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IEA Says the Party’s Over, By Richard Heinberg, Post Carbon Institute

June 5, 2014 in EV News, IEA, Oil, Politics

Richard Heinberg Photo courtesy of Post Carbon Institute

Richard Heinberg
Photo courtesy of Post Carbon Institute

The International Energy Agency has just released a new special report called “World Energy Investment Outlook” that should send policy makers screaming and running for the exits—if they are willing to read between the lines and view the report in the context of current financial and geopolitical trends. This is how the press agency UPI begins its summary:

It will require $48 trillion in investments through 2035 to meet the world’s growing energy needs, the International Energy Agency said Tuesday from Paris. IEA Executive Director Maria van der Hoeven said in a statement the reliability and sustainability of future energy supplies depends on a high level of investment. “But this won’t materialize unless there are credible policy frameworks in place as well as stable access to long-term sources of finance,” she said. “Neither of these conditions should be taken for granted.”

Here’s a bit of context missing from the IEA report: the oil industry is actually cutting back on upstream investment. Why? Global oil prices—which, at the current $90 to $110 per barrel range, are at historically high levels—are nevertheless too low to justify tackling ever-more challenging geology. The industry needs an oil price of at least $120 per barrel to fund exploration in the Arctic and in some ultra-deepwater plays. And let us not forget: current interest rates are ultra-low (thanks to the Federal Reserve’s quantitative easing), so marshalling investment capital should be about as easy now as it is ever likely to get. If QE ends and if interest rates rise, the ability of industry and governments to dramatically increase investment in future energy production capacity will wane.

Other items from the report should be equally capable of inducing policy maker freak-out:

The shale bubble’s-a-poppin’. In 2012, the IEA forecast that oil extraction rates from US shale formations (primarily the Bakken in North Dakota and the Eagle Ford in Texas) would continue growing for many years, with America overtaking Saudia Arabia in rate of oil production by 2020 and becoming a net oil exporter by 2030. In its new report, the IEA says US tight oil production will start to decline around 2020. One might almost think the IEA folks have been reading Post Carbon Institute’s analysis of tight oil and shale gas prospects! www.shalebubble.org This is a welcome dose of realism, though the IEA is probably still erring on the side of optimism: our own reading of the data suggests the decline will start sooner and will probably be steep.

Help us, OPEC—you’re our only hope! Here’s how the Wall Street Journal frames its story about the report: “A top energy watchdog said the world will need more Middle Eastern oil in the next decade, as the current U.S. boom wanes. But the International Energy Agency warned that Persian Gulf producers may still fail to fill the gap, risking higher oil prices.” Let’s see, how is OPEC doing these days? Iraq, Syria, and Libya are in turmoil. Iran is languishing under US trade sanctions. OPEC’s petroleum reserves are still ludicrously over-stated. And while the Saudis have made up for declines in old oilfields by bringing new ones on line, they’ve run out of new fields to develop. So it looks as if that risk of higher oil prices is quite a strong one.

A “what-me-worry?” price forecast. Despite all these dire developments, the IEA offers no change from its 2013 oil price forecast (that is, a gradual increase in world petroleum prices to $128 per barrel by 2035). The new report says the oil industry will need to increase its upstream investment over the forecast period by $2 trillion above the IEA’s previous investment forecast. From where is the oil industry supposed to derive that $2 trillion if not from significantly higher prices—higher over the short run, perhaps, than the IEA’s long-range 2035 forecast price of $128 per barrel, and ascending higher still? This price forecast is obviously unreliable, but that’s nothing new. The IEA has been issuing wildly inaccurate price forecasts for the past decade. In fact, if the massive increase in energy investment advised by the IEA is to occur, both electricity and oil are about to become significantly less affordable. For a global economy tightly tied to consumer behavior and markets, and one that is already stagnant or contracting, energy constraints mean one thing and one thing only: hard times.

What about renewables? The IEA forecasts that only 15 percent of the needed $48 trillion will go to renewable energy. All the rest is required just to patch up our current oil-coal-gas energy system so that it doesn’t run into the ditch for lack of fuel. But how much investment would be required if climate change were to be seriously addressed? Most estimates look only at electricity (that is, they gloss over the pivotal and problematic transportation sector) and ignore the question of energy returned on energy invested. Even when we artificially simplify the problem this way, $7.2 trillion spread out over twenty years simply doesn’t cut it. One researcher estimates that investments will have to ramp up to $1.5 to $2.5 trillion per year. In effect, the IEA is telling us that we don’t have what it takes to sustain our current energy regime, and we’re not likely to invest enough to switch to a different one.

