Global energy system unsustainable - IEA official

11 December 2007 18:53  [Source: ICIS news]

WASHINGTON (ICIS news)--Explosive growth in China and India has made the global energy system increasingly unsustainable, and oil and natural gas markets will experience growing tightness during the next decade, a top global energy economist said on Tuesday.


Fatih Birol, chief economist at the International Energy Agency (IEA), told an energy forum in Washington that “China and India are transforming the global energy system by their sheer size” and the rapid expansion of their economies and related energy demand.


Relating the IEA’s annual energy outlook, Birol said that with global oil demand expected to exceed production capacity additions in the next ten years, “a supply crunch cannot be ruled out”.


He said that a total of 37.5m bbl/day of gross oil capacity additions will be needed by 2015. Member nations of the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC producing countries have announced plans to add 25m bbl/day of new capacity through 2015.


“Thus, a further 12.5m bbl/day of gross capacity would need to be added - or demand growth curbed by that amount by 2015,” he said.


Current global oil production and demand are almost evenly matched at around 85m bbl/day.


He said the ability of global oil producers to meet that additional 37.5m bbl/day of demand is in question, noting that “the current reserve replacement ratio of the top five IOCs [independent oil companies] has fallen, and it is becoming more difficult to replace reserves despite rising oil prices”.


He said that China and India combined are expected to build 80% of the world’s expected growth in coal-fired power plants between 2005 and 2030 and account for 60% of the anticipated growth in global nuclear power capacity.


As China and India continue to increase energy demand and consumption - and especially with those two countries’ heavy commitments to coal-fired electric power generation - they will climb to the top in carbon dioxide (CO2) emissions, he said.


Birol said that the US economy was still the leading global source of CO2 emissions in 2005 at 5.8bn tonnes, followed by China’s 5.1bn tonnes, but that China became the leading emitter of CO2 this year and is expected to emit 8.6bn tonnes of CO2 in 2015 compared with a projected US level of 6.4bn tonnes.


India is expected to move from fifth place in 2005, with 1.1bn tonnes of CO2 emissions, to take a solid hold on third place behind the US with 1.8bn tonnes of CO2 emissions by 2015.

By: Joe Kamalick
+1 713 525 2653

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