Energy costs to soar if no carbon deal, agency says

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."

Story Copyright (c) 2009 Reuters Limited. All rights reserved.

[Tallredeye]

What a convenient prediction. Numbers out of thin air. Anyone still cares anymore about alarmist predictions that never comes true?

[mike_ekim]

Agreed. They can come to an agreement where a ton of fossle fuel is used and prices go up. The existence of any old agreement will not control prices. What they are saying is that their particular agreement must be reached or energy prices will increase. In the words of The Church Lady: "Isn't that conveeeeenient!"

They do not accurately account for the energy price increase due to the alternate sources and alternate tech used. For example: if you reduce your energy usage by switching to spiral bulbs, it takes 5 years just to break even.

We couold reduce fuel usage if everyone threw away their car and bought a more fuel efficient one. That doesn't mean we would have a net cost savings, nor would it be better for the environment.

[krosafcheg]

@mike_ekim

"We couold reduce fuel usage if everyone threw away their car and bought a more fuel efficient one. That doesn't mean we would have a net cost savings, nor would it be better for the environment."

That's what I find particularly hilarious, you have all these nutcases that think it's beneficial to the environment to just destroy a perfectly functional vehicle, piece of outdoor power equipment, or appliance and replace it with a "more efficient" one. Really? Are you counting the energy expended to recycle (what you can) from the old one, the energy and resources expended to engineer, manufacture, ship and support a replacement? No, you aren't!!! Don't even get me started on Cap & Tax, we're turning our energy market over to the same speculators that ran oil prices sky high. Shortsighted tree hugging idiots will be the destruction of this economy.

[USDecliningDollar]

The most likely case is that energy costs will soar, regardless.

[Renegade Knight]

Energy will cost more with controls than without. They are smoking crack to make the pitch they are making. They need to focus on why the increased cost is worth the price.

[iptofar]

First the rise in oil prices is driven by the US gov't printing and borrowing money since december. I'm reasonably certain the lack of an agreement does not actually change the usage/price of petroleum in the next five years. The primary problem is the futures trading market is under regulated. This is likely because the rich guys buy our politicians and the greenies like us scared of energy prices.

So, have the economists been right yet/why do we keep listening to them and paying their salaries?

[dbargen]

One of the few chances to save ourselves from inflation in energy prices thanks to inflation in currency would be to drill for our own oil and start putting that 30% of the entire world's supply of natural gas we have off the north coast of Alaska to good use. It's more than we could ever use in decades, so one would think to start up some free-trade pacts and sell some of it to help American's buying power abroad and put the dollar back up where it's supposed to be.

[aubskibob]

How are funding new, more expensive, clean methods of energy production going to result in cheaper energy? This is all BS.

[jamstigator]

Heh, we heard all these same comments when oil replaced coal as the primary energy source. Why move from coal, when oil is so much more expensive to drill? Blah blah blah. You guys sound like you slept for a hundred years then just replaced a couple of words. Oil is finite, demand is growing, human population is growing, so OF COURSE oil/coal are going to go up in price, a lot. And in the end, there will be no more oil. I'm sure that very last barrel will be quite expensive. On the other hand, a small-ish desert area receives enough solar energy to supply the energy needs of the entire planet, and THAT energy source will never get more expensive and will effectively never run out either, nor will it get harder to collect it, so it's the obvious and intelligent path for us. Nobody ever accused us of being a particularly intelligent species though, so we'll probably stay hooked on oil crack until the dealer (the Earth) cuts us off and we go into fatal withdrawal.

[mike_ekim]

Sure, no more oil, just like there's no more coal?

I agree with you in part: in 100 years, people will still be saying we're gonna run out of oil soon.

[iptofar]

I think if you do some research, you will realize that solar is not all that and find that it produces less energy than it uses. Why else do you need subsidies if it pays for itself and then some? It's not like you can't loan cheap money these days. If you want to argue for nuclear. I'm with you. Think how many nuclear plants could have been built with the wasted 800 or so billion wasted stimulus dollars.

[kewell82]

Hey what about when that small-ish desert area has an overcast of clouds, or when it is night time. Are we only going to have power during the day time? Those solar panels only have full capacity in the middle of the day. They are so inefficient and you want to put your energy dependency on it. The technology is not there yet. I think it will get there but we shouldn't freak out that the earth will come to an end if we don't act now. Mother nature is far more powerful than any human interference, what ever happens it is because of mother nature not man-made. Al Gore's theories are for him to take advantage of others and get paid for his BS ideas.

[krosafcheg]

You must live on the coast somewhere like windy/sunny California. Wind and solar energy are impractical for most of the southern-midwest, look at the research maps online for example. Though solar panels in deserts can generate massive amounts of electricity, the technology and resources don't exist to transmit and distribute that power effectively across the entire country. So what does that leave us with? Coal, natural gas and nuclear. Too bad it's about impossible to get a nuclear plant built in less than a decade due to all the environmental regulations.

