The world is headed on an “unsustainable” path with continued reliance on fossil fuels over the next two decades, with the oil price set to hit $120 per barrel by 2035 and gas playing a greater role in the energy mix, the International Energy Agency (IEA) has predicted.
The IEA forecasts in its latest World Energy Outlook that global energy demand is set to increase by one-third between 2010 and 2035, fuelled by fast-expanding China, with oil consumption expected to rise from 87 million to 99 million barrels per day over the period.
Output increases from the Middle East and North Africa (MENA) will provide about 90% of the required growth in crude production to 2035.
However, if annual investment in the MENA region falls short of the $100 billion needed between 2011 and 2015 the oil price could spike to a near-term $150 per barrel, according to the IEA.
The agency also reaffirms a recent report predicting a “golden age” for gas, with especially Russia standing to benefit from increased demand for the fuel – which is cleaner burning than other fossil sources, as well as being cheap and flexible, and is considered a transition fuel for renewables.
However, key challenges for Russia are to finance a new generation of higher-cost oil and gas fields and to improve its energy efficiency, according to the report.
Although fossil fuels will account for a lower proportion of global demand, falling from about 81% today to 75% in 2035, the IEA says the share of renewables will increase only from 13% to 18%.
Stoking environmental concerns, the agency predicts the use of coal – which met almost half of the increase in global energy demand over the last decade - will increase by 65% by 2035, although this is contingent on governments’ climate policies.
The report states that the “world is locking itself into an unsustainable energy future which would have far-reaching consequences”.
“Growth, prosperity and rising population will inevitably push up energy needs over the coming decades. But we cannot continue to rely on insecure and environmentally unsustainable uses of energy,” said IEA executive director Maria van der Hoeven.
“Governments need to introduce stronger measures to drive investment in efficient and low-carbon technologies.”
She said carbon dioxide emissions have been pushed to a record high following a rebound in energy demand last year, with the Fukushima nuclear accident in Japan and turmoil in the MENA region also playing a part.
Sounding the alarm on the environment, the IEA’s chief economist Fatih Birol warned that even if governments implement new energy policies, cumulative CO2 emissions over the next 25 years would still lead to a long-term global temperature rise of 3.5 degrees Celsius – above the 2-degrees C target - and could reach 6 degrees C if these policies are not implemented.
This, he said, was a factor of already committed investments to building CO2-emitting power stations, buildings and factories.
“As each year passes without clear signals to drive investment in clean energy, the “lock-in” of high-carbon infrastructure is making it harder and more expensive to meet our energy security and climate goals,” Birol said.
Greenpeace spokesman Charlie Kronick said the report makes for “sobering reading” and called on concerted action by government leaders when they meet for the next round of climate talks in Durban later this month.
“The decisions being made by politicians today risk passing a monumental carbon debt to the next generation, one for which they will pay a very heavy price. The Eurozone crisis is getting all the headlines right now but it’s the decisions our leaders are making on energy that could be their toxic legacy,” he said.