BIOMASS HUB

Earlier this week, the IEA released its Annual World Energy Outlook, which contained stern warnings for the international community in advance of Copenhagen and beyond.  WEO-2009 acknowledges that “the time has come to make the hard choices needed to combat climate change and enhance global energy security.”

These warnings are nothing new and are already assaulting the minds of world leaders as they meet for a rehash of the Kyoto Treaty, which was signed over a decade ago.  But the WEO-2009 findings are worth noting for the credence they lend to even the most extreme Peak Oil alarmists.  Key to shoring up energy security and tackling climate change will be the speed to which countries implement regulations.

WEO-2009 notes that as one of the consequences of the financial crisis, global energy use is set to fall this year, but p rojects that it will soon resume its upward trend if government policies don’t change.  Specifically, the report calls for a profound transformation of the energy sector, identifies higher oil prices as a major threat to the world economy, and points to growing demand in Southeast Asia as an indicator pointing to a refocusing of the global energy landscape increasingly towards Asia.

Profound Transformation

WEO-2009 acknowledges that it is possible to contain climate change, but only insofar as a “profound transformation of the energy sector” takes place.  This includes fossil fuel demand peaking by 2020 and energy-related carbon dioxide emissions falling to 26.4 gigatonnes in 2030 from 28.8 in 2007.  While energy efficiency must play a vital role, the report also calls on increasing development of low-carbon energy technologies to create downward pressure on GHG emissions.  2030 projections for global electricity production include 60% from renewables (37%), nuclear (18%), and plants fitted with carbon capture and storage (5%) as well as 60% market penetration for PHEVs and EVs, up from 1% of sales today.  Of these, biomass is projected to play in increased role.

Threat to World Economy

WEO-2009 identifies higher oil prices, coupled with the downturn in oil sector investment, as a serious threat to the world economy, just as it is beginning to recover.  Although oil demand has dropped sharply in the past year, it is set to recover in 2010 if current policies are continued.  However, a commitment to 450 ppb would bring substantial benefits the report conludes, including: avoiding the worst effects and costs of climate change, energy sucurity benefits, reduced imports, lower energy bills, and health benefits coupled with reduced air pollution.  Alarmingly, the report notes that each year of delay adds $500 billion to mitigation costs between today and 2030.

Refocusing of Global Energy Landscape

WEO-2009 projects that Southeast Asia’s energy demand will expand by 76% between 2007 and 2030.  Coupled with increased demand and strong growth in India and China, Asia will emerge as the epicenter for the global energy landscape.  This shift will have profound implications for energy geopolitics.

For more, click here.