Last week I reported on a pre-released summary of the International Energy Agencyâ''s major annual report, in which the IEA predicted much higher long-term oil prices. That report has now been released in full, and $200 oil is not the only bad news. The World Energy Outlook says that if the worldâ''s energy business continues as usual, there will be â''shockingâ'' implications for our climate: basically, it will be all but impossible to keep carbon dioxide concentrations in the atmosphere below 450 parts per million (roughly double pre-industrial levels) and limit this centuryâ''s temperature increase to 2 more degrees celsius. Above 450 ppm or 550 ppm (where the average global tempurature increase would be about 3 degrees C), climate change could get â''dangerous,â'' by general scientific consensus.
All words about climate change are loaded and contested, but however you parse them, the IEAâ''s conclusions are almost sure to give you pause. If non-OECD countries like China and India allow their emissions to keep on rising at current rates, then it will be impossible to keep the world at 450 ppm even if the OECD countriesâ''the advanced industrial countriesâ''stopped emitting any CO2 whatsoever, starting tomorrow.
Another equally disconcerting conclusion: because of declining yields from major oil fields around the world, long-term petroleum supply almost certainly will not keep pace with new demand. â''Despite all the attention that is given to demand growth, decline rates are actually a far more important determinant of investment needs. Even if oil demand was to remain flat to 2030, 45 million barrels per day of gross capacityâ''roughly four times the current capacity of Saudi Arabiaâ''would need to be built by 2030 just to offset the effect of oilfield decline,â'' said IEA executive director Nobuo Tanaka.
â''One thing is certain,â'' he said. â''The era of cheap oil is over.â''