The International Energy Agency provides a sobering analysis of the challenges the world faces in reducing its from dependence on oil and reducing carbon emissions, in its latest biennial analysis Energy Technology Perspectives 2008.
“If governments around the world continue with policies in place to date – the underlying premise in the ETP Baseline scenario to 2050 – CO2 emissions will rise by 130% and oil demand will rise by 70%. This expansion in oil equals five times today’s production of Saudi Arabia,” the report notes.
Such growth of oil demand raises major concerns regarding energy supply access and investment needs.
In the IEA’s Baseline scenario, the power generation sector accounts for 44% of total global emissions in 2050, followed by industry, transport, the fuel transformation sector and buildings.
To bring CO2 emissions back to current levels in 2050, all options are needed at a cost of up to USD 50/t CO2, the IEA says. No single form of energy or technology can provide the full solution. Improving energy efficiency is the first step and is very attractive as it results in immediate cost savings. Significantly reducing emissions from power generation is also a key component of emissions stabilisation.
A more ambitious goal of reducing emissions by half implies that all options up to a cost of USD 200/t CO2 will be needed, the IEA says. This is based on a set of optimistic assumptions for technology development. Under less optimistic assumptions, options that would cost up to $ 500/t CO2 may be needed.
Total additional investment needs in technology and deployment between now and 2050 would amount to $45 trillion, or 1.1% of average annual global GDP over the period.
We would need a virtual decarbonisation of the power sector.
Given the growing demand for electricity, this would mean that on average per year 35 coal and 20 gas-fired power plants would have to be fitted with CO2 capture and storage (NYSE:CCS) technology, between 2010 and 2050 at a cost of $1.5 billion each. Furthermore, we would have to build an additional 32 new nuclear plants each year and wind capacity would have to increase by approximately 17.500 turbines each year.
In addition to all this, we would also have to make an eightfold reduction of the carbon intensity of the transport sector.