IEA Chief Presents Sobering View of Our Energy Future
IEA Chief Fatih Birol addressed the Council on Foreign Relations earlier this week. (image: wikipedia.org and cfr.org)
Monday night at the Council on Foreign Relations in New York, Fatih Birol, Chief Economist at the International Energy Agency (IEA) presented the highlights of the recently released 2009 World Energy Outlook, which was recently completed. Yours truly was in attendance, and got the scoop just for you dear readers.
Mr. Birol knows his stuff- he worked for OPEC for six years, has written lots of articles about energy and energy policy, has won lots of awards for his work and is steeped every day in the numbers and analysis of global energy consumption and production. He’s known for being pretty plainspoken. So when he has something to say, we should listen.
And what he has to say isn’t pretty. Some samples:
• To keep up with global oil demand, the world will need to discover an additional four (yes, he said four) Saudi Arabia’s worth of crude production before 2030
• To keep up with global gas demand the world will need to discover an additional four Russia’s worth of natural gas reserves by 2030.
• Because of the financial crisis, global investment in oil production fell by $90B in 2009, or 19 percent- the first time this has happened in a decade.
• Existing oil fields will lose two-thirds of their productive capacity by 2030
• Between 2008 and 2030, the percentage of GDP spent on energy in the US will double, and in countries like China and India could increase three to six-fold.
• Oil prices were ‘not innocent’ in precipitating the financial crisis of 2008 and will remain a threat to global growth.
Whoa…Fatih…I’m trying to catch my breath here. What are we going to do?
Mr. Birol emphasized that the way to address these threats is to address climate change. In the IEA’s projections they use two scenarios, one they call the ‘Reference’ scenario (no change in our behavior) and the ‘450’ scenario (we keep carbon parts per million in the atmosphere under the critical 450 and thus will save the world- or so Al Gore tells me).
The changes he calls for to reach the 450 scenario are EXPENSIVE. They would cost many trillions—with a capital T. Renewables, electric cars, carbon capture, wind, solar, cap and trade, the works. But, he emphasizes, the cost of waiting will be even more expensive.
During the Q&A session that followed his presentation, someone asked him what his recommendations would be if climate change turned out to be an elaborate hoax (I paraphrase). He said he would still recommend 90% of the changes outlined in the review. Huh?
Birol explained that many people, especially in the developing world, view energy security as a bigger issue than climate change. Countries like China and India may not be very interested in spending money on climate change, but they may be extremely willing to spend on energy security. The same argument could be made to climate change skeptics. In his view, the changes we would make to reduce emissions are the same moves we would make to improve our energy security.
Interesting. Is it possible climate change zealots and national security hawks can fall in love on this? Who’s going to call Al Gore and Dick Cheney for the handshake photo-op? And is this really a way we can convince China it is in their best interest not to turn the planet into the air quality equivalent of my Grandpa’s apartment (Marlboro reds, two packs daily)? Sounds revolutionary to me.
Birol did have some other very interesting comments that we will touch on in future articles, among them:
• Hydrofracking in the US represents a silent energy revolution that no one is paying attention to, but will provide us with oodles of natgas for the next 20 years.
• Oil and coal usage in OECD (developed) countries peaked in 2009
• A natural gas glut is forming globally and will reach its apex in 2015
So put that in your pipe and smoke it. Be back in touch soon.
Energy Dept. Says World Oil Production Could Decline in 2011 | HeatingOil.com says: says:
[...] pronouncements about the eventual decline of world oil production made by the CEO of Petrobras, the chief economist of the International Energy Agency, and a host of others to imply that Sweetnam bolsters the case for peak oil whether he wants to or [...]
Josh Garrett says: says:
Shane, thanks for pointing out the error–it has now been corrected. While the idea of the the world needing more oil production as opposed to oil reserves is less alarming, I think the statement “nuthin to worry about” is too dismissive, don’t you think?
Josh Garrett says: says:
Thanks for your comments, Steve. I agree that energy conservation is the best way to address the potential global energy shortage. However, your contention that broad economic policy in the US, Japan, and Europe over the last 30 years were all misguided and failed attempts to address energy demand growing faster than energy supplies is pretty far-fetched. Do you have any evidence to support your claim?
Josh Garrett says: says:
Thanks for the input, Poopy, though it is a bit disjointed. First, it is true, much of China’s pollution comes from manufacturing that provides the US with cheap consumer products–J.R. was and is aware of that fact, but did not include it in this post because it is not relevant. Second, reducing global greenhouse gases to 350 parts per million (ppm) of CO2-equivalent is the goal of an international grassroots movement. Separately, the IEA has identified 450 ppm as a more realistic goal for 2020. Third, no one answers the question, “Whether it’s peak oil production, or peak oil demand, how does our insane system of continual economic growth continue?” because it is impossible to answer–as the world energy system undergoes major changes in the coming years, it will no doubt affect economic growth. What that effect will be remains to be seen.
