Can we curb unsustainable growth?

The primary scarcity facing the planet is not natural resources nor money but time, argues Fatih Birol

If governments around the world stick with current policies – the underlying premise of the reference scenario of the International Energy Agency (IEA)’s world energy outlook 2007 – the world’s energy needs are projected to grow by 55 per cent between 2005 and 2030.

The WEO-2007, released in November, provides insights into the growing importance of China and India in global energy markets. These two countries will account for 45 per cent of the global demand increase, with China’s primary energy demand projected to more than double. With four times as many people, it will overtake the US to become the world’s largest energy consumer soon after 2010. Primary energy demand in India is also set to more than double by 2030.

Globally, fossil fuels will continue to dominate the fuel mix, accounting for 84 per cent of the overall global increase in demand between 2005 and 2030. Oil remains the single largest fuel, reaching 116 million barrels per day in 2030 – 32 mb/d up on 2006. In line with the spectacular growth of the past few years, coal sees the biggest increase in demand in absolute terms, jumping by 73 per cent between 2005 and 2030. Most of the increase in coal use arises in China and India.

In the reference scenario, emissions will jump by 57 per cent between 2005 and 2030. Fast growing global energy demand will also lead to increased reliance of consuming countries on imports of oil and gas – much of them from the Middle East and Russia. Ensuring reliable and affordable supply will be a formidable challenge.

The reference scenario projections are based on what some might consider to be conservative assumptions about economic growth in China and India. Higher rates of growth would result in much faster energy demand growth in these two countries. Faster growth would also boost international trade between China and India and the rest of the world, thus heightening global energy security concerns.

The consequences of unfettered growth in global energy demand are alarming. But what would happen if governments put policies in place aimed at arresting these worrying trends? In the WEO-2007 alternative policy scenario, in which policies are under consideration but not yet implemented are assumed to be fully implemented over the projection period, global primary energy demand will grow by 38 per cent in 2005-2030. Global oil demand will be 14 mb/d lower in 2030 – equal to the entire current output of the United States, Canada and Mexico combined. Coal use will fall most in absolute and percentage terms, and energy-related CO2 emissions will stabilise in the 2020s. In 2030, emissions will be 19 per cent lower than in the reference scenario.

Lower fossil-fuel consumption, resulting from the introduction of more efficient technologies, accounts for most of the energy savings in the alternative policy scenario. Worldwide, renewable energy plays a much greater role in the alternative policy scenario, reflecting increased government support. The most significant increases come from the power sector, where renewable energy is projected to account for 29 per cent of global electricity generation in 2030, compared with 18 per cent now. Renewables will overtake gas to become the second-largest source of electricity after coal.

The EU has a target of 34 per cent for the share of renewable energy sources in power generation by 2020 – in the alternative policy scenario this target will be met soon after 2020. Likewise, biofuels will account for about 10 per cent of road transport fuel – another EU target – way before 2030 in this scenario. Because renewable energy sources play a much greater role, energy-related CO2 emissions in the EU fall much faster than primary energy demand. Emissions in 2030 in the alternative policy scenario are over 20 per cent lower than their 1990 level.

Yet even in the alternative policy scenario global emissions would still be 27 per cent higher than in 2005. According to the best estimates of the intergovernmental panel on climate change, the CO2-equivalent concentration in the atmosphere of about 550 parts per million (ppm) resulting from this scenario would correspond to an increase in average temperature of around 3°C above pre-industrial levels. In order to limit the average increase in global temperatures to a maximum of 2.4°C, the smallest increase in any of the IPCC scenarios, the concentration of greenhouse gases in the atmosphere would need to be stabilised at around 450 ppm.

To achieve this, CO2 emissions would need to be cut to around 23 gigatonnes in 2030, about 19 gigatonnes less than in the reference scenario. The WEO-2007 “450 stabilisation case” describes a notional pathway to achieve this outcome. Emissions savings come from improved efficiency in fossil-fuel use in industry, buildings and transport, switching to renewables and nuclear power, and the widespread deployment of CO2 capture and storage in power generation and industry. Exceptionally quick and vigorous policy action by all countries – over and above those policies assumed to be implemented in the alternative policy scenario – and unprecedented technological advances, entailing substantial costs, would be needed to make this case a reality.

The primary scarcity facing the planet is not of natural resources nor money, but time. Investment now being made in energy-supply infrastructure will lock in technology for decades, especially in power generation. The next ten years will be crucial, as the pace of expansion in energy-supply infrastructure is expected to be particularly rapid. Government action must focus on curbing the rapid growth in CO2 emissions from coal-fired power stations – the primary cause of the surge in global emissions in the last few years. Energy efficiency and conservation will need to play a central role in curbing soaring electricity demand and reducing inputs to generation. Renewable energy and nuclear power can also make a major contribution to lowering emissions.

The EU has policies in place that could bring about a drastic reduction in its share of global CO2 emissions. But the EU’s efforts alone to enhance its energy security and to reduce CO2 emissions will not bear fruit if the rest of the world’s energy demand continues to grow at current trends. There can be no effective long-term solution to the twin threats of climate change and energy insecurity unless all major energy consumers contribute.