IEA: Recession lowers global energy outlook to 2030
In its 2009 World Energy Outlook (WEO), the International Energy Agency projects in its reference scenario that global energy demand will climb 40% between 2007 and 2030, and the agency says that the world’s energy resources are adequate to meet this projected demand increase through 2030 and well beyond.
OGJ Senior Editor-Economics
HOUSTON, Nov. 10 -- In its 2009 World Energy Outlook (WEO), the International Energy Agency projects in its reference scenario that global energy demand will climb 40% between 2007 and 2030, and the agency says that the world’s energy resources are adequate to meet this projected demand increase through 2030 and well beyond.
In last year’s WEO, IEA projected that worldwide energy demand would expand by 45% between then and 2030.
In the current reference scenario, IEA assumes that government policies will go unchanged throughout the period. Fossil fuels remain the dominant sources of energy worldwide, accounting for 77% of the demand increase to 2030. By far, coal will see the largest increase in demand over the forecast period, followed by gas and oil. But oil will remain the single-largest fuel in the energy mix in 2030, even though its share falls to 30% from 34% now, according to the WEO.
Electric power generation, set to climb at a rate of 2.5%/year over the forecast period, will drive gas and coal demand. More than 80% of this growth will take place in countries outside the Organization for Economic Cooperation and Development (OECD), according to the WEO, as additions to power generation capacity total 4,800 Gw by 2030 worldwide. The largest additions are set to occur in China.
Southeast Asia’s energy demand expands by 76% between 2007 and 2030 in IEA’s reference scenario. Collectively, non-OECD countries will account for more than 90% of the increase, their share of global energy demand rising to 63% from 52%. China and India represent more than 53% of incremental demand to 2030. Outside of Asia, the Middle East will see the fastest growth rate, contributing 10% to incremental demand, according to IEA projections.
In what it terms a ‘450 Scenario,’ IEA sets out an aggressive timetable of actions needed to limit the long-term concentration of greenhouse gases in the atmosphere to 450 ppm of carbon dioxide equivalent (CO2e) and keep the global temperature rise to around 2° C. above preindustrial levels.
To reach the goals of the 450 Scenario, which would require cumulative incremental investment of $10.5 trillion in low-carbon energy technologies and energy efficiency by 2030, the Paris-based agency says that fossil fuel demand would need to peak in 2020.
Oil, gas forecasts
The WEO identifies higher oil prices and the downturn in oil investment as serious threats to the world economy. As a result of the current financial crisis, IEA says that investment in upstream oil and gas has already been cut by more than $90 billion this year compared with 2008. While demand for oil has dropped sharply, in the agency’s reference scenario oil demand starts recovering in 2010, reaching 88 million b/d in 2015, and then 105 million b/d in 2030.
Worldwide natural gas demand between 2007 and 2030 is forecast to climb by 41% in the reference case, but only by 17% in the 450 Scenario due to more efficient use, lower electricity demand, and increased switching to nonfossil energy sources.
IEA expects the boom in North American unconventional gas production together with the recession’s impact on demand to prolong the glut of gas supply for the next few years.
“The analysis of WEO 2009 shows that the annual underutilization of interregional pipeline and LNG capacity could rise from around 60 billion cu m in 2007 to 200 billion cu m by 2015. This glut could have far-reaching consequences for the structure of gas markets, with suppliers to Europe and Asia-Pacific coming under pressure to modify pricing terms under long-term contracts, to delink gas prices from oil prices, (to) sell more gas on a spot basis, and to cut prices to stimulate demand,” IEA said.
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