The International Energy Agency (IEA) warned last week that irreversible climate change will occur if bold actions are not taken worldwide within the next five years, but the agency’s chief economist said he’s not optimistic that leaders will make the sacrifices necessary.

In its flagship annual World Energy Outlook (WEO), the Paris-based agency said action has to be taken to temper global temperature increases at 2 degrees C, or 3.6 degrees F, above pre-industrial levels. Beyond that threshold scientists have warned that catastrophic environmental changes could be triggered.

“Growth, prosperity and rising population will inevitably push up energy needs over the coming decades,” said IEA Executive Director Maria van der Hoeven. “But we cannot continue to rely on insecure and environmentally unsustainable uses of energy. Governments need to introduce stronger measures to drive investment in efficient and low-carbon technologies.”

She said the Fukushima nuclear accident in Japan, turmoil in parts of the Middle East and North Africa and a sharp rebound in energy demand in 2010, which pushed carbon dioxide (CO2) emissions to a record high, “highlight the urgency and the scale of the challenge.”

Chief economist Fatih Birol said the world was going in the wrong direction in terms of climate change. For instance, he noted that governments have put energy efficiency at the top of their to-do lists but global energy efficiency has in fact gotten worse for two years in a row. The consequences will be real, he said.

“After 2017 we will lose the chance to limit the temperature increase to 2 degrees C,” he said.

According to the WEO, current government promises to cut emissions, when taken together, likely will result in an increase of more than 3.5 degrees C — and no guarantees are in place to ensure that the commitments will be made. Without emissions cuts, however, global temperatures may increase 6 degrees C or more, the report noted.

Technology isn’t lacking, said Birol. Rather, it’s political will.

“Even with existing technologies you can improve substantially, but to do that, you need some price incentives and these price incentives are not there,” he said.

The report indicated that there actually are incentives to consume more energy.

Subsidies for fossil fuels are above $400 billion, the WEO noted. Subsidies should be reduced and a price should be levied on carbon, it recommends. When “dirty” fuels become more expensive, governments then would meet their commitments to increase energy efficiency. “The most important contribution to reaching energy security and climate goals comes from the energy that we do not consume,” the report noted.

According to WEO’s “new policies” scenario, which assumes that recent government commitments are implemented in a cautious manner, primary energy demand increases by one-third between 2010 and 2035, with 90% of the growth in developing economies.

“China consolidates its position as the world’s largest energy consumer: it consumes nearly 70% more energy than the United States by 2035, even though, by then, per capita demand in China is still less than half the level in the United States,” the report noted. “The share of fossil fuels in global primary energy consumption falls from around 81% today to 75% in 2035.”

The future for natural gas is more certain, said the WEO. The share of natural gas in the energy mix “rises and gas use almost catches up with coal consumption,” which underscores findings from a recent WEO special report, which examined whether the world was entering a “golden age” of gas.

Renewables are expected to increase to 18% of the energy mix by 2035 from 13% today.

“The growth in renewables is underpinned by subsidies that rise from $64 billion in 2010 to $250 billion in 2035, support that in some cases cannot be taken for granted in this age of fiscal austerity. By contrast, subsidies for fossil fuels amounted to $409 billion in 2010.”

Short-term pressures on oil markets are easing with the economic slowdown and the expected return of Libyan supply, said the WEO. “But the average oil price remains high, approaching $120/bbl (in year-2010 dollars) in 2035. Reliance grows on a small number of producers: the increase in output from Middle East and North Africa (MENA) is over 90% of the required growth in world oil output to 2035. If, between 2011 and 2015, investment in the MENA region runs one-third lower than the $100 billion per year required, consumers could face a near-term rise in the oil price to $150/bbl.”

Oil demand is expected to rise from 87 million b/d in 2010 to 99 million b/d in 2035, “with all the net growth coming from the transport sector in emerging economies. The passenger vehicle fleet doubles to almost 1.7 billion in 2035. Alternative technologies, such as hybrid and electric vehicles that use oil more efficiently or not at all, continue to advance but they take time to penetrate markets.”

The use of coal, which met almost half of the increase in global energy demand in the last decade, is forecast to jump 65% by 2035.

“Prospects for coal are especially sensitive to energy policies, notably in China, which today accounts for almost half of global demand,” the WEO noted. “More efficient power plants and carbon capture and storage technology could boost prospects for coal, but the latter still faces significant regulatory, policy and technical barriers that make its deployment uncertain.”

The Fukushima Daiichi nuclear plant accident in Japan earlier this year “has raised questions about the future role of nuclear power.” In its new policies scenario, the WEO said nuclear output rises by more than 70% by 2035, “only slightly less than projected last year, as most countries with nuclear programs have reaffirmed their commitment to them.

“But given the increased uncertainty, that could change. A special low nuclear case examines what would happen if the anticipated contribution of nuclear to future energy supply were to be halved. While providing a boost to renewables, such a slowdown would increase import bills, heighten energy security concerns and make it harder and more expensive to combat climate change,” said the report.

“As each year passes without clear signals to drive investment in clean energy, the ‘lock-in’ of high-carbon infrastructure is making it harder and more expensive to meet our energy security and climate goals,” said Birol. The WEO presented a “450” scenario, which traces an energy path consistent with meeting the globally agreed goal of limiting the temperature rise to 2 degrees C. “Four-fifths of the total energy-related CO2 emissions permitted to 2035 in the 450 scenario are already locked in by existing capital stock, including power stations, buildings and factories.”

Without further action by 2017, the WEO found that energy-related infrastructure then in place would generate all the CO2 emissions allowed in the 450 scenario up to 2035.

“Delaying action is a false economy: for every $1 of investment in cleaner technology that is avoided in the power sector before 2020, an additional $4.30 would need to be spent after 2020 to compensate for the increased emissions.”

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