Josh Garrett says: says:
“Weak,” your argument is terribly weak. You’re saying that developing nations created cap and trade and the Copenhagen conference in an attempt to squeeze money out of wealthy nations? There are so many things wrong with that, I don’t even know where to start. Do some research and form some fact-based opinions before you attempt to enter this debate. Your simplistic proclamations only degrade the discussion.
Josh Garrett says: says:
Thanks for your input, Guy. I suppose that the definitions of “optimistic” and “pessimistic” can depend on your point of view. The one thing that Birol’s comments unequivocally confirm is that we are on the precipice of a major global shift in the production and consumption of energy, and we need to prepare for that shift in whatever ways we can.
Drumbeat: November 27, 2009 | Climate Vine says: says:
[...] IEA Chief Presents Sobering View of Our Energy Future Monday night at the Council on Foreign Relations in New York, Fatih Birol, Chief Economist at the International Energy Agency (IEA) presented the highlights of the recently released 2009 World Energy Outlook, which was recently completed. Yours truly was in attendance, and got the scoop just for you dear readers. Mr. Birol knows his stuff- he worked for OPEC for six years, has written lots of articles about energy and energy policy, has won lots of awards for his work and is steeped every day in the numbers and analysis of global energy consumption and production. He’s known for being pretty plainspoken. So when he has something to say, we should listen. And what he has to say isn’t pretty. [...]
steve from virginia says: says:
First of all, Birol’s deadlines are beside the point, the peak of cheap oil took place ten years ago. Without the cheap oil, there is nothing to run the developed world’s economies. All were designed and executed with -$20 oil in mind.
The seeds of the economic crisis of today were sown in 1973 (Japan) and 1982 (USA, Eurozone). All tried different strategies to overcome the obvious onrushing energy constraints; a currency union in Europe, asset- price bubbles and cheap money in Japan as well as in the US along with off- shoring high wage US manufacturing jobs. All these hedges - designed to allow non- stop consumption - failed.
Oil prices above $35 are destructive to modern economies. The outcome of higher oil prices can be seen in a credit environment that does not respond to ordinary fiscal and monetary cures. Low rates and quantitative easing in Japan have done nothing despite 20 years of application. Similar approaches are failing elsewhere.
Don’t believe me, just sit back and watch. High oil prices are extraordinarily deflationary. $80 oil is like doubling everyones’ income taxes or Fed Funds interest rate @ 6 percent.
The only solution is to first acknowledge the depth of the problem. Second is to accept stringent conservation. This would be cutting US consumption of oil to half of current domestic production. This would be an 80% cut in consumption from current. Oil would be reserved for uses that showed a return, only. Perhaps the balance of domestic production could be traded to overseas creditors for ‘debt relief’.
Sorry, no more cars …
Shane says: says:
A video of Birol’s talk is available at www,cfr.org. Note he does not talk about finding four Saudi Arabias worth of reserves, but four Saudi Arabias worth of *production*, or some 45 million bpd, *just to keep production at current levels*. That’s over 50% of current production he expects will be gone (offline) by 2030.
Nuthin to worry about here folks.
Guy McPherson says: says:
If you’re paying the slightest bit of attention, you know Birol is extremely optimistic about our energy future. We passed the world crude oil peak in 2005 (2008, according to fudged numbers by IEA and the US EIA). By 2030 we’ll be firmly in the post-industrial Stone Age. Good thing, too. If we keep the ominicidal industrial machine kicking until 2030, we’ll be out of habitat for humans on this planet by then.
Nature bats last. And she bats 1.000. We can bring down the industrial economy or we can cause our own extinction.
Poopypants says: says:
Author seems to forget that all that pollution from China is a result of them making all of our cheap WalMart crap.
And since when has 450ppm become the new 350ppm?
Oh, and using the ‘oil demand has peaked’ argument. This is so obviously a desperate response to the peak oil argument, and is really rather childish. No one seems to ever answer the question: Whether it’s peak oil production, or peak oil demand, how does our insane system of continual economic growth continue? And, it takes oil to make all the crap needed to replace oil (windmills, solar panels, electric cars, batteries, etc.).
Weak As Water says: says:
Cap and trade, the Copenhagen Agreement, are all about world wide wealth redistribution and are nothing about energy security.