Wednesday, November 11, 2009

Sober Foresight: The International Energy Agency Report, 2009

Human beings are the most sentient creatures on the earth, the most capable of foresight and planning, the most adaptable and adjustable. At least so we tell ourselves.

The reality may be otherwise. We seem able to see ahead but as a species we – the industrial world especially -- seem unable to correct our social practices enough to spare our planet from ecological collapse. Could Jared Diamond be a prophet? Is it because we are unable or unwilling?

Anyway, I wonder how many people will read the just-released executive summary of the International Energy Agency’s “World Energy Outlook 2009”. Sobering as it is, the industrial world is likely to go on more or less as it has, primarily driven by immediate and local practical interests. That seems to me the most sobering, and unstated, features of the report.

In order to help circulate the sense of how serious the world ecological trend is I reproduce here merely the topic sentences of the executive summary. Actually the whole report is not long and the details are the most sobering feature of the report; click on the title for a link to the whole Executive Summary.

Just so you don't miss it: Here is how it ends:
Saving the planet cannot wait. For every year that passes, the window for action on emissions over a given period becomes narrower — and the costs of transforming the energy sector increase. 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. A delay of just a few years would probably render that goal completely out of reach. If this were the case, the additional adaptation costs would be many times this figure. Countries attending the UN Climate Change Conference must not lose sight of this. The time has come to make the hard choices needed to turn promises into action.

Read, and wonder. Some of us also will pray.


International Energy Agency, “World Energy Outlook 2009” [executive summary]


The past 12 months have seen enormous upheavals in energy markets around the world, yet the challenges of transforming the global energy system remain urgent and daunting. How we rise to that challenge will have far-reaching consequences for energy markets. The scale and breadth of the energy challenge is enormous — far greater than many people realise. But it can and must be met.

Households and businesses are largely responsible for making the required investments, but governments hold the key to changing the mix of energy investment. This Outlook presents the results of two scenarios: a Reference Scenario, which provides a baseline picture of how global energy markets would evolve if governments make no changes to their existing policies and measures; and a 450 Scenario, which depicts a world in which collective policy action is taken to limit the long-term concentration of greenhouse gases in the atmosphere to 450 parts per million of CO2-equivalent (ppm CO2-eq), an objective that is gaining widespread support around the world. © OECD/IEA, 2009 World Energy Outlook 2009

The financial crisis brings a temporary reprieve from rising fossil energy
use
• Global energy use is set to fall in 2009 — for the first time since 1981 on any significant scale — as a result of the financial and economic crisis; but, on current policies, it would quickly resume its long-term upward trend once economic recovery is underway.
• Fossil fuels remain the dominant sources of primary energy worldwide in the
Reference Scenario, accounting for more than three-quarters of the overall increase in energy use between 2007 and 2030.
• The main driver of demand for coal and gas is the inexorable growth in energy needs for power generation.
• The use of non-hydro modern renewable energy technologies (including wind, solar, geothermal, tide and wave energy, and bio-energy) sees the fastest rate of increase in the Reference Scenario.

Falling energy investment will have far-reaching consequences
• Energy investment worldwide has plunged over the past year in the face of a tougher financing environment, weakening final demand for energy and lower cash flow.
• In the oil and gas sector, most companies have announced cutbacks in capital spending, as well as project delays and cancellations, mainly as a result of lower cash flow.
• Falling energy investment will have far-reaching and, depending on how governments respond, potentially serious consequences for energy security, climate change and energy poverty.
• The financial crisis has cast a shadow over whether all the energy investment needed to meet growing energy needs can be mobilised. Current policies put us on an alarming fossil-energy path
• Continuing on today’s energy path, without any change in government policy, would mean rapidly increasing dependence on fossil fuels, with alarming consequences for climate change and energy security.
• Non-OECD countries account for all of the projected growth in energy-related CO2 emissions to 2030.
• These trends would lead to a rapid increase in the concentration of greenhouse gases in the atmosphere.
• The Reference Scenario trends also heighten concerns about the security of energy supplies.
• Expanding access to modern energy for the world’s poor remains a pressing matter.

