Share of non-hydro renewables to remain flat, says IEA

PARIS, France, July 26, 2006 (Refocus Weekly) The share of wind, solar, biomass, geothermal, tidal and wave energy will remain flat at 11% around the world, suggests the chief economist of the International Energy Agency.

Fossil fuels continue to dominate energy supply, meeting more than 80% of the projected increase in primary energy demand, says Fatih Birol. Oil remains the single largest fuel, with two-thirds of the increase in oil use coming from the transport sector.

Demand for oil reaches 92 million barrels a day in 2010 and 115 mb/d in 2030, whille demand for natural gas grows faster, driven mainly by power generation, he explains. Natural has overtakes coal as the world’s second-largest primary energy source before 2015, although demand for coal remains concentrated in China and India.

The market share for nuclear declines marginally, while hydropower remains broadly constant. “The share of non-hydro renewables, including biomass, geothermal, solar, wind, tidal and wave energy, will remain flat at 11%,” he predicts.

“The world’s energy resources are adequate to meet the projected growth in energy demand in the reference scenario,” with global oil reserves currently exceeding the cumulative projected production between now and 2030. More reserves will need to be firmed to avoid a peak in production before the end of the period and the exact cost of finding and exploiting energy resources over coming decades will be uncertain but “certainly be substantial.”

Cumulative energy-sector investment needs are estimated at US$17 trillion (in 2004 dollars) from 2004 to 2030, with half in developing countries. Financing the required investments in non-OECD countries is one of the biggest challenges facing the energy industry, he adds.

“In recent years, demand for energy has surged,” he says. “This unrelenting increase has helped fuel global economic growth but placed considerable pressure on suppliers buffeted by geopolitics, violent weather conditions and other potentially disruptive factors.”

“On the demand side, increased energy security and environmental concerns may lead to changes in consuming countries’ energy policies,” he adds. “If governments stick with current policies (the underlying premise of the IEA’s reference scenario), the world’s energy needs would be more than 50% higher in 2030 than today, an average annual growth rate of 1.6%.”

“Over time, consuming countries will grow increasingly reliant on oil and gas imports from an ever-smaller group of suppliers, notably Russia and the big Middle East producers,” he explains. “Expanding trade is to be welcomed as it binds suppliers and customers in mutually beneficial relationships but, at the same time, the risk of a major supply disruption whether from terrorism, piracy, accidents, severe weather, political tensions or war, will undoubtedly increase.”

“Consuming countries must identify policies and measures aimed at reducing the risk of disruptions and higher prices, as well as mitigating their consequences,” he adds. “Consuming-country governments also need to consider long-term policies that promote further diversification of their energy supplies as a means of both lowering their vulnerability to supply disruptions and of addressing environmental challenges, including rising GHG emissions.”

“Reducing dependence on oil and gas through diversification of fuels and their geographic sources and more efficient use of energy must be central to long-term policies aimed at enhancing energy security,” he concludes.


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