World energy policy is not sustainable

PARIS – The world must change its energy habits or struggle with choking fumes, runaway oil demand and a growing dependence on the volatile Middle East for fuel, the International Energy Agency said yesterday.

Energy demand and greenhouse gas emissions will soar by more than 50 per cent by 2030 if consumers keep burning oil unchecked, the IEA said in its World Energy Outlook. That would blow a hole in the United Nations’ Kyoto protocol aimed at cutting developed nations’ emissions five percent below 1990 levels by 2008-12.To keep pace with booming demand over the next 25 years, top producer Saudi Arabia and its neighbours would have to spend an annual US$56 billion on rigs and refineries or oil prices will race higher, the IEA said.”These projected trends have important implications and lead to a future that is not sustainable,” said Claude Mandil, chief of the energy adviser to 26 industrialised countries.”We must change these outcomes and get the planet onto a sustainable energy path.”Under the IEA’s reference scenario, a likely but undesirable outcome, Middle East and North African producers would have to double annual investment on their oilfields to satisfy consumers’ growing thirst for fuel.Failure to spend enough over the next 25 years could slap another US$13 a barrel on the projected price of oil.”If investments do not come in a timely and sufficient manner, there will be higher oil prices, and global economic growth will suffer,” said IEA Chief Economist Fatih Birol.The IEA also outlines a deferred investment scenario, where producers delay spending – inadvertently or deliberately – and a world alternative policy scenario, where importing nations take action to cut demand and change the pattern of fuel use.”There is already evidence of the deferred scenario over the past five years, which has implications for everyone,” said IEA Deputy Executive Director William Ramsay.”We would be quite happy to see our reference scenario made irrelevant by good policy decisions.”Not all countries have signed up to Kyoto and the combined emissions of those that have are well below half the world total.The main outsider is the United States, the top polluter which accounts for about 25 per cent of all emissions.The other big emitters outside Kyoto are China and India.Core producers must pile cash into global refining to rid the energy system of bottlenecks that helped drive prices to a record high above US$70 in late August, the IEA said.The United States, the world’s biggest consumer, has not built a refinery on its soil in three decades.It was drastic spending cuts on oilfield expansions in the late 1980s and 1990s that have has left the world stretched for supplies as demand explodes in Asia and the United States.The Paris-based agency says it is high time Middle East and north African producers “reinvest with confidence”.Saudi Arabia would have to shell out US$174 billion on oil and gas projects through 2030 under the IEA’s reference scenario.For its part, Riyadh already has a US$50 billion oil and gas expansion project in train.The kingdom would remain the globe’s oil superpower, with output rising from 10,4 million barrels per day (bpd) in 2004 to 18,2 million bpd in 2030.Exports would jump from 8,3 million bpd in 2004 to 14,4 million.Even if world governments got tough on tackling the environment and energy security, demand in 2030 would still soar by 37 per cent and the Middle East and north Africa would be pumping much more oil than now.”This will add to the vulnerability to a disruption and to the risk that those countries will seek to use their dominant market position to force up prices at some point in the future,” said the IEA.In the reference scenario, global dependence on Middle East fuel would rise as oil demand grows 1,4 per cent per year – from 79 million bpd in 2003 to 92 million bpd in 2010 and 115 million bpd in 2030.Developing countries would account for more than two-thirds of the increase in demand.Asia looks especially vulnerable in the IEA’s reference scenario – with the region’s reliance on Middle East oil and gas growing from 83 per cent in 2004 to 90 per cent in 2030.North America would become the Middle East’s biggest importer in 2030 when imports hit 11 million bpd, a quarter of the region’s total exports of 39 million bpd.Oilfields in the Middle East and North Africa are in no danger of running dry over the next 25 years.And if producers there spend on the order laid out in the reference scenario, oil output would rise by 75 percent by 2030 and the region’s share in global oil output would climb from 35 per cent to 44 per cent.Natural gas output would treble.Crude production would rise from 29 million bpd in 2004 to 50,5 million bpd in 2030, with the Middle East accounting for nearly all the increase.