If you look at the trends cited and ignore misleading explicit price forecasts, the IEA’s implicit message is clear: continued oil price stability looks problematic. And with fossil fuel prices high and volatile, governments will likely find it even more difficult to devote increasingly scarce investment capital toward the development of renewable energy capacity.

As you read this report, imagine yourself in the shoes of a high-level policy maker. Wouldn’t you want to start thinking about early retirement?

This article is a repost, credit: Post Carbon Institute.

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IEA shows benefits of improved energy efficiency of urban transport systems, Source: IEA

July 14, 2013 in Electric Vehicles, EV News, IEA

Photo courtesy of US DOT

Photo courtesy of US DOT

As energy consumption for transport in cities is expected to double by 2050, report sees potential savings of up to USD 70 trillion

Policies that improve the energy efficiency of urban transport systems could help save as much as USD 70 trillion in spending on vehicles, fuel and transportation infrastructure between now and 2050, according to a new report from the International Energy Agency.

The report,  A Tale of Renewed Cities, draws on examples from more than 30 cities across the globe to show how to improve transport efficiency through better urban planning and travel demand management. Extra benefits include lower greenhouse-gas emissions and higher quality of life.

The report comes at a critical time: More than half of the world’s population already lives in cities, many of which suffer from traffic jams and overcrowded roads that cost hundreds of billions of dollars in lost fuel and time and that harm environmental quality, health and safety.

“As the share of the world’s population living in cities grows to nearly 70 percent by 2050 and energy consumption for transport in cities is expected to double, the need for efficient, affordable, safe and high-capacity transport solutions will become more acute,” said IEA Executive Director Maria van der Hoeven as she presented the report. “Urgent steps to improve the efficiency of urban transport systems are needed not only for energy security reasons, but also to mitigate the numerous negative climate, noise, air pollution, congestion and economic impacts of rising urban transport volumes.”

She urged policy makers to take a systems perspective and a long-term view to address the challenges. “Governments must think beyond individual technologies and electoral cycles, and consider how to build – and how to renew – cities that will accommodate and transport nearly 6.3 billion people by 2050. We must plan infrastructure, logistics and energy systems now that make sense today and over the coming decades,” she said.

Among the three broad categories of policies recommended in the report are those that allow travel to be avoided, those that shift travel to more efficient modes, and those that improve the efficiency of vehicle and fuel technologies. The report notes that if fully implemented across the transportation sector, this “avoid, shift and improve” approach could save up to USD 70 trillion in terms of lower spending on oil, roadway infrastructure and vehicles.

The report offers three case studies – Belgrade, Seoul and New York City — to show how those cities have already improved their transport systems. It notes, for example, that within the first six months of refurbishing its urban rail system, Belgrade tripled passenger levels. When Seoul pushed through reforms that no longer rewarded bus operators for carrying more people, ridership, speed and safety all increased. And New York City shaved 11 minutes off travel times within a year of introducing express bus services, while at the same time attracting more passengers.

A Tale of Renewed Cities, which was supported by the European Bank for Reconstruction and Development, sets forth a pathway outlining the essential steps and milestones for policy development and implementation to transform cities by improving urban transport systems. The pathway is divided into four sections that present the necessary planning and actions for supporting development, financing, implementation and evaluation of policies to improve the energy efficiency of urban transport systems.

To assist planners and policy makers in addressing many common issues and challenges, the pathway also provides a list of policy references and practitioner’s guides that are noted throughout the report and on the IEA Policy Pathway Series webpage.

  • To download the report, please click here.
  • To read comments by Executive Director Maria van der Hoeven and others at the report’s launch, please click here.
  • To see the slides from the report’s launch, please click here.
  • To download the archive of the webinar for the report’s launch, please click here.

About the IEA

The International Energy Agency is an autonomous organisation which works to ensure reliable, affordable and clean energy for its 28 member countries and beyond. Founded in response to the 1973/4 oil crisis, the IEA’s initial role was to help countries co-ordinate a collective response to major disruptions in oil supply through the release of emergency oil stocks to the markets. While this continues to be a key aspect of its work, the IEA has evolved and expanded. It is at the heart of global dialogue on energy, providing reliable and unbiased research, statistics, analysis and recommendations.

This article is a repost, credit: International Energy Agency, http://www.iea.org/.

