The energy world faces unprecedented uncertainty

‘The Copenhagen Accord and the agreement among G20 countries to phase out subsidies are important steps forward. But, these moves still fall a very long way short of what is required to set us on the path to a truly sustainable energy system’, said Nobuo Tanaka, Executive Director of the International Energy Agency today in London at the launch of the latest edition of the IEA’s annual World Energy Outlook (WEO).

‘The energy world is facing unprecedented uncertainty’, Mr Tanaka said. The strength of the economic recovery holds the key to how energy markets will evolve over the next few years. But WEO-2010 demonstrates that it is what governments do, and how that action affects technology, the price of energy services and end user behaviour, that will shape the future of energy in the longer term. ‘We need to use energy more efficiently and we need to wean ourselves off fossil fuels by adopting technologies that leave a much smaller carbon footprint.’

Energy demand increases by 36%

In the New Policies Scenario, which takes account of the broad policy commitments and plans that have been announced by countries around the world, world primary energy demand increases by 36% between 2008 - 2035, or 1.2% per year on average. The assumed policies make a tangible difference to energy trends: demand grew by 2% per year over the previous 27 year period.

In the scenario, Non-OECD countries account for 93% of the projected increase in world primary energy demand. China contributes 36% to the projected growth in global energy use. ‘It is hard to overstate the growing importance of China in global energy. How the country responds to the threats to global energy security and climate posed by rising fossil fuel use will have far reaching consequences for the rest of the world’, Mr Tanaka added.

Globally, fossil fuels remain dominant over the Outlook period and oil nonetheless remains the leading fuel in the energy mix by 2035, followed by coal. Of the three fossil fuels, gas consumption grows most rapidly, its share of total energy use almost reaching that of coal.

More support needed to meet Copenhagen Accord

‘Renewable energy can play a central role in reducing carbon dioxide emissions and diversifying energy supplies, but only if strong and sustained support is made available’, Mr Tanaka said. The energy trends envisioned in the New Policies Scenario imply that national commitments to reduce greenhouse gas emissions, while expected to have some impact, are collectively inadequate to meet the Copenhagen Accord’s overall goal of holding the global temperature increase to below 2 °C. The New Policy Scenario trends are in line with stabilising the concentration of greenhouse gases at over 650 parts per million (ppm) of CO₂ equivalent (eq), resulting in a likely temperature rise of more than 3.5 °C in the long term.

In order to have a reasonable chance of achieving the goal, the concentration of greenhouse gases would probably need to be stabilised at a level no higher than 450 ppm CO₂ eq.

‘We must act now to ensure that climate commitments are interpreted in the strongest way possible and that much stronger commitments are adopted and taken up after 2020, if not before. Otherwise, the 2 °C goal could be out of reach for good’, Mr Tanaka said.

Vital to eliminate subsidies

In analysis that builds on the IEA’s ongoing work for the G-20, WEO-2010 reveals that fossil fuel subsidies amounted to US$ 312 billion in 2009. ‘Getting the prices right, by eliminating fossil fuel subsidies, is the single most effective measure to cut energy demand in countries where they persist, while bringing other immediate economic benefits’, said Mr Tanaka.

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