The world faces a surge in energy costs, as well as in planet-warming carbon emissions, unless it can swiftly agree a climate change deal, the International Energy Agency said Tuesday.
Arguing strongly for a global deal at the U.N. Climate Change summit in Copenhagen in December, the IEA said use of fossil fuels will increase quickly if policies remained unchanged.
Without an international agreement on climate change, the ratio of energy spending to gross domestic product for the largest consumer countries would double by 2030.
The world would have to spend an extra $500 billion to cut carbon emissions for each year it delayed implementing a deal on global warming, the IEA said in its annual World Energy Outlook.
"As the leading source of greenhouse-gas emissions, energy is at the heart of the problem and so must be integral to the solution. The time to act has arrived," it said.
IEA Chief Economist Fatih Birol told Reuters in an interview the world needed to stabilize the concentration of greenhouse gas emissions in the atmosphere at 450 parts per million of CO2 equivalent.
"The world needs to go to the 450 parts per million target, not only because of climate change but because of growing problems within our energy system and its possible implications again on the economy," Birol said.
Global energy demand would rise by an average of 2.5 percent per year over the next five years if governments made no changes to their existing policies and measures.
Under these circumstances, which the IEA called its reference scenario, world primary energy demand would rise by an average of 1.5 percent per year over the next two decades.
Oil demand, excluding biofuels, would increase by 1 percent per year to 105 million barrels per day by 2030 from 85 million barrels per day in 2008. This was a slight decrease in its demand forecast, reflecting the impact of the global economic downturn.
Last year the agency, which advises 28 industrialized nations, forecast oil use would reach 106 million barrels per day by 2030.
But the IEA stressed the trend toward heavier use of hydrocarbons would be unabated without a climate change deal.
"Fossil fuels remain the dominant sources of primary energy worldwide in the reference scenario, accounting for more than three-quarters of the overall increase in energy use," it said.
A key driver of energy demand would be inexorable growth in power generation, it said, forecasting in its reference scenario world electricity demand would grow 2.5 percent a year to 2030.
Stressing the need to move away from dependence on fossil fuels, Birol said that without a climate change deal, the European Union's annual energy bill would more than double to $500 billion by 2030, up from $160 billion in the last 30 years.
Oil prices soared to a record of nearly $150 a barrel in July 2008. They then collapsed to less than $33 last December, but have since recovered to around $80.
The price collapse, combined with the credit crisis, choked off investment and the Paris-based IEA has warned the oil market could surge back, damaging still fragile economic growth.
Birol said the oil price was likely to reach $100 per barrel by 2015 and $190 by 2030: "This means that if we don't do anything to our energy system, we will be in difficulty."
Bank of Ireland analyst Paul Harris said the IEA had taken a "rather cautious approach" in the report.
"There's an emerging consensus that the demand and supply balance is really going to start to tighten by 2015 which should sound the death knell for cheap oil."
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Additional stories from Reuters
Without more efficient consumer electronics, the world will need to build hundreds of gigawatts worth of new power plants to run the exploding number of electronic gadgets, according to the International Energy Agency.
The Paris-based energy industry watchdog on Wednesday published its "Gadgets and Gigawatts" report, saying that consumer electronics already account for 15 percent of households' electricity bills and is rising rapidly.
Around the world, a growing number of people are acquiring electronics, from mobile phones to televisions, which means the total amount of electricity from electronics is poised to explode in the next two decades.
The IEA estimates that the yearly energy consumed from IT and consumer electronics is on pace to double by 2020 and triple by 2030 to 1,700 terawatt-hours. That would be the equivalent of the combined residential electricity consumption of Japan and the United States in a year.
It's clear that there is technology available to make devices more energy efficient, the IEA said. Because consumers want a long run-time, mobile devices are already more efficient than appliances that run from outlets.
"This example shows us what can be achieved. Where no such commercial drivers exist, governments must step in to ensure that we make the most of every energy efficiency opportunity," IEA Executive Director Nobuo Tanaka said in a statement.
He said that governments should "urgently implement" energy-efficiency policies. The biggest opportunity for energy savings improvements from consumer electronics companies is "making hardware and software work together more effectively to ensure that energy is only used when, and to the extent needed," the IEA said.
