(EnergyAsia, December 30 2011, Friday) — Fatih Birol, chief economist of the International Energy Agency (IEA), recently presented the findings of its “World Energy Outlook (WEO) 2011” report in Singapore.
Amid uncertain energy future demands, he said the world would need a bold change in policy direction or risks locking itself into an insecure, inefficient and high-carbon energy system.
Referring to the recently ended UN climate change summit in Durban, South Africa, Dr Birol said:
“The good news from Durban was that all of the biggest emitters signed up to develop a binding agreement to cut emissions. But as they iron out the details of the plan, countries must also push ahead with practical action to avoid being locked into a high-carbon energy system, particularly in Asia where rising incomes and population will inevitably push energy needs higher.”
As a result of its rapid economic expansion and large population, Asia has become the centre of an increasingly inter-connected global energy markets.
According to the WEO’s central New Policies Scenario, global primary energy demand will increase by one-third between 2010 and 2035, with 90% of that growth coming from non-OECD economies.
China, which recently surpassed the US to become the world’s largest energy consumer, will consume 70% more energy than the US by 2035, although its per capita demand will still be less than half of the US by then.
Dr Birol told the audience of more than 200 professionals that nuclear power capacity is expected to grow by about 70% in 2035, led by China, India and South Korea. But he cautioned that varying policy responses to the Fukushima reactor crisis in Japan could derail the IEA’s projections.
A slowdown in the development of nuclear power would boost the role of renewables, but it would also increase the cost of energy imports, reduce diversity of the fuel mix and make it harder and more expensive to mitigate the effects of climate change.
Dr Birol expects oil prices to continue to face upward pressure on account of global demand rising from 87 million b/d in 2010 to 99 million b/d in 2035, with the net growth coming from the transport sector in emerging economies.
On the supply side, the Middle East and North Africa region will provide around 90% of the total production increase, but it is on the condition that it is able to attract US$100 billion worth of oilfield investments each year between 2011 and 2015.
If it achieves only two-thirds of that target, consumers around the world could face a near-term rise in the oil price to US$150 a barrel, he said.
The WEO projects that coal, which met almost half of the increase in global energy demand over the last decade, could see another 24% increase in use by 2035. Prospects for coal are especially sensitive to energy policies, notably in regions like China which today accounts for almost half of global demand.
Natural gas continues to grow its importance in the energy pie, underscoring key findings of a recent WEO Special Report on the ‘Golden Age of Gas’.
According to the IEA’s New Policies Scenario, global gas demand will grow by an average 1.7% a year to 4.75 trillion cubic metres (tcm) in 2035.
Non-OECD countries will account for 81% of the growth, with China expected to boost its domestic demand from 110 billion cubic metres (bcm) in 2010 to over 500bcm by 2035.
Based on the IEA’s projections, the world’s CO2 emissions over the next 25 years will amount to three-quarters of the total from the past 110 years, and put the world on track for a long-term average temperature rise of 3.5°C. China’s per-capita emissions will match the OECD average by 2035.
Dr Birol said: “There is still some limited time to change course and meet the international goal of limiting the long-term increase to 2°C. However, each year, the necessary measures get progressively tougher and more expensive.