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Four energy policies can keep the 2 °C climate goal alive, Source: IEA

June 12, 2013 in Climate Change, Environment, EV News

This image is of two polar bears cuddled together on a piece of Arctic sea ice, surrounded by ocean water and thin layers of sea ice. This image allows for a deeper understanding of the endangered species and highlights the need for USGS research to help in their protection.  Photo by Jessica Robertson , U.S. Geological Survey  Courtesy of USGS

This image is of two polar bears cuddled together on a piece of Arctic sea ice, surrounded by ocean water and thin layers of sea ice. This image allows for a deeper understanding of the endangered species and highlights the need for USGS research to help in their protection.
Photo by Jessica Robertson , U.S. Geological Survey
Courtesy of USGS

IEA report shows how to stop growth in energy-related emissions by 2020 at no net economic cost

10 June 2013

Warning that the world is not on track to limit the global temperature increase to 2 degrees Celsius, the International Energy Agency (IEA) today urged governments to swiftly enact four energy policies that would keep climate goals alive without harming economic growth.

“Climate change has quite frankly slipped to the back burner of policy priorities. But the problem is not going away – quite the opposite,” IEA Executive Director Maria van der Hoeven said in London at the launch of a World Energy Outlook Special Report, Redrawing the Energy-Climate Map, which highlights the need for intensive action before 2020.

Noting that the energy sector accounts for around two-thirds of global greenhouse-gas emissions, she added: “This report shows that the path we are currently on is more likely to result in a temperature increase of between 3.6 °C and 5.3 °C but also finds that much more can be done to tackle energy-sector emissions without jeopardising economic growth, an important concern for many governments.”

New estimates for global energy-related carbon dioxide (CO2) emissions in 2012 reveal a 1.4% increase, reaching a record high of 31.6 gigatonnes (Gt), but also mask significant regional differences. In the United States, a switch from coal to gas in power generation helped reduce emissions by 200 million tonnes (Mt), bringing them back to the level of the mid‑1990s. China experienced the largest growth in CO2 emissions (300 Mt), but the increase was one of the lowest it has seen in a decade, driven by the deployment of renewables and improvements in energy intensity. Despite increased coal use in some countries, emissions in Europe declined by 50 Mt. Emissions in Japan increased by 70 Mt.

The new IEA report presents the results of a 4-for-2 °C Scenario, in which four energy policies are selected that can deliver significant emissions reductions by 2020, rely only on existing technologies and have already been adopted successfully in several countries.

“We identify a set of proven measures that could stop the growth in global energy-related emissions by the end of this decade at no net economic cost,” said IEA Chief Economist Fatih Birol, the report’s lead author. “Rapid and widespread adoption could act as a bridge to further action, buying precious time while international climate negotiations continue.”

In the 4-for-2 °C Scenario, global energy-related greenhouse-gas emissions are 8% (3.1 Gt CO2‑equivalent) lower in 2020 than the level otherwise expected.

  • Targeted energy efficiency measures in buildings, industry and transport account for nearly half the emissions reduction in 2020, with the additional investment required being more than offset by reduced spending on fuel bills.
  • Limiting the construction and use of the least-efficient coal-fired power plants delivers more than 20% of the emissions reduction and helps curb local air pollution. The share of power generation from renewables increases (from around 20% today to 27% in 2020), as does that from natural gas.
  • Actions to halve expected methane (a potent greenhouse gas) releases into the atmosphere from the upstream oil and gas industry in 2020 provide 18% of the savings.
  • Implementing a partial phase-out of fossil fuel consumption subsidies accounts for 12% of the reduction in emissions and supports efficiency efforts.

The report also finds that the energy sector is not immune from the physical impacts of climate change and must adapt. In mapping energy-system vulnerabilities, it identifies several sudden and destructive impacts, caused by extreme weather events, and other more gradual impacts, caused by changes to average temperature, sea level rise and shifting weather patterns. To improve the climate resilience of the energy system, it highlights governments’ role in encouraging prudent adaptation (alongside mitigation) and the need for industry to assess the risks and impacts as part of its investment decisions.

The financial implications of climate policies that would put the world on a 2 °C trajectory are not uniform across the energy sector. Net revenues for existing renewables-based and nuclear power plants increase by $1.8 trillion (in year-2011 dollars) collectively through to 2035, offsetting a similar decline from coal plants. No oil or gas field currently in production would need to shut down prematurely. Some fields yet to start production are not developed before 2035, meaning that around 5% to 6% of proven oil and gas reserves do not start to recover their exploration costs. Delaying the move to a 2 °C trajectory until 2020 would result in substantial additional costs to the energy sector and increase the risk of assets needing to be retired early, idled or retrofitted. Carbon capture and storage (CCS) can act as an asset protection strategy, reducing the risk of stranded assets and enabling more fossil fuel to be commercialised.