See CNET's Green Tech Guide which rates PCs and TVs on energy efficiency.
The International Energy Agency raised the alarm Wednesday with the release of its annual report, emphasizing that a revolution in the energy business is required to maintain economic growth and stabilize greenhouse gas emissions.
The IEA's World Energy Outlook 2008 report, written for policymakers, paints a troubling picture in terms of energy costs and global warming due to burning fossil fuels. It calls for "radical action" from governments at all levels and for a coordinated international response.
"Current trends in energy supply and consumption are patently unsustainable--environmentally, economically and socially--they can and must be altered," Nobuo Tanaka, the IEA's executive director, said at the release of the report.
Although softening demand has pushed the price for oil down recently, the rising cost of extraction, combined with declining productivity rates at oil fields, means that the "era of cheap oil is over," according to the report.
The IEA's annual report forecasts that energy demand will spike in the next two decades, driven in large part by fast-growing India and China. OECD refers to the 30 developed nations in the Organization for Economic Cooperation and Development.
(Credit: IEA)The study also lays outs the changes needed to stabilize carbon dioxide concentrations in the atmosphere and concludes that massive amounts of capital will be required.
To limit the increase in temperatures to 3 degrees Celsius by 2030 would require a huge increase of low-carbon energy--nuclear, hydropower, biomass, renewables, and underground carbon storage. That scenario would require a $4.1 trillion investment, or 0.2 percent of the world's annual GDP.
From the report's executive summary:
"It is not an exaggeration to claim that the future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient, and environmentally benign system of energy supply. What is needed is nothing short of an energy revolution."
The IEA's call to action to policymakers reemphasizes the long-term trends that many clean-technology businesses are already betting on. Even with the credit crunch and falling prices for fossil fuels, clean-energy investors and entrepreneurs predict positive growth in their sector over the long term.
In the U.S., the incoming administration of President-elect Barack Obama and a Democrat-controlled Congress bode well for policies that promote clean technologies to address economic development and climate change.
Attempts to bring a global warming bill up for debate were blocked in the Senate on Friday, derailing what would have been the first federal U.S. climate change legislation.
According to published reports, Democrats fell short of the 60 votes necessary to end a Republican-led filibuster.
Debate on the Lieberman-Warner Climate Security Act of 2008 has focused on the cost of throttling carbon dioxide emissions.
"It's a huge tax increase," said Republican Senate leader Mitch McConnell, from the coal state of Kentucky, according to an Associated Press story. Trading carbon emissions allowances, McConnell said, would produce "the largest restructuring of the American economy since the New Deal."
The same article quoted Democratic Senator Barbara Boxer of California accusing the Republicans of spreading misinformation. "There is no tax increase," she said, arguing that consumers would be provided tax relief to help pay energy prices.
President Bush has also warned of carbon regulation costs, and the bill was not expected to be passed into law.
Impact on green tech?
In general, people at clean-tech and energy companies are not counting on a swift introduction of climate change regulations. But most people expect them to take hold within the next five years.
Both presumed presidential candidates--Barack Obama and John McCain--favor climate change legislation.
Climate change regulations are designed to put a price on polluting. For instance, in a cap and trade system that will start for Northeast utilities this fall, large polluters are given carbon emissions allowances that can be bought and sold.
Whether these regulations will benefit green-tech companies and clean energy projects hinges on how the rules are set up.
Until any laws on the books, many technologies are being developed in anticipation of policies to support low-carbon energy technologies and as an alternative to rising fossil fuel prices.
IEA calls for policy-led "energy revolution"
Also on Friday, the International Energy Agency called for a $45 trillion fund to halve carbon emissions by 2050.
In a study, the IEA said that 1,400 nuclear power plants would need to be built and off-shore wind farms expanded rapidly to make this goal.
A "global energy revolution" is necessary to mitigate climate change and to meet rising energy demand around the world, the IEA said. With existing policies, the group said, carbon dioxide emissions will rise 130 percent and oil demand will rise 70 percent by 2050.
"Such growth of oil demand raises major concerns regarding energy supply access and investment needs," Nobuo Tanaka, the IEA's executive director, said in a statement.
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