The International Energy Agency (IEA) has released a special early excerpt of the World Energy Outlook 2009, reporting that the financial and economic crisis has had a considerable impact on the energy sector worldwide. Investment in polluting technologies has been deferred and carbon dioxide emissions could drop in 2009 by as much as 3%, faster than at any time in the last 40 years. To continue this trend, the IEA has called for greater investments in renewables.
Accused of almost always backing conventional fossil and nuclear fuels, the latest World Energy Outlook (WEO) of the IEA presented recently in Bangkok suggests more should be invested in renewable energies than in other technologies. The WEO-2009 excerpt sets out, for key countries and regions (including the United States, Japan, the European Union, Russia, China and India), the energy transformation that each might undertake, sector by sector, if the world were to adopt a 450 parts per million trajectory.
Faith Birol, chief economist at the IEA, reminds us that emissions have been increasing on average at 3% per annum, the same rate at which emissions are expected to fall in 2009. “The economic and financial crisis has created an opportunity to transform the global energy system,” she said. The scenario described by the IAE would enable the world to stabilise greenhouse gas emissions at 450 ppm of carbon dioxide-equivalent, in line with an increase in global temperature of around 2ºC. “This gives us a chance to make real progress towards a clean-energy future, but only if the right policies are put in place promptly. The success of the UNFCCC process is crucial in this regard,” said IEA Executive Director, Nobuo Tanaka, in his presentation of the excerpt at the UNFCCC climate change talks in Bangkok at the end of September.
“Energy is at the heart of the problem – and so must form the core of the solution. For this very reason, I took the unprecedented decision to present an exceptional early release today of the climate change work of our flagship publication WEO 2009 to provide a timely contribution towards a landmark agreement in Copenhagen,” said Mr. Tanaka. According to the IEA’s calculations, three-quarters of the 3% drop in emissions are due to the global recession, which has led to a fall in demand for fossil fuels, while the remainder is due to measures taken by governments to fight climate change.
The IEA highlights the role of China as the leading emitter of greenhouse gases. “It is however also one of the countries making the greatest effort to move towards a sustainable development,” said Birol. She believes that if China is able to reach the emission target set for 2020, this will represent a quarter of the effort required worldwide to ensure emissions do not exceed the 450 ppm limit.
It is necessary to reach an ambitious agreement in Copenhagen and Mr. Tanaka stressed that “we need to act urgently and now. Every year of delay adds an extra $500 billion to the investment needed between 2010 and 2030 in the energy sector”. Consequently, “we need an energy and environment revolution” he said. According to IEA representatives, emissions of rich and developing nations must stabilise before 2020.
The role of renewables grows day-by-day. The IEA calls for an investment in renewables that is four times greater that spent on nuclear energy between now and 2030 and calculates that in only 10 years, installed renewable capacity must exceed nuclear capacity if we want to avoid temperatures rising by more than 2ºC. The WEO-2009 also contains a chapter on transport, concluding that a rapid uptake of electric, hybrid and plug-in hybrid vehicles is required to ensure only half the vehicles on our roads are conventional by 2020.
“The biggest challenge will be to ensure there is funding to back this energy transformation, with substantial support for developing countries,” said Mr. Tanaka. “In 2020, the energy sector in non OECD countries would need to make $200 billion of extra investments in clean power, energy-efficiency measures in industry and buildings and next-generation hybrid and electric vehicles. For this, developing countries will need some financial support from OECD countries.
OECD domestic investment needs amount to a further $215 billion in 2020. But the benefits, in terms of energy savings, reduced fuel imports and air quality improvements offset much of this extra cost, not to mention the fact that this will help to avoid extreme climate change.”
The entire WEO 2009 will be launched in London on 10 November 2009 and contains substantially more climate analysis than that presented in the excerpt. It analyses the full impact of the financial crisis on the energy sector, provides a comprehensive set of results, by sector and by region, for both the Reference Scenario and the 450 Scenario, and analyses the international financial flows and mechanisms that might underpin a post-2012 agreement.