Nations must invest $37 trillion in energy technologies by 2030 to stabilize greenhouse gas emissions at sustainable levels and meet energy needs, the International Energy Agency warned today.
IEA's "World Energy Outlook" raises the stakes for U.N. climate talks in Copenhagen, Denmark. Delaying the shift to low-carbon energy by just a few years, it says, will make it impossible to avert catastrophic temperature rises.
The report predicts $26 trillion in 2008 U.S. dollars through 2030 is needed for energy projects to meet growing energy demand, if the world continues on its current energy-use trajectory and remains heavily dependent on fossil fuels.
Another $10.5 trillion must be spent to lower energy-related greenhouse gas emissions over that span to meet a lower-carbon scenario, the report says.
No change in government policies means "rapidly increasing dependence on fossil fuels, with alarming consequences for climate change and energy security," the report says.
Nobuo Tanaka, IEA's executive director, said the report provides both a stern warning and cause for optimism.
"Continuation of current trends in energy use puts the world on track for a rise in temperature of up to 6 degrees C and poses serious threats to global energy security," Tanaka said in a statement. But, he added, "there are cost-effective solutions to avoid severe climate change while also enhancing energy security -- and these are within reach as the new Outlook shows."
The report finds that energy-related carbon dioxide emissions this year could be as much as 3 percent lower due to the economic slump, which coincided with energy demand slackened by the recession.
But the report adds that these CO2 savings will "count for nothing" without a strong agreement coming out of next month's pivotal climate change talks in Copenhagen.
The report predicts a 2 percent drop in world energy demand this year, the first significant drop since 1981, but says it should rebound soon.
IEA forecasts an increase of 2.5 percent annually between 2010 and 2015, then a slowdown as developing economies mature and population growth eases.
Overall, the report's "reference" case points to an increase of 1.5 percent yearly between 2007 and 2030.
A senior IEA official who asked not to be identified said U.S. pressure forced the report's authors to overstate the potential for oil production increases, The Guardian reported yesterday. That official said the United States pushed IEA to underestimate how quickly existing oil fields may be depleted and hype the development of new reserves in order to prevent a scramble to buy remaining sources, according to the newspaper.
Efficiency is key
The $10.4 trillion additional investment by 2030 to meet the report's "450 scenario" -- in which atmospheric greenhouse gas emissions are stabilized around 450 parts per million -- would be dominated by investment in building efficiency, the power sector and transportation. The 450 ppm level would limit the odds of global temperatures rising more than 2 degrees Celsius to 50 percent, IEA said.
IEA finds that end-use efficiency accounts for more than half of emissions reductions in 2030 compared with the reference case. Efficiency, as well as other "decarbonization" investments including a greater share of nuclear and renewable energy generation in the power sector, provides two-thirds of the carbon reductions in 2030, the report says.
Coal demand is reduced by half and natural gas demand would be 17 percent lower in 2030 in the carbon-cutting scenario versus the reference scenario. Carbon capture and storage accounts for 10 percent of the emissions savings in 2030, the report said.
Additional investment needed to meet the lower-carbon scenario would be offset by $8.6 trillion in health, security and energy savings benefits, the report says.
IEA warns that delaying emission curbs will be disastrous -- and would add far more to the already considerable costs needed to adopt lower-carbon alternatives.
"We calculate that each year of delay before moving onto the emissions path consistent with a 2°C temperature increase would add approximately $500 billion to the global incremental investment cost of $10.5 trillion for the period 2010-2030," the report states. "A delay of just a few years would probably render that goal completely out of reach."
Oil and gas
IEA's reference case predicts that oil demand will grow by a percentage point a year on average, reaching 105 million barrels per day in 2030, compared to 85 million last year. All the growth comes from developing countries, while demand in countries in the Organisation for Economic Co-operation and Development declines.
"As conventional oil production in countries not belonging to the Organization of the Petroleum Exporting Countries (OPEC) peaks around 2010, most of the increase in output would need to come from OPEC countries, which hold the bulk of remaining recoverable conventional oil resources," the report says.
The scenario needed to stabilize CO2 at 450 ppm would boost the use of electric vehicles and other transport-sector alternatives. Under the 450 case, transportation sector demand sees a savings of 12 million barrels per day. However, oil production is still slightly above 2008 levels in 2030 under the 450 case.
The report finds that natural gas "will play a key role whatever the policy landscape." It says demand for natural gas will continue growing for the next 20 years, but how fast it grows depends on climate action. In the reference scenario, natural gas consumption will increase from 3 trillion cubic meters in 2007 to 4.3 trillion cubic meters in 2030, largely driven by India and China and the rest of the developing world.
The world will see an "acute glut" of gas in the next few years as market demands continue to be weak but additional production comes online. IEA estimates the global recoverable gas resource base at 850 trillion cubic meters, of which about 45 percent is unconventional gas. Only 8 percent of total recoverable resources have been produced to date, according to the report.
"The world's remaining resources of natural gas are easily large enough to cover any conceivable rate of increase in demand through to 2030," the report says. The cost to recover such resources, however, is uncertain, especially in some parts of the world, it says.
The biggest challenges for the electricity generators are financial difficulties and weak demand, the report says.
Global electricity demand is expected to fall by about 1.6 percent this year, the first decline since World War II. Overall, this has reduced the need to immediately build new generating capacity, which especially hurts the investment of new renewable energy generation "proportionately more than that in other types of generating capacity" -- close to 20 percent, the report says. Without governments' stimulus packages, it says, the renewable energy investment would have fallen 30 percent.
Without any changes to policy, electricity demand is expected to grow 76 percent by 2030 -- about 2.5 percent per year -- requiring 4,800 gigawatts of capacity additions, about 5 times as much existing capacity in the United States, the report says.
Coal remains the "backbone" fuel for electricity but renewable energy rises from 18 percent in 2007 to 22 percent in 2030, the report says. Nuclear power as a percentage of overall global electricity generation drops by 2030, although there is growth in non-European countries, it says.
Reprinted from Greenwire with permission from Environment & Energy Publishing, LLC. www.eenews.net, 202-628-6500