IEA Anticipates a Fossil-Dominated Future

The International Energy Agency's annual World Energy Outlook, released yesterday, is receiving relatively little attention in the press even though the alternative energy scenarios the IEA traces are of above-average interest.

Admittedly, the main messages of the report are pretty much what we already all know in our guts: Oil, coal, and natural gas will continue to dominate world energy consumption, whether we conduct business as usual, adopt greener policies, or make heroic efforts to keep carbon concentrations in the atmosphere below 450 ppm so as to prevent temperatures from rising more than 2 more degrees celsius in this century.

What gives the report its bite is its sharp attention to the issue of what a really effective global climate policy would require, a subject on which the IEA and its director Nobuo Tanaka have shown themselves to be true believers. As in its previous annual report, the agency still expects world energy consumption to grow sharply, with fast-developing countries accounting for the lion's share of additional energy demand. Among fossil fuels, reliance on natural gas will grow the most strongly, an estimated 44 percent by 2035--more than a third of that increase being "unconventional" (shale) gas. Though consumption of coal and oil decreases in the advanced industrial countries according to the IEA's intermediate "new policies" scenario--the one it seems to consider most probable--demand for oil and coal in China, India and other developing countries increases by a significantly greater amount.

With expectations for global climate policy much dampened since Copenhagen  last December and the U.S. failure to adopt a greenhouse gas reduction bill this year, the notion of reducing governmental subsidies for fossil fuels has been getting a lot of attention of late as an alternative approach. But the IEA survey implicitly casts serious doubt on the plausibility of that approach. Subsidies are by far the highest in just the countries that have oil and gas coming out their ears: Iran, Saudi Arabia, Russia, etc. Are we seriously to believe that governments in such countries are going to risk their popularity or stability by sharply boosting domestic energy prices?

The IAE report makes specifically clear what we already know, namely that really effective climate policy--of a kind that might contain the global temperature rise in this century at no more than two additional degrees Celsius--would require a gargantuan effort on the part of just those countries most reluctant to commit themselves to it. In terms of what would be required between now and 2035, China would have to account of 32 percent of CO2 abatement and the United States 18 percent.

As yet, regrettably, there's still no sign that the challenge issued by IEEE Spectrum magazine in November 1999 will be met: Noting that China would surpass the United States as the world's top source of greenhouse gas emissions in the next century, we said that "if countries like the United States want to mitigate risks of climate change, after cleaning up for themselves and getting their own houses in order, the next-best thing they can do is help China and India do the same."

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