  • To download the WEO special report Redrawing the Energy-Climate Map, click here.
  • To read Executive Director Maria van der Hoeven’s comments at the report’s launch, please click here.
  • To see the presentation that accompanied the report’s launch, please click here.
  • To watch the press conference for the report’s launch, please click here.
  • Accredited journalists who would like more information should contact [email protected].
  • For what opinion leaders are saying about the report, please click here.

About the IEA

The International Energy Agency is an autonomous organisation which works to ensure reliable, affordable and clean energy for its 28 member countries and beyond. Founded in response to the 1973/4 oil crisis, the IEA’s initial role was to help countries co-ordinate a collective response to major disruptions in oil supply through the release of emergency oil stocks to the markets. While this continues to be a key aspect of its work, the IEA has evolved and expanded. It is at the heart of global dialogue on energy, providing reliable and unbiased research, statistics, analysis and recommendations.

This article is a repost, credit: International Energy Agency, http://iea.org/newsroomandevents/pressreleases/2013/june/name,38773,en.html.

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IEA-led report measures scale of meeting twin challenges of energy poverty and climate change, Source: IEA

May 29, 2013 in Climate Change, Environment, EV News, IEA, Research

Global Tracking Framework says the world must do more if it is to ensure that all can benefit from modern, clean energy by 2030

28 May 2013

A new report published today as part of the Sustainable Energy for All (SE4ALL) initiative finds that a population four times the size of the United States still lives without access to electricity, holding back global economic development, and that, despite efforts to limit climate change, fossil fuels still account for more than 80% of the world’s energy mix.

The Global Tracking Framework, a multi-agency effort led by the International Energy Agency (IEA) and the World Bank, calculates the starting point against which the SE4ALL initiative can benchmark progress towards its three objectives of achieving universal access to modern energy services, doubling the global rate of improvement in energy efficiency and doubling the share of renewable energy in the global energy mix (all by 2030).

“The Sustainable Energy for All initiative is a rallying cry to tackle the twin crises of energy poverty and climate change, and this Global Tracking Framework is an important first response,” said Maria van der Hoeven, Executive Director of the IEA and a member of the Advisory Board of the SE4ALL initiative. “By measuring the scale of the challenge, it provides a crucial reference against which the partners of the SE4ALL initiative, and all of us, can track progress towards building a cleaner energy system for all. The IEA has advocated stronger action to tackle energy poverty for more than a decade as part of its World Energy Outlook, but more needs to be done to tackle the problem. It is a moral imperative and we cannot afford to ignore it.”

The Global Tracking Framework estimates that, as of 2010, 17% of the global population did not have access to electricity while 41% still relied on wood or other biomass to cook and heat their homes. Renewable energy accounted for 18% of the global energy mix in 2010, while global energy efficiency had improved by 1.3% per year on average since 1990.

Global action is required, but the nature of the challenge differs across countries and, for each of the SE4ALL goals, the report identifies 20 “high-impact” countries that are crucial to making major progress. The report also finds that achievement of the SE4ALL goals requires energy investments to increase by at least USD 600 billion per year until 2030, compared with the level currently expected. But the costs are not spread evenly, with universal access to modern cooking needing an additional USD 4.4 billion per year and electricity access needing USD 45 billion per year, while renewables need an additional USD 174 billion per year and energy efficiency USD 394 billion per year. This investment must be accompanied by a comprehensive package of policy measures, including fiscal, financial and economic incentives, phasing out fossil-fuel  subsidies, and pricing of carbon.

To read the Executive Summary of Global Tracking Framework, please click here‌.

To download Global Tracking Framework, please click here.

To link to the webcast, please click here.

To download the presentation at the launch of Global Tracking Framework, please click here.

To link to the World Energy Outlook‘s Modern Energy for All webpage, please click here

To link to the Sustainable Energy for All webpage, please click here.

About the IEA

The International Energy Agency is an autonomous organisation which works to ensure reliable, affordable and clean energy for its 28 member countries and beyond. Founded in response to the 1973/4 oil crisis, the IEA’s initial role was to help countries co-ordinate a collective response to major disruptions in oil supply through the release of emergency oil stocks to the markets. While this continues to be a key aspect of its work, the IEA has evolved and expanded. It is at the heart of global dialogue on energy, providing reliable and unbiased research, statistics, analysis and recommendations.

This article is a repost, credit: International Energy Agency, http://www.iea.org/.