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21 April 2011
Findings from the World Energy Outlook are presented at the Bridge Forum
Dialogue in Luxembourg
The Executive Director of the International Energy Agency (IEA) has warned that curbing rising fossil fuel
prices will require significant investments and further development and deployment of renewable energy
technologies, energy efficiency, and advanced vehicles.
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The age of cheap energy is over, IEA Executive Director warns
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Nobuo Tanaka noted that the renewed debate on nuclear energy could have an impact, not only on climate
change but also energy security.
CLEAN ENERGY
“The age of cheap energy is over,” Mr Tanaka said, speaking at the Bridge Forum Dialogue in Luxembourg on
13 April 2011. “The only question now is, will the extra rent from dearer energy go to an ever smaller circle of
producers, or will it be directed back into the domestic economies of the consumers, with the added benefits
of increased environmental sustainability?”
50 million barrels of oil per day need to be produced from new fields by 2035
Mr Tanaka presented scenarios found in the World Energy Outlook 2010, the IEA’s flagship publication, at the
Luxembourg meeting.
OIL SUPPLY
One of these scenarios – the ‘New Policies Scenario’ – takes account of the broad policy commitments that
have already been announced by governments. It assumes cautious implementation of national pledges made
at the UN Climate Change conference in Copenhagen to reduce greenhouse-gas emissions by 2020, and also
assumes that new measures are introduced after 2020 to maintain the pace of decline in carbon intensity.
In this scenario, by 2035, three-quarters of the world’s oil production from existing fields will need to be
replaced, Mr Tanaka said.
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That works out to just over 50 million barrels per day, which is equivalent to about four times the production
capacity of Saudi Arabia, the world’s largest oil producer.
IEA analysts calculated that this amount of oil is needed to compensate for the predicted decline in production
at existing fields, as they pass their peak and their production rates drop. (Crude oil output from fields that
were in production in 2009 is expected to fall from 68 million barrels per day in 2009 to 16 million per day by
2035).
Replacing production from existing fields
In this scenario, the IEA projects that crude oil production achieves an undulating plateau of 68-69 million
barrels per day over the projection period (to 2035).
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“Despite the fact that crude oil production doesn’t increase, the need for new capacity on a gross basis is still
very large, because so much of the world’s existing production capacity will have been lost by the end of the
projection period [of 2035],” said Mr Tanaka.
“Another 15 million barrels per day of oil-production capacity is needed to meet the increase in global
demand. We project that it will come from natural gas liquids and unconventional oil [sources].”
Slowdown in development of nuclear capacity will have significant consequences
He also stressed that the ongoing nuclear incident in Japan has “renewed debate surrounding the future role
of nuclear power in the global energy mix”.
Mr Tanaka explained that “investment in nuclear capacity may be delayed or deferred at least in the shortterm and plants may be retired early due to the introduction of more stringent safety regulations.”
He warned: “Any slowdown in the development of nuclear capacity will have implications for energy prices,
the overall fuel mix, climate change and investment.”
Particularly if nuclear does not play as large a role in the future as was expected, rapidly rising demand for
relatively cheap gas could herald a golden age of gas, he said. (On 6 June, a special excerpt of the World
Energy Outlook 2011 will be released, which will look at just how bright – and just how likely – a ‘golden age
of gas’ might be).
Movement from China
Mr Tanaka added, however, that Chinese policies on gas, as well as on renewables, nuclear, power, electric
vehicles, and efficiency will have major impacts on the global energy economy.
“China has become a world leader in renewable energy, planning major new investments in wind, solar, and
biomass projects as well as in advances vehicle technologies. Given the sheer scale of China’s domestic
market, its push to increase the share of new low-carbon energy technologies could play an important role in
driving down their costs by contributing to improvements in technology learning rates.”
Key terms:
Advanced vehicles
The IEA’s term ‘advanced vehicles’ covers electric (which are battery powered), plug-in hybrid (which uses
two sources of power – most commonly gasoline and electric) and fuel cell models (which convert hydrogen
into electricity).
Energy efficiency
Something is more energy efficient if it delivers more services for the same energy input, or the same
services for less energy input. For example, when a compact florescent light (CFL) bulb uses less energy than
an incandescent bulb to produce the same amount of light, the CFL is considered to be more energy efficient.
For more information, click here.
Energy security
The uninterrupted availability of energy sources at an affordable price.
Photo: © GraphicObsession.
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29/04/2011
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