IEA forecasts massive shift in global energy mix
Renewables set to be second-largest energy source by 2015
The International Energy Agency (IEA) has released its 2012 World Energy Outlook, forecasting a “sea-change in global energy flows”. The central scenario of the Outlook sees the United States becoming a net exporter of natural gas by 2020 and almost completely self-sufficient in energy by 2035.
The IEA says that, as a consequence of the US becoming a net oil exporter, nearly 90% of Middle Eastern oil exports will be drawn to Asian markets by 2035. At the same time, global energy demand will grow by over one-third, with China, India and the Middle East region accounting for 60% of that growth.
Fossil fuels are set to remain dominant in the global energy mix – boosted by subsidies that stood at US $523 billion in 2011 – pushed up by increases in the Middle East and North Africa. Unconventional and deepwater oil will support non-OPEC supply over this decade, by the IEA forecast that OPEC will become increasingly important after 2020. Iraq’s fossil fuel reserves will account for 45% of the growth in global oil production by 2035, overtaking Russia to become the second-largest oil exporter.
Renewable energy is forecast to become the second biggest source of electricity generation by just 2015, and will be closing in on coal generation by 2035. The IEA emphasises that the growth rest on the continuance of subsidies to the industry – which amounted to $88 billion last year. The report suggests that a massive $4.8 trillion in subsidies will be required by 2035 to support the growth, with more than half already committed to existing projects.
In water, the energy sector already accounts for 15% of the world’s total water consumption, and demand is set to increase much more. By 2035, growth in power generation and bio fuels will be a key cause of an 85% growth in water consumed. The report says that in some regions water constraints are already impacting on the viability of existing projects and will introduce additional costs.
“Our analysis shows that in the absence of a concerted policy push, two-thirds of the economically viable potential to improve energy efficiency will remain unrealised through to 2035. Action to improve energy efficiency could delay the complete ‘lock-in’ of the allowable emissions of carbon dioxide under a 2oC trajectory – which is currently set to happen in 2017 – until 2022, buying time to secure a much-needed global climate agreement. It would also bring substantial energy security and economic benefits, including cutting fuel bills by 20% on average,” said IEA Chief Economist Fatih Birol.