Nov. 7 (Bloomberg) -- The cost of satisfying the world's thirst for energy through 2030 has swollen by $3 trillion in a year because of higher industry costs, especially in oil and gas, the International Energy Agency said.

Governments and companies need to spend $20 trillion in 25 years and there is ``no guarantee'' it will succeed, the IEA said today in its annual ``World Energy Outlook.'' More than half of the total will be needed in emerging countries, where both demand and supply are rising the fastest. China alone needs to spend $3.7 trillion on energy during 2005 to 2030.

``Under-investment in new energy supply is a real risk,'' said Claude Mandil, the executive director of the Paris-based agency, which is an adviser to 26 consuming nations, in an e- mailed statement. ``The energy future we are facing today is dirty, insecure and expensive.''

The agency expressed doubt that sufficient funds will be invested in Russia to maintain natural-gas exports to Europe. As for major oil companies such as Exxon Mobil Corp., Royal Dutch Shell Plc and BP Plc, increased capital spending ``is to a large extent illusory,'' the IEA report said, because it's ``blunted'' by rising costs for labor and equipment such as drilling rigs and steel piping.

When adjusted for cost-inflation, total spending last year was only 5 percent more than that of 2000, the IEA calculated.

Competition for Supplies

State-run energy companies in east Asia and India are competing for supplies with western corporations at a time when high oil prices have prompted some producing nations to take greater control of their own resources. China is already poised to become the biggest lender to African nations, surpassing the World Bank, as it uses loans as a way to secure energy and metal resources, according to World Bank figures.

The IEA investment estimate assumes energy demand will rise by an average 1.6 percent a year through to 2030, with the ``center of gravity'' shifting to developing countries. Oil prices are assumed to reach a nominal level of $97.30 a barrel in 2030, or $55 in 2005 dollars.

Fossil fuels including oil, gas and coal will still dominate, accounting for 81 percent of total energy demand in 2030, little changed from today. Oil demand will rise to 116 million barrels a day from 85 million barrels a day today.

New power stations and transmission lines will require $11.3 trillion of spending, or 56 percent of the world total, the report said. Investments in oil will cost $4.3 trillion, gas $3.9 trillion, coal $563 billion and biofuels $161 billion.

Who Will Pay?

Investment of $20 trillion during 2005 to 2030 is about the same as one year's gross domestic product of the world's three largest economies, the U.S., Japan and Germany, combined.

``The ability and willingness of major oil and gas producers to step up investment in order to meet rising global demand are particularly uncertain,'' the report said, referring to both exploration and oil refining.

The agency's annual outlook covered a range of energy topics and forecasts out to 2030, including the role nuclear power and biofuels could have in reducing greenhouse gas emissions if alternative policies are adopted.

The report was partly a response to calls from leaders of the Group of Eight nations at meetings in Gleneagles, Scotland, in July 2005 and St. Petersburg, Russia, this July for the IEA ``to advise on alternative energy scenarios and strategies aimed at a clean, clever and competitive energy future.''

The IEA was formed in 1974 to coordinate energy policy among the largest industrialized consuming nations in the wake of an Arab oil embargo that caused long queues at U.S. gas stations.

To contact the reporter on this story: Stephen Voss in London at sev@bloomberg.net

Last Updated: November 7, 2006 05:00 EST