The International Energy Agency (IEA) released their 2012 edition of the World Energy Outlook (WEO) on Monday, 12 November 2012. The take-away from the report is:
The WEO finds that the extraordinary growth in oil and natural gas output in the United States will mean a sea-change in global energy flows. In the New Policies Scenario, the WEO’s central scenario, the United States becomes a net exporter of natural gas by 2020 and is almost self-sufficient in energy, in net terms, by 2035. North America emerges as a net oil exporter, accelerating the switch in direction of international oil trade, with almost 90% of Middle Eastern oil exports being drawn to Asia by 2035.
The new oil and natural gas production in the US will not only result in lower domestic prices for gasoline, electricity and heating oil, it could result in delivering our nation from the endless traumata that are the turbulent Middle-Eastern nations. Will we feel it necessary to defend shipping routes any more? Will we need to provide F-16 fighter planes to Saudia Arabia? I wonder if the European or perhaps the Saudis, are becoming nervous thinking that they might have to do for themselves what we have been doing for them. Maybe the Chinese will take up the slack. I’m not sure that is a comforting thought.
The report says this about the use of fossil fuels:
Fossil fuels will remain dominant in the global energy mix, supported by subsidies that, in 2011, jumped by almost 30% to $523 billion, due mainly to increases in the Middle East and North Africa. Global oil demand grows by 7 mb/d to 2020 and exceeds 99 mb/d in 2035, by which time oil prices reach $125/barrel in real terms (over $215/barrel in nominal terms). A surge in unconventional and deepwater oil boosts non-OPEC supply over the current decade, but the world relies increasingly on OPEC after 2020. Iraq accounts for 45% of the growth in global oil production to 2035 and becomes the second-largest global oil exporter, overtaking Russia.
That fossil fuels will remain preeminent just confirms what most rational people had already figured out.
The report says the following about renewables:
Renewables become the world’s second-largest source of power generation by 2015 and close in on coal as the primary source by 2035. However, this rapid increase hinges critically on continued subsidies. In 2011, these subsidies (including for biofuels) amounted to $88 billion, but over the period to 2035 need to amount to $4.8 trillion; over half of this has already been committed to existing projects or is needed to meet 2020 targets. Ambitions for nuclear have been scaled back as countries have reviewed policies following the accident at Fukushima Daiichi, but capacity is still projected to rise, led by China, Korea, India and Russia.
Do you think the people will want to spend $4.8 trillion over the next 30 years in order to replace low cost fossil fuels with much more expensive and less reliable renewable energy? If you do, I have a some ocean front property in Arizona I would like to sell to you. China, India, Brazil and Russian will not jump headlong into the renewables program. They have too many poor people that they wish to bring up to a standard of living approaching that of North America and Europe. Even in Europe today, many new coal-based power plants are being built as they are finding that their economies can not afford renewables.
The radical environmentalists say that the globe is racing toward a catastrophe due to an increase in atmospheric CO2 that results from burning fossil fuels. But the past 16 years of no global temperature rise despite an increasing amount of atmospheric CO2 indicates that natural causes have more control of global temperatures than CO2.
The usual word of caution–forecasts often prove to be in error. While this one looks pretty reasonable, we wont really know how good it is until 2035.
To read the press release by IEA, click here.