[rapier1]

There are plenty of methods for storing energy from solar power during off-peak and night time. The most promising seems to be a method of storing the energy as heat in the form of liquid sodium/molten salt. Even if you are opposed to things like solar energy or wind power it's helpful to actually know something about what you are opposed to. Otherwise you just look like naysayer.

[krosafcheg]

@rapier1

I'm not at all opposed to wind or solar energy if it's actually practical and nets a savings for the region. Check the maps and inform yourself, otherwise you just sound like a tree hugging fanboi:
http://www.windpoweringamerica.gov/wind_maps.asp
http://www.nrel.gov/gis/solar.html

[rapier1]

I've actually seen those maps. In areas which are well suited for wind or solar its a definite win. Its not a solution for every area but by reducing dependence in one region we can shift resources to areas that are not as well suited. Any real solution is going to use a variety of sources - traditional, alternative, and conservation in order to reduce our dependence on oil and coal. Over the long term it will be more economically sustainable than the current mix.

[bj1126]

Yeah because higher taxes and government controls always help contain costs... What a bunch of insanity. My only consolation is the chance of this happening is pretty much zero.

[William Crow]

How did the world survive in past years and centuries without "carbon trading?"

More and more I see the global warming religion to be a social/political coalition. Such as the PETA people buying into it because the ownership farm animals contributes methane to the larger "global warming" picture. When, afterall, PETA is only interested in reducing the number of animals owned or controlled by mankind.

When broken down the "global warming" movement is made up, in large part, of this and other fringe political and social considerations - disparate groups banding together for no honest central truth. People are slowly realizing this.

Its very little about "global warming." Its a false coalition cause. A phantom.

[Renegade Knight]

Global warming is a fact. When you accept that you will be in a position to ask intelligent questions and even make intelligent assertions and assessments.

If you can't accept that, you are a of the same ilk you are complaining about.

Notice I didn't say Global Warming was good or bad, caused by man, nature or both or anything. I merely stated the fact that starts the debate.

[Average_American]

So, the Paris, France based International Energy Agency is pushing the implementation of punitive legislation in an attempt to stifle world economic growth????

A rise in the demand for energy is a sign of economic recovery and should be encouraged, not stopped! In order to recover we must use our available energy sources, not some yet to be developed/implemented technologies.

The effort led by Al Gore to force our economy away from cheap energy is a dangerous endeavor. When the market is artificially manipulated like that it can have devastating effect, such as Jimmy Carter's and Bill Clinton's "Fair Housing Act" that bent the rules of the credit and mortgage industries to favor people that would not otherwise qualify for housing loans of that magnitude. And we are all now dealing with the aftermath of that fiasco!

The earth's climate is changing; it always has been and always will be. It is a natural trend that any credible geophysicist or geologist can attest to. Our current trend is the reason we are not in an ice-age right now. In fact, the earth has actually been cooling off for the last ten years! Now that's an inconvenient truth for the proponents of "GoreLore".

[rapier1]

This sort of argument "The climate has always been changing!" is really one of the most facile and specious arguments available to the nay sayers. Sure, climates do change and they usually change over a very long period of time - thousands of years of slow swings back and forth. What's striking is that over the past 10 to 15 thousand years the climate has been relatively stable. There have been a few blips here and there (The Medieval Climate Optimum, The Little Ice Age) but nothing that was global in its effect, very excessive, or long lasting (a few hundred years at most). However, even these little blips had a dramatic impact on the areas that were impacted by them. In some cases, crops failed, fields turned to forests, forests turned to pasture, nations weakened while other grew, endemic diseases entered new areas, and so forth.

However, what we are talking about here isn't going to be geographically limited, minor in scope, or short lived. We're talking about a significant shift in global weather patterns that may end up putting Northern Europe in to a deep freeze as the Atlantic Conveyor shuts down, large portions of the Central United States being rendered inhospitable for grain production, the northern shift of malarial belts, and so forth. The combination of these things will, without a doubt, have a significant impact on the US economy, its ability to project its power, and the overall wellbeing of its citizens. It doesn't matter if its natural or not - the impact is still going to be tremendous. Dismissing it as 'natural' doesn't make it any less dangerous. Our civilization - both globally and locally has been optimized for the current climatic patterns - changes in the climate will have unpredictable and potentially dangerous effects on our greater society.

We are facing a potential disaster and, regardless of its cause, only a fool would choose to simply ignore it. Investing in new technologies, energy sources, and other forms of mitigation is no more 'inconvenient' than having an insurance policy on your house.

[noesnoesnoes]

If we sign a carbon deal to cut emissions, THAT is what will increase energy costs. Without a deal, they will stay the same/be on the same trend.

