Jump in Energy Demand Seen by 2035
By JULIA WERDIGIER
Published: November 9, 2010
LONDON — World energy demand will grow by more than a third over the next 25 years, led by increased consumption in China, and fossil fuels will still predominate, an influential forecasting agency said Tuesday.
In its annual World Energy Outlook, the International Energy Agency also predicted that oil prices would rise to $113 per barrel in 2035 from just over $60 per barrel in 2009, due to growing demand for cars and airplanes and increasingly difficult to reach reserves.
While that might not be good news for consumers, it would provide more of an incentive to try other options, Fatih Birol, the I.E.A.’s chief economist, said in an interview.
“Moving, for example, from an oil-based to an electric car is one, if not the only, tool oil importing countries have in having a say in the international oil markets,” Mr. Birol said.
The report said that overall energy demand would increase by 36 percent by 2035. Even though renewable energy sources are set to increase in importance, oil, coal and natural gas would remain the main sources in 2035, according to the intergovernmental agency, which is based in Paris and advises industrialized countries.
“It is hard to overstate the growing importance of China in global energy markets,” the I.E.A. added in its annual report. “The country’s growing need to import fossil fuels to meet its rising domestic demand will have an increasingly large impact on international markets.”
The agency reported in July that China overtook the United States as the world’s largest energy user last year, although Beijing disputed the finding.
China is expected to continue to drive growth in energy demand overall as its industrial production increases and its population grows, even if energy consumption per capita remains below that of developed economies. Demand for energy in China is expected to rise 75 percent until 2035 and by that time, China would account for 22 percent of the world’s energy demand, up from currently 17 percent.
Mr. Birol also said that he expects China to become “the leader in low-carbon technologies,” such as electric cars.
“Because of economies of scale, costs for technology will go down and make it accessible to the rest of the world,” he said. That change might have an impact on countries such as Germany, where 3 percent of gross domestic product comes from the car industry, Mr. Birol said.
Volkswagen, the German carmaker, announced plans to build 10,000 electric cars in China from 2014 on Monday. Rivals Nissan Motor, General Motors and Daimler are also planning electric vehicles in the country, which offers subsidies to buyers of such cars that are less dependent on oil.
The I.E.A. also said that the world energy outlook in 2035 hinged critically on government policies and how their actions affect technology, the price of energy services and consumer behavior. “Government regulation is crucial,” Mr. Birol said. “If we leave it to the market to deal with the problems it won’t work. Governments need to provide the right framework.”
Renewable energy sources “will have to play a central role in moving the world onto a more secure, reliable and sustainable energy path,” the I.E.A. said in its report. Renewable energy sources could see their share of global electricity generation increase to almost 33 percent by 2035 from 19 percent in 2008.
Mr. Birol also called on governments to suspend subsidies for fossil fuels, which “would lower demand for oil and lower CO2 emissions.”
Unless reformed, current subsidies would increase to $600 billion in 2015 from $312 billion in 2009, according to the I.E.A. By contrast, the I.E.A. estimated that government support for renewable energies would rise to $205 billion, or 0.17 percent of gross domestic product, by 2035 from $75 billion in 2009.
The issue of fossil fuel subsidies is expected to be discussed at the Group of 20 meeting in Seoul this week.
Oil is expected to remain the dominant fuel while demand for natural gas is to “resume its long-term upward trajectory from 2010” after a drop in 2009 because of the recession, it said, with demand especially strong in China and the Middle East. That could raise new concerns in Europe about its dependence on natural gas imports from Russia.
The I.E.A. also predicted a shift among oil producing nations towards a greater role for members of the Organization of Petroleum Exporting Countries, which by 2023 would generate more than half of the global output. Most of the growth is expected to come from Iraq, which is to overtake Iran in the next five to six years, according to the I.E.A.
That shift could make it more difficult for major oil companies such as BP or Chevron, compared with state-owned oil giants, to access new reserves, Mr. Birol said. “Many of the big international oil companies are entering an age of identity crisis,” he said. “They’ll be looking more for natural gas and other energy sources.” |
