IEA Predicts 'Dire Future'

Source: WSJ, Oct 19, 2011

By JAMES HERRON

PARIS—The world is headed for a "dire future" where high energy prices drag on economic growth and global average temperatures rise by more than 3.5 Celsius unless there are significant innovations to lower the cost of clean energy and carbon-capture technology, the International Energy Agency said Wednesday.

Speaking at the conclusion of a two-day meeting with international energy ministers and business leaders in Paris, senior officials from the agency painted a gloomy picture of the world's current trajectory.

The meeting concluded that growth in energy demand will be powered largely by coal and the only hope of restraining the rise in global temperatures to safe levels is to hope that the creation of cheaper technologies to capture carbon dioxide "might eventually allow it to be used in a more environmentally benign manner."

The meeting, which was attended for the first time by ministers from a large number of emerging economies, was a clear acknowledgment of how economic realities conflict with the goal of reducing carbon-dioxide emissions.

"Twenty percent of the world's population does not have access to reliable energy," said Martin Ferguson, Australia's Minister of Resources and Energy who was chairing the IEA meeting. These developing countries "are going to continue to grow their economy and hence their demand for energy."

This means that "coal will continue to be the world's fastest growing energy source for some time," with its consumption rising by two-thirds under the current trajectory, he said. "It's not for us to deny them, but to invent clean technology at the lowest possible cost," and share it with them, he said, adding that investment in carbon capture and storage and renewable energy is important.

Current clean energy technologies are insufficient to meet carbon-reduction targets, so in the nearer term improving energy efficiency is the most important action to take, the IEA said in a statement concluding the meeting.

"The scale and breadth of the energy challenge is enormous," the IEA said. "Unless much stronger action is taken ... energy related CO2 emissions would rise to a level consistent with a long-term global temperature increase of more than 3.5 Celsius, with dangerous consequences for the global environment and human welfare."

The door may already be closing on the opportunity to prevent average global temperatures from rising by more than two degrees Celsius, said the IEA's Chief Economist, Fatih Birol, on Tuesday.

Growing dependence on fossil fuels will also be economically damaging, the IEA said. "Persistently high levels of spending on energy imports would impose a drag on economic growth in many countries," it said. "The risk of serious energy-supply disruptions would continue to mount."

High oil prices this year have contributed to the economic slowdown many countries are currently experiencing, said the head of the IEA's oil markets division, David Fyfe.