Standing at the crossroads

Nobuo Tanaka has a stark warning for world leaders. The planet is at a crossroads with its energy consumption.

Carrying on regardless will lead to economic as well as environmental catastrophe.

This is not the apocalyptic vision of a tree hugger. Tanaka is executive director of the International Energy Agency (IEA), the heavyweight policy advisor to the governments of the 28 most developed nations, including the UK and USA.

Formed in the crucible of the early 1970s energy crisis, the IEA knows all about volatile times and how to respond to them.

“We cannot let the financial and economic crisis delay the policy action that is urgently needed to ensure secure energy supplies and to curtail rising emissions of greenhouse gases,” says Tanaka. “We must usher in a global energy revolution of low-carbon energy.”

The IEA’s annual analysis of world energy says if governments do nothing between 2006 and 2030 demand will grow by 1.6 a year, a startling increase of 45 per cent. Demand for coal will rise more than any other fuel – bad news for the climate – accounting for more than a third of the increase in energy use.

But renewables will overtake gas to become the second largest source of electricity. China and India are driving more than half the demand although the Middle East is emerging as a major force. Non-OECD countries account for almost all of the increase in fossil energy production.

Meanwhile demand for oil will rise from today’s 85 million barrels a day to 106 million by 2030. This year’s price spike highlighted how oil prices are sensitive to volatile markets as well as the finite nature of this source.

Yet the immediate risk is not one of supply – “the world is not running short of oil just yet” - but lack of investment. Last year $390 billion was spent on oil and gas exploration and production, well short of the $450 billion needed to keep pace with demand. Look forward to an oil supply crunch.

Putting this altogether, these trends demand investment of £26.3 trillion to 2030. However the credit crunch may delay spending, leading to a supply crunch that could choke economic recovery. Tanaka thinks this can not go on.

“Current trends in energy supply and consumption are patently unsustainable – environmentally, economically and socially – they can and must be altered,” he says. “Rising imports of oil and gas into OECD regions and developing Asia, together with the growing concentration of production in a small number of countries, would increase our susceptibility to supply disruptions and sharp price hikes. At the same time, greenhouse gas emissions would be driven up inexorably, putting the world on track for an eventual global temperature increase of up to 6°C.”

In short, the planet will roast, millions of people will be displaced through lack of water, food production will collapse and the global map will be dramatically redrawn. Economically, the IEA warns “the future of human prosperity” is at stake.

To avoid this nightmare scenario, the IEA suggests pumping underground carbon dioxide produced from burning vegetation, but this is an untested technique. Carbon capture and storage will dramatically rise up the agenda as will planting more forests.

To limit global warming to no more than 2°C – the level that some climate researchers think is already inevitable – would also involve scrapping and replacing dirty power plants. The cost will be $3.6 trillion between 2010 and 2030. Compare that with world leaders’ recent efforts to rescue the global economy - $4 trillion.

“The energy sector will have to play the central role in tackling climate change,” concedes Tanaka.

All eyes on Copenhagen, the venue for next year’s international negotiations for a new global climate deal.

huw.morris@haymarket.com


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