[rapier1]

It saddens me to see people, people I would think must be intelligent enough to actually think these things through, simply dismiss conclusions that are contrary to their personal beliefs. Yes, energy costs will grow. This is undeniable because developing economies will demand a greater and greater share of the finite supplies of fuel. This will grow at a rate in excess of inflation and eventually cause a significant drag on the world economy. If you will only think back 3 or 4 years when oil prices had peaked there was significant concern about rising prices causing a strangulation of the economy. I would argue that the only thing that 'saved' us from a commodities induced recession was the housing market collapse. As we struggle out of the effects of the housing collapse and credit crunch commodity prices will start to rise, in fact they have already been rising. It is likely that we'll end up returning to a scarcity problem especially in regards to sources of easily accessible oil (Its true that there is a lot of oil left - the problem is that much of it is excessively expensive to drill - the economy doesn't just depend on oil but on affordable oil).

It is possible to mitigate the effects though. A growth in non-carbon based energy sources will help reduce the demand of oil and coal and help keep those prices in check over the long run. Likewise, a dedicated effort to producing energy efficient devices will also reduce demand and keep prices in check. This isn't rocket science people, its basic supply and demand theory and really only makes sense. You can hold on a contrarian position if it really makes you happy but it's only a sign of a willful disregard of the global economic realities.

[whitesoflr]

Martin Martin Martin, put down the green Kool-Aid for just one minute and consider this: The basis of your story is flawed in that it is rooted in a self-fulfilling prediction.

The IEA plans for your beloved Obama/Pelosi regime to hand over US sovereignty to the IEA so that they can inflict punitive measures on us and control our behavior. Obama wants this, and from his actions it appears to me that he intends to head the IEA or some other World Body just as soon as he is finished tearing down the US.

Here's an idea: How about we keep our energy costs down by retaining our independence as a nation, in terms of both energy as well as constitutional authority.

[rapier1]

You really need to stop drinking so much Kool Aid kid. It's really starting to kick those paranoid conspiracy theories you have into overdrive.

[whitesoflr]

How can it be theory when he makes the argument himself? You guys won't see the bus coming until it hits you in the face.

[rapier1]

No one is talking about handing over sovereignty to any one. No one. I'd really like to see where you found anyone saying that anyone is about to do that. Perhaps you are mistaking international coordination and cooperation with abdication of national sovereignty. There is a difference you know. International coordination is a necessity in any sort of world where nation states interact with each other. This is why we have such useful things as international maritime law, trade agreements, NATO, SEATO, and so forth. We don't and can't live in a bubble after all.

[whitesoflr]

Of course no one's going to announce that handing over our sovereignty is going to occur. I don't believe the ones who run the world bodies are stupid. In fact they should be admired for their cunning.

The proof that world bodies want to override our constitution can be found by anyone who cares to look. Consider the UN's disdain for our second amendment rights as an example, embodied in a treaty, cocked and loaded and ready for Obama to enforce it, that would outlaw the reloading of spent shells among other measures.

I simply reject the premise that we all must pay a high price for energy and that that price should be manipulated by anyone who is not a player in the producer-consumer relationship, except for sensible oversight by our own US government. But hey, call me a capitalist.

I share a desire for a clean environment and I do my part to keep it clean. But I reject the notion that we should be forced to pay penalties for the emission of CO2, penalties that would wreck our economy even without solid evidence that the reduction of US carbon emissions would improve one thing.

You show me the proof that the Brits have improved one iota of the climate/environment with their stolen pounds and then you may have a chance to convince me that this is a worthwhile endeavor.

Until then, reduce your own carbon-footprint but keep your CO2 emitting nose out of mine.

[krosafcheg]

We need to act now to stop man-made continental drift!

[henryhayne]

Energy costs are going to soar period, with or without the agreement.

[Ron_PE]

I'm always amazed that those calling themselves 'Chief Economist' don't seem to be aware of the causes of "a surge in energy costs". There are no true shortages. But there are plenty of governments only too willing to inflate their currencies as Bernie 'The Inflator' is doing now in the USA.

So Mr Birol thinks our energy prices will be lower if first world countries send their wealth to third world countries like Bangladesh? No logic there!

Where did the 450 ppm CO2 concentration come from? I thought the magic target concentration was 350 ppm.

As for the real sources of that imagined villain CO2, one should look to the Eastern hemisphere first.
It's natural!

http://svs.gsfc.nasa.gov/vis/a000000/a003500/a003562/carbonDioxideSequence2002_2008_at15fps.mp4

http://wattsupwiththat.com/2009/09/13/some-results-from-gosat-co2-hot-spots-in-interesting-places/

[gggg sssss]

lets send all of our manufacturing and processing jobs to china, and then see how much energy we save. No wait, what are all those people going to do? Get employed by the govt? doing what?

[sq_root_in_a_round_world]

In Arkansas our governor is hiring people to go around and coach HS students on how to find a job, and brags about the 44 jobs he has created in the process.

[sq_root_in_a_round_world]

Isn't it amazing how adept our current leaders are on the topic of sustainability, except when it comes to an economy.