Warning against relying on “insecure and environmentally unsustainable” uses of energy, IEA has called for stronger measures to drive investment in efficient and low-carbon technologies .Its World Energy Outlook over 2011-2035 estimates primary energy demand to increase by one-third between 2010 and 2035, mainly in non-OECD economies, assuming that recent Government commitments on clean energy are implemented in a cautious manner.

China would have consolidated its position as the world’s largest energy consumer in 2035 when it would use 70 per cent more energy than the United States, the second-largest consumer, even though, per-capita energy consumption in China by then is to be less than half the level in USA. The rates of growth in energy consumption in India, Indonesia, Brazil and the Middle East would be even faster than in China.

China, responsible for nearly half of global coal use in 2009, holds the key to the future of the coal market with an ambitious 12th Five-Year Plan for 2011-2015 to reduce energy and carbon intensity through enhanced energy efficiency and diversifying the energy mix. In the projected period, China accounts for more than half of global coal-demand growth, its consumption growing by around one-third by 2020 and then declining to remain stable, above 2,800 Mtce (Million tones coal equivalent) through to 2035

India by more than doubling its coal use to 880 Mtce by 2035 displaces the United States as the world’s second largest consumer by 2025. It would also be the largest coal importer by around 2020. However, China remains the determining factor in global coal markets. Coal is the most abundant fossil fuel globally, with reserves totalling 1 trillion tonnes, or some 150 years of current production.

The lion’s share of 20 per cent increase in coal output between 2009 and 2035 would occur in non-OECD countries with China contributing more than half of the increase in global supply and the rest coming from India and Indonesia. Australia is the only major OECD producer. The age of fossil fuels is far from over, IEA says, and while world primary energy demand increases by one-third between 2010 and 2035, energy-related CO2 emissions increase by 20%.

The share of fossil fuels in global primary energy consumption falls slightly from 81% in 2010 to 75% in 2035. Natural gas is the only fossil fuel to increase its share in the global mix over the period to 2035. Renewables and natural gas collectively should meet almost two-thirds of incremental energy demand by 2035. The share of renewables in the energy mix would increase from 13 per cent now to 18 per cent in 2035.

Fossil fuel subsidies is a major issue currently being tackled by G-20. IEA said these subsidies encourage wasteful consumption, incentivizes fuel adulteration and blur market signals. The growth in renewables is underpinned by subsidies that rise from 64 billion dollars in 2010 to 250 billion in 2035, “support that, in some cases, cannot be taken for granted in this age of fiscal austerity” By contrast, subsidies for fossil fuels amounted to 409 billion dollars in 2010.

Oil demand will rise from 87 mbd (million barrels per day) in 2010 to 99 mbd in 2035, all the net growth in transport sector in emerging economies. Notwithstanding ongoing turmoils, the Middle East and North Africa (MENA) is set to supply bulk of growth in oil output through 2035. It would require investment of over 100 billion dollars per annum but this order of investment could fall short by one-third in the near term, which case consumers could face a substantial near-term rise in oil prices to 150 dollars per barrel (in 2010 dollars).

There is much less uncertainty over the outlook for natural gas, both supply and demand sides point to a bright future, even a golden age. Although the cleanest of fossil fuels, increased use of gas in itself (without carbon capture and storage) would not be enough to put the world on carbon emissions path consistent with limiting the rise in global temperatures to 2C.

US oil imports drop due to rising domestic output and improved transport efficiency. EU imports are projected to overtake those of USA by 2015 while China would become the largest oil importer around 2020. India’s oil needs (imports) could rise from 2.5 mbd to around 7 mbd by 2035, above that of USA and Japan and lower than EU but only half of China’s imports.

Russia emerges as the cornerstone of the global energy economy (oil and natural gas) over the coming decades to become the largest producer and exporter, with a rising share of exports to Asia. Its fossil fuel exports would rise from 255 billion dollars in 2010 to 420 billion in 2035. Exports to China would be 20 per cent with Europe’s (traditional market) share declining from 61 per cent to 48 per cent. Out of Russia's rich fossil fuel resources, natural gas retains its predominant position in primary energy supply under the new Scenario. Gas production is projected to increase from 637 bcm (billion cubic metres) in 2010 to 860 bcm in 2035. Other large producers behind Russia would be China, Qatar, USA and Australia.

Global investment in energy supply infrastructure of $38 trillion (in year-2010 dollars) is required over the period 2011 to 2035, according to IEA, almost two-thirds of the total investment in countries outside of the OECD. Oil and gas collectively account for almost $20 trillion, as both the need for upstream investment and the associated cost rise in the medium and long term. The power sector claims most of the remainder, with over 40% of this being for transmission and distribution networks.

On the outlook for nuclear energy, in the aftermath of the Fukushima disaster triggering concerns worldwide, including India, IEA says though the events have raised questions about the future role of nuclear power, “it has not changed policies in countries such as China, India, Russia and Korea that are driving its expansion”. In the new energy scenario of IEA, nuclear output rises by more than 70% over the period to 2035, only slightly less than projected last year.

A Low Nuclear Case scenario, in which no new OECD reactors are built and non-OECD countries build only half of the additions projected, would create opportunities for renewables but also boost demand for fossil fuels. The net result would be to put additional upward pressure on energy prices, raise level of concerns on energy security and make it harder and more expensive to combat climate change, IEA said. It would also become more challenging for emerging economies to satisfy their rapidly growing demand for electricity. (IPA Service)