Carbon Emissions Set to Rise Steadily with Fossil Fuel Use; But, IEA Indicates, Ways to Halt Climate Change Do Exist

World energy will grow by a steady 2 percent a year from now till 2020, and carbon dioxide emissions which contribute to unwanted climate change will rise at about the same rate. Most of the increases will come in developing countries. Oil, gas and coal will continue to dominate the world fuel mix. Countries that import oil and gas will grow increasingly dependent on production from OPEC members in the Middle East.

These are some of the main projections to be found in the “reference scenario” of World Energy 2000, the biennial flagship publication of the International Energy Agency. Robert Priddle, the IEA’s Executive Director, presented these things today in Berlin, at a meeting of the Energy Board of Structural Political Society.

“This is a detailed portrait, warts and all, of how the energy world might develop from now till 2020,” said Robert Priddle, the IEA Executive Director. “It points to a number of serious challenges. But it also contains an array of relevant facts and dispassionate analysis that can help the world to understand and meet the challenges posed by the energy sector.”

WEO 2000, the latest in a series of publications that have become the point of reference for the energy world, contains a number of important innovations. Previous editions were based on a “business as usual” scenario, which simply projected forward established energy trends. The “reference scenario” of this year’s Outlook goes beyond that approach. It takes into account that likely effect of policies and measures to combat climate destabilisation which have been adopted since 1997, the last year for which authoritative global statistics are available. WEO 2000 also offers, for the first time, a selection of alternative cases,” which trace what would happen if additional measures were taken.

The energy world depicted in the reference scenario of WEO 2000 is dynamic, expanding and rapidly changing. It assumes that the world economy will grow by 3% a year, that fossil fuel prices remain flat till 2010, then rise to $28 in today’s money by 2020. In that event, overall energy demand will grow by 57 percent over twenty years, just slightly below the rate in recent years. CO2 emissions will swell by 60% or 2.1% annually – one-third from power generation.

Fossil fuels – coal, oil and natural gas – will continue to provide 90 per cent of the world’s primary energy, although gas will displace coal in some regions. Petroleum will remain the dominant fuel, meeting 40% of world energy needs. Oil use will surge from 76 million barrels a day now to 115 mb/d 2020. Nuclear power output will remain constant in absolute terms, but decline as a proportion of total energy supply as older nuclear reactors in Europe and North America are retired. New renewable energy sources will increase rapidly, from 2% to 3% of total demand.

Energy use will grow much faster in the world’s poorer nations than in the rich. But rich and poor alike will come to depend heavily on a diminishing number of gas and oil suppliers. Middle East OPEC countries, which furnished 26% of world oil supplies in 1997, will be called upon to produce 32% in 2010 and 41% in 2020.

Despite all the efforts made so far to reduce energy-related CO2 emissions, the WEO 2000 reference scenario sees them rising by 60% from 1997 to 2000, faster than energy demand and faster than in recent decades. Developing countries will account for two-thirds of the increase, with China’s emissions risking as fast as those of the whole OECD. Emissions from power generation will increase by more than three-quarters and those from the transport sector by nearly as much.

These projections show how much more needs to be done in the energy sector if developed and transition countries are to meet their commitments to limit greenhouse gas emissions under the term of the Kyoto Protocol. The reference scenario foresees North American emissions 42% higher than the Kyoto targets by 2010. The gap would be 29% in the OECD Pacific region and 18% in Western Europe.

Those are sobering statistics. They clearly make the case far more, and more decisive, action to avert unwanted climate change. WEO 2000 offers three “alternative cases” illustrating options for such action. They are:

The emissions trading case in which maximum efficient use is assumed to be made
of the provision in the Kyoto Protocol which allows countries to “trade” carbon permits and thus fulfil their Kyoto obligations. The Outlook analysis concluded that a fully effective trading system would result in a “price” of $32 for a tonne of carbon dioxide. Trading could lower the cost to countries of meeting their Kyoto obligations by between 29% and 63% depending on their domestic circumstances. Trading would also produce major revenue flows for Eastern Europe and the Former Soviet Union, which would be the main “sellers” of emission credits.

The transport case in which additional efforts are assumed to cut emissions from road vehicles and airplanes. These include increasing fuel efficiency, wider use of alternative fuels, altering the shape of transport demand and imposing taxes on carbon-emitting fuels. Of these methods, the Outlook study finds improved fuel efficiency to be the most promising within the Kyoto time frame. A concentrated effort in the transport area could stabilise CO2 emissions from the transport after 2010 but not before.

The power generation case, which assumes various programmes to reduce emissions in this key sector. It finds that fuel switching from coal to natural gas could reduce the sector’s emissions by 1.7% in 2010, while extending the life of older nuclear plants could reduce them by 2.3%. Increased use of renewables could achieve a 3.2% reduction and more combined heat and power generation nearly 1%. There are however, economic or political obstacles to all these approaches. Because of the long-term nature of the power sector, none of them can be put in place rapidly.

Because of the increasing significance of energy demand in developing countries, especially the very large ones, WEO 2000 presents for the first time chapter-length studies of the energy situation in Russia, China and Brazil. An even more detailed presentation is offered of the energy situation and projections in India. Underlying all the work presented in this volume is an extended and reshaped World Energy Model containing some 10,000 equations – by far the most complete and sophisticated energy model in the world.

“World Energy Outlook 2000 is a very large and very rich piece of work,” says Priddle. “It will take us all some time of the digest the information and insights it contains. It sounds important alerts – particularly in the areas of oil-supply security and climate change. But, by laying out the facts in rich detail and by proposing a number of alternative scenarios, WEO 2000 can help us to come to grips with reality and make some difficult choices.”