Environment
5:19 pm
Mon November 12, 2012

Global Energy Outlook Predicts Gains for American Oil and Gas, and Renewable Energy

The International Energy Agency has released its outlook on the world’s energy usage.

In the annual report, the organization foresees a huge shift in the global energy balance. North America will continue to produce oil and natural gas, and both fuels produce an every-increasing share of the country’s energy mix. By 2020, the IEA says, the United States will be a net exporter of natural gas. By 2035, the country will be a next exporter of oil and be essentially self-sufficient for energy.

Rayola Dougher is a senior economic advisor for the American Petroleum Institute. She says the prediction doesn’t surprise her, and the main reason the industry is growing at such a rate is because of new technology.

“It’s allowing us to access resources we didn’t imagine we could get to, even four or five years ago. Not at the scale that we’re doing it,” she said.

But besides American energy independence, the real winner in the IEA’s outlook is renewable energy. The report predicts renewables will be neck-in-neck with coal as the primary source of the world’s electricity by 2035.

Renewables become the world’s second-largest source of power generation by 2015 and close in on coal as the primary source by 2035. However, this rapid increase hinges critically on continued subsidies. In 2011, these subsidies (including for biofuels) amounted to $88 billion, but over the period to 2035 need to amount to $4.8 trillion; over half of this has already been committed to existing projects or is needed to meet 2020 targets. Ambitions for nuclear have been scaled back as countries have reviewed policies following the accident at Fukushima Daiichi, but capacity is still projected to rise, led by China, Korea, India and Russia.

Seth Masia of the American Solar Energy Society says he’ll be surprised if it takes until 2035 for renewables to surpass coal. He also attributes the growth to new technology, and says solar power keeps getting better and cheaper, which makes it more competitive.

“Large-scale solar is now being installed for around the order of $2 to $2.50 a watt,” he said. “To build a new coal plant costs about $6 a watt. And then you have to pay for the fuel.”

The report also predicts global coal demand could increase by about 21 percent, mainly in China and India. And it also quantified the benefits of energy efficiency measures:

WEO-2012 presents the results of an Efficient World Scenario, which shows what energy efficiency improvements can be achieved simply by adopting measures that are justified in economic terms. Greater efforts on energy efficiency would cut the growth in global energy demand by half. Global oil demand would peak before 2020 and be almost 13 mb/d lower by 2035, a reduction equal to the current production of Russia and Norway combined. The accrued resources would facilitate a gradual reorientation of the global economy, boosting cumulative economic output to 2035 by $18 trillion, with the biggest gains in India, China, the United States and Europe.