Several members of the CCC team were at Imperial College London yesterday evening to hear Dr Fatih Birol, the Chief Economist at the IEA, discuss the recently released World Energy Outlook for 2013. This yearly publication has become a touchstone for global energy forecasting, as well as an influential source of advice on CO2 abatement.
Dr Birol strongly emphasised the turbulent times the global energy market is currently going through, with several major energy importers becoming major exporters and vice versa. Chief amongst the game-changing developments is the shale gas boom in the USA, which has had knock on effects throughout the energy landscape. Accompanying this, the flow of global energy trade will continue to shift from OECD countries towards Asia, which will account for 65% of energy growth in the next 20 years. Although China is expected to increase its demand in the short term, a movement towards lighter industry and energy efficiency will see this level off, and India take over as the main centre of growth in the 2020s.
Unfortunately, with fossil fuels still accounting for 82% of energy consumption—actually unchanged since the early 90s—the world is still well on the way to the IEA’s 3 degree global warming scenario. However, Dr Birol expressed a great deal of optimism for the forthcoming climate summit to be held next year in Paris, at which several main players seem likely to be more receptive to positive change. The USA has already seen a sharp decline in emissions purely from a shift to gas generation and, although often more motivated by air quality issues, China has implemented efficient power generation policies and seen a huge growth in renewables. Conscious that any measures taken in Paris will only come into effect in 2020, the IEA have proposed a ‘4 for 2’ plan for curbing greenhouse gas emissions in the meantime at minimum economic cost. Principal among these four strategies are energy efficiency measures, followed by cutting methane emissions from oil and gas production, phasing out fossil fuel subsidies, and limiting use of subcritical coal plants. This last proposal was of most interest to the CCC contingent, with some doubts expressed as to the true cost of curtailing plants which many countries depend on for a large propotion of their energy.
The lecture finished by highlighting the unprecedented divergence in gas and electricity prices occurring throughout the world, which looks to remain with us till at least 2035. Natural gas and energy currently cost significantly more in Japan and the EU than in the USA, and this is likely to harm economies with a large proportion of energy-intensive industry. Dr Birol offered a clear warning that such regions will need to respond to this fast-changing energy landscape with shrewd policy.