China will drive a surge in world energy demand over the next quarter century, as straining supply enhances OPEC’s oil market share and growing coal use undermines efforts to contain global warming, according to a report.
Chinese demand will jump 75 percent, accounting for more than a third of an increase in energy use that will bring global consumption to 16.7 billion metric tons of oil equivalent by 2035, the International Energy Agency forecasts in its annual World Energy Outlook. Oil supplies will be pushed near their peak, thwarting government pledges to limit the rise in global temperature to 2 degrees Celsius (3.6 degrees Fahrenheit).
“Oil market developments and growth in CO2 emissions are my greatest concern,” IEA Chief Economist Fatih Birol said in a telephone interview from Paris. “Demand from emerging markets will be strong. There is a lack of united political will to reduce carbon emissions.”
Global oil demand will increase 18 percent to 99 million barrels a day in 2035, from 84 million a day in 2009, the IEA said. The agency lowered its 2035 estimate for oil use by 6 million barrels a day because of government pledges to curtail carbon emissions under the Copenhagen Accord signed last December.
Oil supply, including production of oils not classified as crude, “comes close” to reaching a peak by 2035, driving prices up to $113 a barrel in 2009 terms, from around $86 a barrel today, according to the agency. Supplies of crude alone will not regain the peak of 70 million barrels a day reached in 2006, as output from ageing fields tapers off, it added.
‘Not Good News’
“This price trajectory is not good news for anyone,” the IEA’s Birol said. “Many oil-importing countries are still in a fragile situation. There are already plans for moving away from oil in the transportation sector in many consuming countries. That would not be good news for oil exporters.”
The Organization of Petroleum Exporting Countries will account for 50 percent of the world’s oil supply by 2035 while production from outside the group falters, the IEA said. OPEC currently accounts for about 40 percent of global supply. Gains will be concentrated in Saudi Arabia, which will boost output 52 percent to 14.6 million barrels a day by 2035, and Iraq.
Iraq, while falling short of government targets to reach 12 million barrels a day by 2017, will nonetheless more than double current production to 5.3 million a day by 2025, surpassing Iranian output levels around 2015, the IEA said.
Russian production will remain “relatively flat” through to 2015 as the pace of new projects fail to offset declining output from maturing fields in western Siberia. By 2035, Russian supply will slide to 9.1 million barrels a day from 10.2 million a day last year.
Consumption of natural gas will increase 44 percent to 4.5 trillion cubic meters in 2035, from 3.1 trillion cubic meters in 2008, according to the agency.
The share of nuclear power in the energy mix will rise to 8 percent in 2035, from 6 percent in 2008, while the proportion of renewable resources will grow to 14 percent from 7 percent, the IEA said.
Still, reliance on fossil fuels means that emissions of carbon dioxide will increase 21 percent to 35 billion tons in 2035 from 29 billion tons in 2008, leading to an increase of 3.5 degrees Celsius in world temperature “in the long term,” the agency said.
The agency’s default set of assumptions, called the “New Policies Scenario,” includes government commitments to tackling climate change, such as the Copenhagen Accord.
The IEA also outlined another case, the “450 Scenario,” which details the measures that would be necessary to reduce the concentration of carbon dioxide and other greenhouse gases in the atmosphere to 450 parts per million, and limit the increase in global temperature to 2 degrees Celsius.
These measures will require additional spending of $11.6 trillion compared with the “New Policies” scenario through 2030, the IEA said. The costs are about $1 trillion more than the agency had estimated last year, to compensate for the shortcomings of existing global climate change policies.
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