In China, 30 out of 1,000 people own a car, compared with the US where 700 out of 1,000 people own a car. By 2035, 240 out of 1,000 people in China will own a car

WHEN Fatih Birol speaks, the world listens. And when he lets his annual World Energy Outlook (WEO) speak, it is taken all the more seriously, as this is regarded as the almanac of the energy world, which is anxiously and eagerly awaited all around.

 

No different was the scenario at the Edwardian I Conference room of the Crown Plaza Hotel in London on Tuesday, Nov. 9, while this much-awaited annual report was unveiled by Nobuo Tanaka, executive director of the International Energy Agency (IEA), in the presence of Birol, the report’s chief author.

The focus of WEO 2010 was clearly on two issues: the emerging, dominant role of China in the global energy equation and the faltering climate battle.

China's daily demand for oil is projected to touch 13 million barrels a day mark by 2035 — equal to 39 percent of the overall increase in the global energy demand.

China, which consumed half as much energy as the United States in 2000, surpassed the US in 2009 to become the world's largest energy user. China will overtake the US in 2025 as the world's biggest spender on oil imports, the IEA said.

At the same time, the country's per capita carbon dioxide emission is to grow by 41 percent to 6.9 metric tons in 2035. China will hence account for 58 percent of the global increase in carbon dioxide emissions by then.

The transportation sector today remains the major user of crude and almost 70 percent of the energy consumed, on a global basis, is in this sector. A primary driver of China's growing energy demand is also the increasing number of car owners there.

In China, 30 out of 1,000 people own a car, compared with the US where 700 out of 1,000 people own a car. By 2035, 240 out of 1,000 people in China will own a car — an 800 percent increase, yet still one-third of where the US is today. China's car fleet, estimated at 40 million, is projected to grow to 135 million by 2035, underlined Birol while talking to the press.

But at the same time, China is also a leading investor in renewable energy sources. China will become a global leader in solar, wind, nuclear and advanced car technologies over the next 35 years, Birol said.

China will lead the way in building sources of renewable energy that will allow the world to diversify away from coal and gas. “This will be a major service from China and for the rest of the world,” he added.

China's increasing appetite for energy will drive rising global energy demand over the coming decades, putting the country in a position to mold the future of both energy security and alternative energy sources. “I see a double role for China in the future,” Birol said in rather clear terms.

“It is hard to overstate the growing importance of China in global energy. How the country responds to the threats to global energy security and climate posed by rising fossil-fuel use will have far-reaching consequences for the rest of the world,” said Tanaka.

The energy world is faced with tremendous uncertainty, most agree and the IEA is no exception.

The strength of the economic recovery holds the key to how energy markets will evolve over the next few years. It is what governments do, and how that action affects technology, the price of energy services and end-user behavior, that will shape the future of energy in the longer term, the report said.

The New Policies Scenario descried in the report, prepared taking into account the broad policy commitments and plans that have been announced by countries around the world, underlines that the global primary energy demand would increase by 36 percent between 2008 and 2035, or 1.2 percent per year on average. The assumed policies make a tangible difference to energy trends: Demand grew by 2 percent per year over the previous 27-year period.

Under this scenario, non-OECD countries account for 93 percent of the projected increase in world primary energy demand. Globally, fossil fuel is to remain dominant over the “Outlook period,” though its share in the overall energy mix is to fall, while contribution from renewable energy sources and nuclear power is projected to go up. And thus despite all the wishes of friends and foes, oil would remain the leading fuel in the energy mix by 2035, followed by coal, the report said.

The oil price is also set to rise, in the meantime, reflecting the growing insensitivity of both demand and supply to price, with the average IEA crude oil price rising from just over $60 in 2009 to $113 per barrel (in year-2009 dollars) in 2035, the report said.

Oil demand continues to grow steadily, reaching about 99 million barrels per day (mb/d) by 2035 — 15 mb/d higher than in 2009. Crude oil output reaches an undulating plateau of just under 69 mb/d by 2020 while production of natural gas liquids (NGLs) and unconventional oil — notably Canadian oil sands — grows strongly, the report added.

Gulf oil producers continue their major role in fulfilling the global needs. OPEC countries account for a growing share of global production, with the biggest increases coming from Saudi Arabia and Iraq, the report clearly underlined. Production in and exports of oil (and gas) from the Caspian region is also to grow substantially.

“Renewable energy can play a central role in reducing carbon-dioxide emissions and diversifying energy supplies, but only if strong and sustained support is made available,” the report said.

In the New Policies Scenario, government intervention in support of renewables (electricity from renewables and biofuels) increases from $57 billion in 2009 to $205 billion (in 2009 dollars) by 2035.

The share of modern renewable energy sources, including sustainable hydro, wind, solar, geothermal, modern biomass and marine energy, in global primary energy use triples between 2008 and 2035 and their combined share in total primary energy demand increases from 7 percent to 14 percent.

The report also emphasized that the globe could lose the climate battle if it fails to reverse its meeting the emission cuts agreed upon last year in Copenhagen.

It said this failure has added $1 trillion to the price tag of preventing dangerous increases in global temperatures.

Additional global spending of about $11.6 trillion will now be needed through 2030 to keep temperatures from rising more than 2 degrees Celsius (3.6 Fahrenheit), the IEA said. That's about $1 trillion more than the IEA forecast last year.

The energy world continues to be in a flux and uncertainties would continue to plague this sector, one could say without fear of denial. To a great extent, good old friend Fatih Birol also seems to be conceding, while letting the WEO to talk on his behalf. We are in for a turbulent ride.