Earlier today, the International Energy Agency (IEA) released its World Energy Outlook 2009.
A brief summary of the major points is provided below.
Falling Energy Investment Will Have Far-Reaching Consequences
- Energy investment worldwide has plunged over the past year in the face of a tougher financing environment, weakening final demand for energy and lower cash flow.
- In the oil and gas sector, most companies have announced cutbacks in capital spending, as well as project delays and cancellations, mainly as a result of lower cash flow.
- Falling energy investment will have far-reaching and, depending on how governments respond, potentially serious consequences for energy security, climate change and energy poverty.
- The capital required to meet projected energy demand through to 2030 in the Reference Scenario is huge, amounting in cumulative terms to $26 trillion (in year-2008 dollars) — equal to $1.1 trillion (or 1.4% of global gross domestic product [GDP]) per year on average.
The Financial Crisis Brings a Temporary Reprieve from Rising Fossil Energy Use
- Global energy use is set to fall in 2009 — for the first time since 1981 on any significant scale — as a result of the financial and economic crisis; but, on current policies, it would quickly resume its long-term upward trend once economic recovery is underway.
- Fossil fuels remain the dominant sources of primary energy worldwide in the Reference Scenario, accounting for more than three-quarters of the overall increase in energy use between 2007 and 2030.
- The main driver of demand for coal and gas is the inexorable growth in energy needs for power generation.
Current Policies Put Us on an Alarming Fossil-Energy Path
- Continuing on today’s energy path, without any change in government policy, would mean rapidly increasing dependence on fossil fuels, with alarming consequences for climate change and energy security.
- Non-OECD countries account for all of the projected growth in energy-related CO2 emissions to 2030.
Energy Efficiency Offers the Biggest Scope for Cutting Emissions
- End-use efficiency is the largest contributor to CO2 emissions abatement in 2030, accounting for more than half of total savings in the 450 Scenario, compared with the Reference Scenario. The 450 Scenario depicts a world in which collective policy action is taken to limit the long-term concentration of greenhouse gases in the atmosphere to 450 parts per million of CO2-equivalent (ppm CO2-eq), an objective that is gaining widespread support around the world.
New Financing Mechanisms Will be Critical to Achieving Low-Carbon Growth
- The 450 Scenario entails $10.5 trillion more investment in energy infrastructure and energy-related capital stock globally than in the Reference Scenario through to the end of the projection period.
Natural Gas Will Play a Key Role Whatever the Policy Landscape
- With the assumed resumption of global economic growth from 2010, demand for natural gas worldwide is set to resume its long-term upwards trend, though the pace of demand growth hinges critically on the strength of climate policy action.
Gas Resources Are Huge But Exploiting Them Will Be Challenging
- The world’s remaining resources of natural gas are easily large enough to cover any conceivable rate of increase in demand through to 2030 and well beyond, though the cost of developing new resources is set to rise over the long term.
Unconventional Gas Changes the Game in North America and Elsewhere
- The recent rapid development of unconventional gas resources in the United States and Canada, particularly in the last three years, has transformed the gas-market outlook, both in North America and in other parts of the world.
A Glut of Gas is Looming
- The unexpected boom in North American unconventional gas production, together with the current recession’s depressive impact on demand, is expected to contribute to an acute glut of gas supply in the next few years.
ASEAN Countries Will Become a Key Energy Market
- The ten countries of the Association of Southeast Asian Nations (ASEAN) are set to play an increasingly important role in global energy markets in the decades ahead.
For more detail on the IEA Report, the Executive Summary can be found here.
The slide presentation can be found here.
Disclosures: None.
