International Energy Agency
November 9, 2011
World Energy Outlook: The Authoritative Source of Energy Analysis and Projections
Early last month, the International Energy Agency issued its 2011 World Energy Outlook. The publication looks at current trends, and provides robust analysis and insight into global energy markets over a 25-year period, through 2035. The Fact Sheet contains a number of interesting findings:
- Global energy-related emissions of CO2 jumped by 5.3% in 2010 to a record 30.4 gigatons (Gt). The report projects that emissions will continue to rise, reaching 36.4 Gt in 2035 – an increase of 20%. This trajectory is consistent with a long-term global temperature increase of more than 3.5°C.
- The Report includes a “450 Scenario,” which is the benchmark of limiting CO2 concentrations of 450 parts per million in order to limit temperature increase to 2⁰ Celsius – the globally agreed goal under the United Nations Framework Convention on Climate Change. (The current level of CO2 concentration in the atmosphere is 389.78 ppm.)
- The long economic lifetimes of much of the world’s energy-related capital stock mean that there is little scope for delaying action to move onto the 450 emissions trajectory without having to retire some stock early. 80 percent of the cumulative CO2emitted worldwide between 2009 and 2035 in the 450 Scenario is already “locked-in” by capital stock – including power stations, buildings and factories – that either exists now or is under construction and will still be operational by 2035, leaving little additional room for maneuver. If internationally coordinated action is not taken by 2017, the Report projects that all permissible emissions in the 450 Scenario would come from the infrastructure then existing, so that all new infrastructure from then until 2035 would need to be zero-carbon, unless emitting infrastructure is retired before the end of its economic lifetime to make headroom for new investment.
- In the power sector, nuclear generation grows by about 70%, led by China, Korea and India. Renewable energy technologies, led by hydropower and wind, account for half of the new capacity installed to meet growing demand. Overall, modern renewables grow faster than any other energy form in relative terms, but in absolute terms total supply is still not close to the level of any single fossil fuel in 2035.
- Natural gas is projected to play an increasingly important role in the global energy economy. World demand is projected to increase at an average rate of 1.7% per year, and global gas consumption almost catches up with coal consumption by 2035. By sector, power generation is the leading contributor to the global increase in gas demand.
- Unconventional gas – tight gas, shale gas and coalbed methane – is set to play an increasingly important role, accounting for roughly half the estimated global resource base of over 800 tcm; its share in output rises from 13% in 2009 to above 20% in 2035 “on the assumption that the industry is successful in dealing with environmental challenges.”
- Fossil-fuel consumption subsidies worldwide amounted to $409 billion in 2010, with subsidies to oil products representing almost half of the total. Persistently high oil prices have made the cost of subsidies unsustainable in many countries and prompted some governments to try to reduce them. In a global survey covering 37 countries where subsidies exist, at least 15 have taken steps to phase them out since the start of 2010. Without further reform, the cost of fossil-fuel consumption subsidies is set to reach $660 billion in 2020, or 0.7% of global GDP (at market exchange rates).
- The share of energy subsidies going to renewable energy is poised to continue to grow. Global renewable-energy subsidies increased from $39 billion in 2007 to $66 billion in 2010, in line with rising production of biofuels and electricity from renewable sources. Despite a projected decline in unit production costs due to cost reductions and rising wholesale prices for electricity and transport fuels, subsidies would need to expand even further to meet existing targets for renewable energy production. In 2035, subsidies to renewables are projected to reach almost $250 billion.