increase over today’s level. China overtakes the United States as the world’s biggest emitter of CO2 before 2010, according to the IEA.
The report demonstrates that nuclear power could make a major contribution to reducing dependence on imported gas and curbing CO2 emissions in a cost-effective way. Additionally, biofuels can make a significant contribution to meeting future road-transport energy needs, helping to promote energy diversity and reducing emissions. The report predicts that biofuels reach 4 percent of road-fuel use in 2030.
Strong policy action is needed to move the world onto a more sustainable energy path, according to the report. One section, the Alternative Policy Scenario, demonstrates that the energy future can be substantially improved if governments around the world implement the policies and measures they are currently considering. In this section, global energy demand is reduced by 10 percent in 2030 – equivalent to China’s entire energy consumption today. Global carbon-dioxide emissions are reduced by 16 percent – equivalent to current emissions in the United States and Canada combined – in the same time-frame.
In the OECD countries, oil imports and CO2 emissions peak by 2015 and then begin to fall. Improved efficiency of energy use contributes most to the energy savings. Increased use of nuclear power and renewables also help reduce fossil-fuel demand and emissions. Just a dozen specific policies in key countries account for 40 percent of the reduction in global CO2 emissions. The shifts in energy trends described in this scenario would serve all three of the principal goals of energy policy: greater security, more environmental protection and improved economic efficiency.
“World Energy Outlook 2006 reveals that the energy future we are facing today, based on projections of current trends, is dirty, insecure and expensive,” says Claude Mandil, executive director of the IEA. “But it also shows how new government policies can create an alternative energy future which is clean, clever and competitive.”