The International Energy Agency has published its World Energy Outlook today, and, as had been promised in leaks over the past few months, it marks a significant change of tone from their previously highly optimistic forecasts. Beyond a spectacular drop in their forecast for oil production in 2030 (from 116mb/d in last year's report to 106mb/d this time round), what is most striking is the tone of their executive summary and their conclusioons for the press. (Not all their report is consistent with that tone, a sign of the ferocious fight that must have taken behind the scenes as to the content to be included). The Oil Drum will be posting detailed analyses of the report over the next several days (I will contribute the opus on renewable energy), but I thought I'd prpvide here just a snapshot of the report,
For this purpose, I am using simply the content of the last slide from the presentation provided to the press (pdf) today:
The warning could not be any clearer:
Current energy trends are patently unsustainable —socially,
environmentally, economically
"Patently unsustainable" - that's pretty strong wording. But there's more.
Oil will remain the leading energy source but...
- The era of cheap oil is over, although price volatility will remain
- Oilfield decline is the key determinant of investment needs
- The oil market is undergoing major and lasting structural change, with national companies in the ascendancy
There are several hard truths in there, again: (i) prices are on a long term uptrend (in fact, the IEA expects above $100 oil for 2010-2015, and $200 oil for 2030) which we need to take into account when planning infrastructure for the long term - periods of lower prices, like right now, should not blind us to that reality; and (ii) this is driven by increasing oil scarcity. The words "peak oil" are not to be seen as such, but the concept permeates the report: existing capacity is in decline; non OPEP production will, at best, be stagnant, and sustaining production will require staggeringly huge investments - all points to easy oil being a concept of the past.
To avoid "abrupt and irreversible" climate change we need a
major decarbonisation of the world’s energy system
A lot of the report links the energy outlook to climate change and says that current trends - and in particular our tendency to go for cheap fossil fuels without taking into account their externalities - are unsustainable. the IEA sees coal as the fastest growing energy source in absolute terms, driven by massive demand in China and India, and notes how dangerous this is (75% of the power plants in use in 2020 are already built today - there is massive inertia in the system).
There are doubts that their energy scenarios and their climate scenarios are compatible (requiring different quantities of carbon altogether), and it seems that the focus on cimate change is political rather than driven by the data in the report; leading to a sneaking suspicion that they hope that climate-driven policies will allow for lower consumption of fossil fuels and avoid afficial recognition of the concept of peak ressources - with all the questioning over our economic system based on growth this might entail...
But either way, their final conclusion stands:
The present economic worries do not excuse back‐tracking or delays in taking action to address energy challenges
As indicated above, more detailed commentary, in particular on the field-by-field analysis included in the report, and the scenarios for oil production going into the future, will be posted on the Oil Drum over the coming days. The firt post is here.