Limiting temperature rise to 2°C requires a low-carbon energy revolution
• Although opinion is mixed on what might be considered a sustainable, long-term level of annual CO2 emissions for the energy sector, a consensus on the need to limit the global temperature increase to 2°C is emerging.
• The reductions in energy-related CO2 emissions required in the 450 Scenario (relative to the Reference Scenario) by 2020 — just a decade away — are formidable, but the financial crisis offers what may be a unique opportunity to take the necessary steps as the political mood shifts.
• With a new international climate policy agreement, a comprehensive and rapid transformation in the way we produce, transport and use energy — a veritable lowcarbon revolution — could put the world onto this 450-ppm trajectory.

Energy efficiency offers the biggest scope for cutting emissions
• End-use efficiency is the largest contributor to CO2 emissions abatement in 2030, accounting for more than half of total savings in the 450 Scenario, compared with the Reference Scenario.
• Measures in the transport sector to improve fuel economy, expand biofuels and romote the uptake of new vehicle technologies — notably hybrid and electric vehicles — lead to a big reduction in oil demand.
New financing mechanisms will be critical to achieving
low-carbon growth
• The 450 Scenario entails $10.5 trillion more investment in energy infrastructure and energy-related capital stock globally than in the Reference Scenario through to the end of the projection period.
• The cost of the additional investments needed to put the world onto a 450-ppm path is at least partly offset by economic, health and energy-security benefits.
• It is widely agreed that developed countries must provide more financial support to developing countries in reducing their emissions; but the level of support, the mechanisms for providing it and the relative burden across countries are matters for negotiation.

Natural gas will play a key role whatever the policy landscape
• With the assumed resumption of global economic growth from 2010, demand for natural gas worldwide is set to resume its long-term upwards trend, though the pace of demand growth hinges critically on the strength of climate policy action.
• The outlook to 2015 differs markedly from the longer-term picture.
• In the 450 Scenario, world primary gas demand grows by 17% between 2007 and 2030, but is 17% lower in 2030 compared with the Reference Scenario.

Gas resources are huge but exploiting them will be challenging
• The world’s remaining resources of natural gas are easily large enough to cover any conceivable rate of increase in demand through to 2030 and well beyond, though the cost of developing new resources is set to rise over the long term.
• The non-OECD countries as a whole are projected to account for almost all of the projected increase in global natural gas production between 2007 and 2030.
• The rate of decline in production from existing gas fields is the prime factor determining the amount of new capacity and investment needed to meet projected demand.

Unconventional gas changes the game in North America
and elsewhere
• The recent rapid development of unconventional gas resources in the United States and Canada, particularly in the last three years, has transformed the gas-market outlook, both in North America and in other parts of the world.
• The extent to which the boom in unconventional gas production in North America can be replicated in other parts of the world endowed with such resources remains highly uncertain.

A glut of gas is looming
• The unexpected boom in North American unconventional gas production, together with the current recession’s depressive impact on demand, is expected to contribute to an acute glut of gas supply in the next few years.
• The looming gas glut could have far-reaching consequences for the structure of gas markets and for the way gas is priced in Europe and Asia-Pacific.
ASEAN countries will become a key energy market
• The ten countries of the Association of Southeast Asian Nations (ASEAN) are set to play an increasingly important role in global energy markets in the decades ahead.
• Many hurdles will need to be overcome if Southeast Asia is to secure access to the energy required to meet its growing needs at affordable prices and in a sustainable manner.
Turning promises into results
• The upcoming UN Climate Change Conference in Copenhagen will provide important pointers to the kind of energy future that awaits us.
• A critical ingredient in the success of efforts to prevent climate change will be the speed with which governments act on their commitments.

The final comment:
Saving the planet cannot wait. For every year that passes, the window for action on emissions over a given period becomes narrower — and the costs of transforming the energy sector increase. 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. A delay of just a few years would probably render that goal completely out of reach. If this were the case, the additional adaptation costs would be many times this figure. Countries attending the UN Climate Change Conference must not lose sight of this. The time has come to make the hard choices needed to turn promises into action.
© OECD

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