Current global trends in energy supply and consumption are "patently unsustainable" and must be altered, according to a report from the International Energy Agency (IEA).
"What is needed is nothing short of an energy revolution," the Paris-based agency said in its World Energy Outlook 2008. The cost to successfully realign global energy markets will be $26 trillion by 2030 -- more than $1 trillion annually, it estimates.
"It is not an exaggeration to claim that the future of human prosperity depends on how successfully we tackle the two central challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply," the IEA said.
The study's reference scenario, which assumes no new government policies, found world primary energy demand growing an average of 1.6% annually between 2006 and 2030 -- a cumulative increase of 45%. That is slower than IEA projected last year, due mainly to the impact of the global economic slowdown, prospects for higher energy prices and some new policy initiatives. According to the scenario, demand for renewables will grow most rapidly, overtaking natural gas to become the second largest source of electricity after 2010; demand for coal will rise more than any other fuel in absolute terms and accounting for over a third of the increase in energy use; and demand for oil will rise from the current 85 Mb/d to 106 Mb/d by 2030. Total oil production over the same period is forecast to rise from 84 Mb/d to 106 Mb/d, with the bulk of the net increase coming from natural gas liquids and from nonconventional resources and technologies, including Canadian oilsands.
"A sea change is under way in the upstream oil and gas industry, with international oil companies facing dwindling opportunities to increase their reserves and production," said IEA Executive Director Nobuo Tanaka. "In contrast, national companies are projected to account for about 80% of the increase of both oil and gas production to 2030." Whether those companies will be willing or able to keep up the necessary pace of investment is "far from certain," Tanaka said.
The findings of a field-by-field analysis of the historical production trends of 800 oilfields indicate that decline rates are likely to rise significantly in the long term, from a current average of 6.7% to 8.6% in 2030, IEA said. To fill the resulting gap between generation and consumption -- and in an effort to stabilize greenhouse gas concentrations -- the share of low-carbon energy generation, including hydropower, nuclear, biomass, other renewables and fossil-fuel power plants equipped with carbon capture and storage in the world primary energy mix would need to expand from 19% in 2006 to 26% in 2030. That would call for $4.1 trillion more investment in energy-related infrastructure and equipment than in the reference scenario.
Production of natural gas is set to become more concentrated in the most resource-rich regions, according to IEA. Approximately 46% of the projected growth in world gas production will come from the Middle East, which will triple its output by 2030. Globally, natural gas resources are large, but are highly concentrated in a small number of countries and fields. Three countries -- Russia, Iran and Qatar -- hold 56% of the world's reserves, while just 25 fields worldwide hold almost half, according to IEA. Although the size of gas discoveries has been steadily declining in recent decades in the same way as for oil, discoveries continue to exceed production. Approximately 25% of the much larger nonconventional gas resources, including coalbed methane, tight gas sands and gas shales, are in the United States and Canada.
The IEA first called for a global "energy revolution" to reduce the world's dependence on fossil fuels in June, saying at least $45 trillion -- three times the current size of the entire U.S. economy -- needed to be invested into the energy sector by governments and the private sector by 2050 (see NGI, June 9).
The World Energy Outlook 2008 is available on the IEA website, www.iea.org.
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