Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

It's official: peak oil is inevitable

By Samuel Fenwick - posted Monday, 15 November 2010


Coal use is expected to fall in the OECD as a consequence, but this will be more than offset from China and India. In fact, the IEA expects China to add a colossal 600GW of new coal-fired generating capacity over the next 25 years, which could be responsible for 30% of the world's CO2 emissions by 2035. The IEA will publish a report around June 2011, which will examine the implications of the gas glut in more detail.


The IEA reports that the share of renewables in electricity generation amounted to 19% in 2008 and will likely increase to 32% by 2035. This will, however, require total annual subsidies for clean sources of electricity to increase from the US$57bn seen in 2009 to US$105bn and US$205bn in 2015 and 2035, respectively. This in Dr Birol's view, represents a significant challenge, given the current size of many government deficits.

Despite the environmental issues associated with their production, the agency expects biofuel use to rise by over four-fold over this period, eventually meeting 8% of road transport fuel demand. He also made the case that China's efforts in this area, such as the installation of 85GW of Solar PV, 335GW of wind turbines, 105GW of nuclear power and 8.5m electric vehicles/hybrids is important on the global scale, as it will likely provide the economies of scale needed to make such technologies more accessible to the rest of the world.

Advertisement


One of the characteristics of the World Energy Outlook is that each year it turns its attention to a different aspect of the energy sector. This year is the turn of the Caspian region and its resource potential. The IEA expects the region's oil output to rise to 5.2mbpd by 2035, largely thanks to capacity additions from Kazakhstan, while Turkmenistan and Azerbaijan are projected to boost natural gas production to over 310bcm. Dr Birol said that the Caspian region can help Europe to diversify its energy mix, but China will become a major buyer, leading to competition.

One problem he foresees is that Europe's 20% renewable energy by 2020 target could eat into gas demand, weakening the Caspian region's interest in investing in the pipeline infrastructure needed to bring the gas to European markets. In addition, Dr Birol explained that the potential of the Caspian region could potentially be much higher than that suggested by the IEA, particularly if the issues of energy efficiency and fuel subsidies could be resolved quickly in the area.

In terms of climate change, Dr Birol made the point that the pledges made at Copenhagen were not legally binding and careful analysis by the IEA suggests there is up to 3.6Gt of uncertainty regarding the emissions reductions they could potentially entail. He highlighted the need for transparency and said that China and the USA are likely to shoulder a large proportion of the burden in terms of CO2 emissions reductions over the forecast period (32% and 8%, respectively).

The scale of the challenge was explained in stark terms. Over the 1990-2008 period, the carbon intensity of the global economy has been falling by around 1% a year. According to the IEA, the rate of decline will have to increase to 2.8% over the 2008-20 period and double again over the 2020-35 period if global warming is to be limited to 2˚C. Dr Birol commented that the higher rate of decarbonisation mentioned was only ever achieved historically at the height of the first oil shock.

The IEA also focuses in the WEO 2010 on energy poverty. It believes that providing access to electricity for the 1.4bn people in the world currently without would require US$36bn a year in investment and that if this were to take place it will not result in dramatic increases in CO2 emissions as currently renewables are the most cost-effective solution for providing electricity to remote rural locations.

During the questions-and-answers session, Dr Birol made the point that if OECD growth appears to be more sluggish than expected, this would probably have less overall impact than might be initially predicted, given the rise of developing countries. When asked as to what the end of cheap oil would mean for globalisation, Dr Birol argued that the wider implications were outside the IEA's remit, but that it would strengthen the hand of national oil companies at the expense of their independent counterparts.

Advertisement

He said that the slowdown in the US should play an important role and pointed to forthcoming EPA regulations as a means of controlling carbon emissions. Dr Birol also pointed out that the IEA's 450ppm scenario requires an eventual carbon price of around US$120/t. One can't help but wonder how this will be achieved given the prospects for political paralysis in the US, which have recently received a boost, courtesy of the mid-term elections.

Coming away from the press conference and reflecting on previous launches, it feels in part as though the IEA is continuing a process of gradually tightening its projections on the supply side (as most clearly demonstrated in terms of conventional oil production) and appears to be attempting to inject the right amount of caution in the public arena - not too cold to be completely complacent, but not hot enough to result in market panic.

As a result, one can't help but wonder how its portrayal of the world's energy sector will evolve over the next few years.

  1. Pages:
  2. 1
  3. Page 2
  4. All

This article was first published on Industrial Fuels and Power.



Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

19 posts so far.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Dr Samuel Fenwick is the editor of Industrial Fuels and Power. He has been extensively covering and reporting on the energy and power sectors since 2007 and holds a PhD in Biochemistry.

Related Links
Industrial Fuels and Ppower

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Photo of Samuel Fenwick
Article Tools
Comment 19 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy