We have recently hosted my friend Fatih Birol, Chief economist, International Energy Agency to share his latest World Energy Outlook report with the media. As always, his work was eye-opening in terms of the Politics of Energy in our region and the rest of the world.
According to Fatih, the financial crisis has halted the rise in global fossil-energy use, but its long-term upward path will resume soon on current policies. Tackling climate change & enhancing energy security will require a massive decarbonisation of the energy system; We are now on course for a 6°C temperature rise & rising energy costs and limiting temperature rise to 2°C will require big emission reductions in all regions. The challenge is enormous – but it can and must be met - Improved energy efficiency & renewable technology deployment are critical and each year of delay adds $500 billion to mitigation costs.
Here are some of my key take aways from his presentation:
· Fossil fuels account for 77% of the increase in world primary energy demand in 2007-2030, with oil demand rising from 85 mb/d in 2008 to 105 mb/d in 2030
· Global upstream spending will fall by over $90 billion, or 19%, in 2009 – the first fall in a decade
· Sustained investment is needed mainly to combat the decline in output at existing fields, which will drop by almost two-thirds by 2030. In other words, the equivalent of 2 Saudi Arabias would be needed.
· Additional capacity of around 2 700 bcm, or 4 times current Russian capacity, is needed by 2030 – half to offset decline at existing fields & half to meet the increase in demand
· A glut of gas is developing –reaching 200 bcm by 2015 – due to weaker than expected demand & plentiful US unconventional supply, with far-reaching implications for gas pricing
· Although indigenous resources are limited & output is declining, Europe isgeographically well placed to secure gas supplies from a variety of external sources
· China overtaking the United States by around 2025 to become the world's biggest spender in oil & gas imports
· An additional $10.5 trillion of investment is needed in total, with measures to boost energy efficiency accounting for most of the abatement through to 2030
· Demand for fossil fuels peaks by 2020, and by 2030 zero-carbon fuels make up a third of the world's primary sources of energy demand
· China, the United States, the European Union & India account for almost 70% of the green house emission amount needed for only 2 degrees C temperature increase
· Renewables, nuclear and plants fitted with carbon capture & storage account for 80% of electricity generation in EU in 2030, up from 44% today