IEA: last year's inaction on climate goals cost us $1 trillion
By John Timmer | Last updated a day ago
Each year, the International Energy Agency produces a report in which it considers trends in energy use and makes projections for the future. Usually, these reports simply take recent trends and project them forward, but this year's is somewhat different: its author uses a mixture of current trends and the projected impact of countries' pledges for reducing greenhouse gas emissions and subsidies for fossil fuels. This results in some eye-popping figures. Globally, we're subsidizing fossil fuel use to the tune of hundreds of billions of dollars, at a rate of over five times the subsidies going to renewable energy. And our inaction on climate goals has tacked $1 trillion onto the cost of reaching them—in 2009 alone.
We'll start with the subsidies. In 2009, the total subsidies were $312 billion, which may seem high until you hear the 2008 figure: $558 billion, boosted by countries' responses to the high fossil fuel prices that year. Most of the subsidies went to help cut the costs of using oil and natural gas products; another substantial chunk went to electricity use.
Clearly, subsidies of this sort occur in Western democracies, but the biggest contributors tend to be fossil-fuel rich countries, such as those in Russia, Iran, and Saudi Arabia, although India and China also do a hefty amount of subsidizing. In some cases, these subsidies account for over 10 percent of the nation's GDP; for Iran, it's 20 percent, which works out to nearly $70 billion. By contrast, the global subsidies for renewable electricity and biofuels amounted to only $57 billion.
Earlier this year, however, the G20 members agreed to bring this practice to an end, which the report's author thinks is a very good idea. "Eradicating subsidies to fossil fuels," he concludes, "would have a dramatic effect on global energy balances, enhancing energy security, reducing emissions of greenhouse gases and air pollution, and bringing economic benefits." He estimates that a complete global phase out would cut carbon dioxide emissions by the equivalent of the annual output of Germany, France, the United Kingdom, and Italy.
The report looks forward to what the energy economy might look like by 2020 and 2035. The first scenario considered involves projecting use patterns forward based on the pledges made by nations at the Copenhagen climate conference that year. Unfortunately, the IEA concludes, these pledges are insufficient to meet the stated goal of stabilizing the climate after a rise of 2°C (an atmospheric concentration of 450 parts per million of CO2). Instead, the "timidity of current commitments" means that we're looking at an atmosphere with 650ppm, which would commit us to 3.5°C of warming. So, the second scenario considered what it would take to put us on a path to 450ppm.
For the 650ppm scenario, coal and oil use decline in the OECD countries (primarily Europe and North America), but expand significantly in China and the developing nations. In general, 93 percent of the growth in energy use occurs outside the OECD, with China accounting for over a third of it. This growth is enough to ensure that we don't hit peak oil before 2035, although use has flattened out by then. In contrast, we would need to reach peak oil before 2020 to have the 450ppm scenario be realistic. The decline from that peak will need to be driven by increased use of plug-in hybrids and electric cars, combined with the decarbonization of electricity.
Most of the oil that does get used comes from traditional producers like Saudi Arabia and Iraq. Behind them, however, are Brazil, Kazakhstan, and Canada. The two former nations have been the sites of large discoveries that are not yet developed; development and further discoveries will become increasingly necessary by 2035. Canada will make the list primarily because of extensive use of its oil sands. Nontraditional sources of oil will also play an ever-growing role in the energy economy.
Coal will peak even during the 650ppm scenario, with its decline offset by nuclear and renewables. The latter will triple their share of the global energy mix. Both of these will have to happen much faster to reach the 450ppm target. Coal would need to return to 2003 levels by 2035, and the nuclear/renewable combo would have to provide 38 percent of the world's energy mix. Natural gas will largely hold steady, since it's cheap and relatively clean, with usage gradually adjusting to accommodate the current glut on the market.
Because nuclear and renewables are relatively capital intensive to install, this transition will have to involve heavy government interventions, according to the IEA. These will take the form of both direct subsidies for renewables, and market signals such as carbon taxes.
But the governments will have to act fast to have any chance of getting us to the 450ppm goal that they claim to support. Due to the inaction that dominated the past year, the IEA estimates that it will take a trillion dollars more to stabilize the atmosphere at 450ppm if we start now than it would have if we'd started a year earlier. Any further delay would make matters worse, so much so that the report seems to conclude that it simply won't happen
arstechnica.com |
