Energy consumption targets already planned by China would contribute 25% of what needs to be done globally to limit carbon emissions and slow global warming, the chief economist of the International Energy Agency said Monday.
Fatih Birol told an audience of the bankers and energy analysts at the Council on Foreign Relations in New York that China’s motivation in planning for greater nuclear power use, lower reliance on coal and use of cleaner transportation fuels is “energy security,” not environmental improvement. But “as a co-benefit, it will help to reduce carbon dioxide emissions.”
He said he was confident that China, which accounts for about 40% of growth in world energy demand, would move ahead with its policies, noting it has met other strict targets in the past for reducing population growth, sustained economic growth and bringing electricity to half a billion people in rural areas.
Birol said China is perhaps more likely to meet its commitments than some of the major industrialized nations that comprise the Organization for Economic Cooperation and Development. The IEA, which is the energy policy advisor for the OECD, advocates a “low-carbon energy revolution” in order to slow the global temperature rise to 2 degrees Celsius by 2030, from a 6 degree rise that would occur without policy changes that would cut use of fuels such as coal and petroleum.
Birol’s remarks came in presenting the IEA’s annual world energy outlook and ahead of the United Nations meeting on Climate Change Conference in Copenhagen next month.
If global oil demand rates and declines in existing fields continued without change, the world would need to discover and produce some 45 million barrels a day more of oil by 2030 just to meet current demand of 85 million to 86 million barrels a day, he said. That’s equal to 4.5 times the current output of Saudi Arabia, the world’s biggest oil exporter.
At current demand levels, some 60% of the world’s natural gas output would need to be replaced with new fields by 2030, a volume equal to four times the current output of Russia, the world’s biggest gas producer, Birol said.
Rising energy costs in coming years will lift fuel bills to 2% of gross domestic product from the 1% level it stood at since 1971, in the U.S., the world’s biggest oil consumer, and other OECD nations, he said. In China, energy costs would triple, to 3% of GDP by 2030, he said.
The global cost of the needed carbon reduction would be a huge $10.5 trillion, Birol said, but delays would only boost costs by half a trillion dollars each year.
Birol said that the Organization of Petroleum Exporting Countries would stand to earn about $28 trillion between 2008-2030, if there is no change in current oil consumption practices. The IEA-favored policy would trim OPEC earnings to $ 24 trillion in the period, he said, noting that OPEC nations should be willing to contribute to the global cause. “They are part of the solution,” he said. In the previous 22 years, he noted, OPEC’s earnings were $6 trillion, so even the reduced level would be four times greater than previous gains.
Birol said the IEA believes the U.S. moves to reduce carbon dioxide emissions have to be “about twice what is talked about” currently by policymakers. Of every $100 invested in energy projects, 52% should be invested in renewable energy and in the transport sector, only one of 100 cars now sold is a technologically advanced vehicle with strictly reduced emissions, he said. By 2030, 60% of cars need to run cleaner, he said, adding that in Europe, wind energy projects would be profitable at an oil price of $60-$70 a barrel.
