FT : IEA Sounds Global Warming Alarm

Friday, June 13, 2008

The good news in the International Energy Agency’s report on the future of energy technologies is that there is enough oil left on the planet to allow a huge increase in consumption over the next few decades.  The bad news is that the consequences for the climate of burning that much oil would be alarming.  The IEA, the rich countries’ energy watchdog, is urging the world to start weaning itself off oil, not because supplies are running out but to avoid “significant change in all aspects of life and irreversible change in the natural environment” as a result of global warming.  In the IEA’s business as usual “baseline” scenario, oil demand rises from its present level of 87m barrels a day to 135m b/d by 2050.  The projection is a robust rejection of the argument, increasingly prevalent as the price of oil has soared, that global oil production is at or near its peak.  The IEA accepts that meeting this sharply increased demand would require massive investment, especially in the Middle East, and “conventional” oil would provide at most about 92m b/d.  The rest would come from “unconventional” sources such as oil sands, shale oil and Arctic oil, and liquid fuels made from coal and natural gas. Biofuels would also make some “limited” contribution.  However, if there is a “global energy technology revolution”, the IEA believes, global oil demand could be cut sharply, dropping 27% from present levels.  Greater fuel efficiency in motor vehicles, greater production of biofuels, and some use of electric and hydrogen-fuelled transport would all contribute to curbing oil demand.  In that scenario, the world’s carbon dioxide emissions could be halved from 2005 levels by 2050, and oil-consuming countries’ dependence on potentially unstable oil-producing regions would be diminished.  The problem is that it is very hard to replace oil as a transport fuel.  Electricity generation can be made low-carbon relatively easily, with nuclear power and wind farms, which are in use today, and carbon capture and storage at fossil fuel power plants, which can be done by integrating currently available technologies.  The flexibility of oil-derived fuels for road and air transport is much more difficult to replace.

Cutting emissions from power generation and taking other relatively low-cost measures could mean global carbon dioxide emissions peaking during 2020-30, then falling back to current levels by 2050, the IEA believes.  That could be achieved with a price for emissions of about $50 (£25, €32) per tonne of carbon dioxide, not far out of line with today’s levels in the European Union.  To go further, however, and cut emissions by 50% by 2050 means using much more expensive technologies, including electric and hydrogen-fuelled cars.  “Those extra bits of carbon dioxide are so expensive to squeeze out,” says Cecilia Tam of the IEA, one of the report’s authors.  “When you look at transport, you need new technologies that are really not available today.”  To make those technologies cost-effective, the IEA suggests, emissions would need to be priced at $500 a tonne of carbon dioxide, a huge increase from today’s levels.  Even with technological improvements, the price might need to be $200 a tonne.  Nobuo Tanaka, the IEA’s executive director, said in Tokyo yesterday that the energy technology revolution was “both necessary and achievable”, but accepted it would be a “tough challenge”.  Persuading consumers and voters to accept emissions prices in the hundreds of dollars will be one of the most daunting aspects of that challenge.

Reference : http://www.ft.com/cms/s/0/fd0eeb98-342a-11dd-869b-0000779fd2ac.html

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