-Nampa-ReutersThat would blow a hole in the United Nations’ Kyoto protocol aimed at cutting developed nations’ emissions five percent below 1990 levels by 2008-12.To keep pace with booming demand over the next 25 years, top producer Saudi Arabia and its neighbours would have to spend an annual US$56 billion on rigs and refineries or oil prices will race higher, the IEA said.”These projected trends have important implications and lead to a future that is not sustainable,” said Claude Mandil, chief of the energy adviser to 26 industrialised countries.”We must change these outcomes and get the planet onto a sustainable energy path.”Under the IEA’s reference scenario, a likely but undesirable outcome, Middle East and North African producers would have to double annual investment on their oilfields to satisfy consumers’ growing thirst for fuel.Failure to spend enough over the next 25 years could slap another US$13 a barrel on the projected price of oil.”If investments do not come in a timely and sufficient manner, there will be higher oil prices, and global economic growth will suffer,” said IEA Chief Economist Fatih Birol.The IEA also outlines a deferred investment scenario, where producers delay spending – inadvertently or deliberately – and a world alternative policy scenario, where importing nations take action to cut demand and change the pattern of fuel use.”There is already evidence of the deferred scenario over the past five years, which has implications for everyone,” said IEA Deputy Executive Director William Ramsay.”We would be quite happy to see our reference scenario made irrelevant by good policy decisions.”Not all countries have signed up to Kyoto and the combined emissions of those that have are well below half the world total.The main outsider is the United States, the top polluter which accounts for about 25 per cent of all emissions.The other big emitters outside Kyoto are China and India.Core producers must pile cash into global refining to rid the energy system of bottlenecks that helped drive prices to a record high above US$70 in late August, the IEA said.The United States, the world’s biggest consumer, has not built a refinery on its soil in three decades.It was drastic spending cuts on oilfield expansions in the late 1980s and 1990s that have has left the world stretched for supplies as demand explodes in Asia and the United States.The Paris-based agency says it is high time Middle East and north African producers “reinvest with confidence”.Saudi Arabia would have to shell out US$174 billion on oil and gas projects through 2030 under the IEA’s reference scenario.For its part, Riyadh already has a US$50 billion oil and gas expansion project in train.The kingdom would remain the globe’s oil superpower, with output rising from 10,4 million barrels per day (bpd) in 2004 to 18,2 million bpd in 2030.Exports would jump from 8,3 million bpd in 2004 to 14,4 million.Even if world governments got tough on tackling the environment and energy security, demand in 2030 would still soar by 37 per cent and the Middle East and north Africa would be pumping much more oil than now.”This will add to the vulnerability to a disruption and to the risk that those countries will seek to use their dominant market position to force up prices at some point in the future,” said the IEA.In the reference scenario, global dependence on Middle East fuel would rise as oil demand grows 1,4 per cent per year – from 79 million bpd in 2003 to 92 million bpd in 2010 and 115 million bpd in 2030.Developing countries would account for more than two-thirds of the increase in demand.Asia looks especially vulnerable in the IEA’s reference scenario – with the region’s reliance on Middle East oil and gas growing from 83 per cent in 2004 to 90 per cent in 2030.North America would become the Middle East’s biggest importer in 2030 when imports hit 11 million bpd, a quarter of the region’s total exports of 39 million bpd.Oilfields in the Middle East and North Africa are in no danger of running dry over the next 25 years.And if producers there spend on the order laid out in the reference scenario, oil output would rise by 75 percent by 2030 and the region’s share in global oil output would climb from 35 per cent to 44 per cent.Natural gas output would treble.Crude production would rise from 29 million bpd in 2004 to 50,5 million bpd in 2030, with the Middle East accounting for nearly all the increase.-Nampa-Reuters