The Politics of Energy and World Outlook 2010

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