World Energy Outlook 2012

The International Energy Agency released their 2012 version of World Energy Outlook today and it featured some interesting highlights.  Here are some of the points that peaked my interest:

• In 2011, fossil fuel subsidies grew 30% to $523 billion while renewable energy received just $88 billion.

Fossil fuels according to the New Policies Scenario:

• The US will become the largest oil producer by 2017, a net exporter of natural gas by 2020, and will be almost energy-self-sufficient (in net terms) by 2035.
• Global oil demand increases by 7mb/d to 99mb/d in 2035 at which time price reach $125/ barrel (real terms) = (over $215/ barrel nominal terms).
• The gas boom in North America will reverse the direction of the international oil trade, with almost 90% of Middle Eastern exports destined for Asia. 
• Natural gas demand increase by 50% in 2035, with most of the production coming from the US, Australia, and China.
• By 2035 we can achieve efficiency savings equivalent to 20% of global demand in 2010. 
• By 2015 renewables become the world’s second-largest source of power generation, closing in on coal as the primary source by 2035. 

In the Efficient World Scenario, greater efforts are placed on energy efficiency measures that would cut the global demand by half.  Other benefits realized in this scenario include:

• Global oil demand would peak by 2020 and be 13mb/d lower by 2035. 
• “The accrued resources would facilitate a gradual reorientation of the global economy, boosting cumulative economic output to 2035 by $18 trillion, with the biggest gains in India, China, the United States and Europe.”

This is all well and good, but there are a few things to note about the conclusions:

1. Energy sufficiency does not mean that we will be insulated from the price spikes on the global market.
2. Approximately 55% of America’s energy self-sufficiency is from increased production – the remaining 45% is from increased energy efficiency measures such as better gas mileage in cars and trucks, more efficient buildings, and smarter appliances.
3. Electricity prices in the US will be about half that of Europe as power plants switch to cheap natural gas.  This will be a huge boom for the economy as heavy industry repopulate parts of the mid-west.  However, in terms of climate change, increased use of natural gas will be offset by increased coal usage in the developing world.

Finally, and very sobering, the report concluded that the unless a global emissions agreement is implemented by 2017, the planet will not remain within the 2 degree Celsius range that most scientists agree is the upper safe limit on warming.