Green Tech

The California Energy Commission on Wednesday unanimously approved the first energy efficiency standards for televisions in the state over opposition from the Consumer Electronics Association.

The rules mandate that televisions sold in California starting in 2011 consume 33 percent less electricity than current models and 49 percent less by 2013. The regulations affect TVs that are 58 inches wide and less.

Although it's a state-level regulation, it is potentially significant outside California as other states are considering adopting similar rules. Unlike voluntary programs, such as the Environmental Protection Agency's EnergyStar program, the rules mandate certain levels of efficiency. For example, a 42-inch TV that consumes 183 watts or less by 2011 needs to consume 115 watts or less by 2013, the Commission explained in its statement.

The effort to regulate television efficiency, which was backed by California utilities and environmental groups, will save money for consumers on electricity and significantly reduce greenhouse gas emissions, say backers. After 10 years, the energy savings will be $8.1 billion, or enough to power 864,000 single-family homes, according to the California Energy Commission.

The Consumer Electronics Association has fiercely opposed the mandate, which has been under development since early 2007. The industry group submitted a statement arguing that efficiency gains should be done through voluntary efforts by manufacturers and more consumer education. (Click for PDF of submission to the CEC.)

At the same time, some television manufacturers and the LCD TV Association supported the measure.

As consumers upgrade to flat-screen TVs, there's a concern that there will be a significant increase in aggregate power usage, in part because people are buying TVs with bigger screens. The Natural Resources Defense Council estimates that implementing the efficiency rules will cut the state's electricity use by almost 1 percent and mean that a 500-megawatt power plant will not need to be built to meet rising demand for power. (Click for Q&A from NRDC).

The California Energy Commission has energy efficiency mandates for a number of household appliances, such as refrigerators. The state's energy efficiency policies have kept the per capita energy consumption steady since the 1970s, according to the Commission.

EcoFactor has been awarded Cleantech Open's national award, which includes $100,000 in seed capital.

The awards ceremony for one of the leading environmental start-up competitions took place at the Masonic Center in San Francisco following a day-long conference in which contestants and venture capitalists had a chance to mingle.

EcoFactor has developed software that works in conjunction with a two-way thermostat to better maintain stable desired temperatures in homes. The system relies on outside data like weather as well has the thermal habits of the home, and self-regulates based on those factors. The process helps heating and cooling home systems run 20-30 percent more efficiently, according to company statistics.

"Being named the Cleantech Open national winner really validates our solution and our business model, and proves that the market is looking for energy-efficiency solutions that don't ask people to change their behavior or sacrifice comfort," EcoFactor CEO and co-founder John Steinberg said in a statement.

Out of the 12 national finalists, there were also 2 chosen as runners-up: Micromidas, which developed a process for converting raw sewage into biodegradable plastic products and Alphabet Energy, a team from the Lawrence Berkeley National Laboratory with a system that produces electricity from waste heat.

BOSTON--Green tech has been a hot venture capital investment category the past few years, but that doesn't mean investors are actually earning money. In fact, some venture capitalists eyeing gold in green may soon be moving on, a panel of investors said here on Friday.

In the third quarter this year, green tech garnered more venture capital than the traditional categories of software and biotech, bouncing back after a sharp drop-off earlier this year. That reflects the high level of confidence that investing in energy-related technologies makes sense in the long run.

But there's a growing understanding that applying the same venture model used for biotech or IT won't always work in energy, said speakers at a panel on venture capital at the Fifth Annual Clean Energy Conference.

"Clean tech is broadly recognized as an area of expansion," said Issam Dairanieh of BP's alternative energy venture capital arm. "But those who went into it because it looked sexy will suffer. Those who went into it without doing their homework will go away."

The two most dramatic differences between IT and energy technology is the amount of time required to build a product and the capital that's needed. A product could take 15 to 18 years to enter into the fuels business and cost tens or hundreds of millions of dollars to develop, said Dairanieh. The traditional venture model is built around getting sizable returns in five to seven years.

"Venture capital in clean tech as currently practiced will not be successful or last very long," said Matthew Nordan, a vice president at venture-capital company Venrock. Venrock is focusing on very early-stage companies with an eye toward finding one that can have a technology breakthrough over many years, Nordan said.

The panelists said that the best VC investors are patient and invest for the long term. But there are many investors who chase fads, said Bic Stevens of Stevens Capital Partners. "Most VC returns are made by getting ahead of a bubble," he said.

Right now, many venture capitalists in green tech are focusing on the companies they have already invested in to ensure that they succeed, a situation that makes it more difficult for newly formed start-ups to secure funding. IT-heavy areas, such as smart grid, are also getting more attention in part because they can be businesses that IT investors feel comfortable with.

The shift to later-stage venture investments was clear in an analysis of third quarter venture capital done by Ernst & Young. For the first nine months of the year, 62 percent of the companies that received funding were already shipping products, compared to 37 percent for the same period last year.

BP's Dairanieh said that despite some limitations, there is an important role for venture capitalists to play in developing very specific technologies. For example, a biofuel company can develop a process for converting algae to fuel, but a small company should expect to bring it to market by partnering with established companies, such as refiners and distributors.

Another heavy presence in energy investing is Washington, with billions of dollars in stimulus money and research funding being put toward energy. Over the past year, many start-ups have applied to Department of Energy programs with a hope of getting a grant or loan.

BOSTON--While hundreds of other companies are trying to make a better battery, start-up SustainX Energy Solutions is trying to find better ways to compress and store air to help utilities take full advantage of intermittent sources of energy like wind.

Dax Kepshire, president of SustainX, sketched out the company's technology and product plans here Thursday at the Fifth Annual Conference on Clean Energy. SustainX was spun out of Dartmouth College last year and received $4 million in funding from Polaris Venture Partners and Rockport Capital in August of this year. It now has 10 employees.

There are already a few compressed-air facilities in the world where off-peak electricity is used to pump air underground for storage. During peak-demand times, the air is released and pushed through a turbine to make electricity.

It's a method that's getting more attention now as a way to store several hours worth of wind power, for example.

Traditional compressed air storage uses underground formations to store compressed air, which is released when needed to make electricity. Click on the image for a photo gallery of other types of energy storage.

(Credit: PG&E)

The primary difference with SustainX's approach is that it doesn't need an underground salt dome or limestone cavern to store the compressed air. Instead, it proposes storing the compressed air in off-the-shelf tanks. Its technical goal in two years is to cram 4 megawatt-hours worth of stored energy in a 40-foot long container, said Kepshire. The tank-filled container would be able to deliver 1 megawatt of power.

In the near term, it plans to build a 100 kilowatt hour pilot system to test the efficiency and then to validate the larger model in 2011, Kepshire said.

Its technology is also very different from the existing compressed-air storage facilities. With traditional compressed-air energy storage, a machine called a compressor compacts air and pumps it underground. To make electricity, the air is released and run through special turbines and a generator to make electricity.

SustainX is designing a system that uses a hydraulic piston to compress air. When the air is released, it moves a hydraulic motor which is attached to a generator to make electricity, Kepshire explained.

The key to making the overall system is to reduce the energy loss that happens in the compression and decompression of air, he said. He expects the first pilot system to be about 50 percent efficient but the full system to be more around 70 percent efficient overall.

Compressed air energy storage has a lot of potential because it's relatively inexpensive and because utilities can store many hours worth of electricity. Pacific Gas & Electric is investigating locations for compressd-air storage capable of delivering 300 megawatts of electricity for 10 hours, or 3,000 megawatt-hours. By contrast, utility-scale battery storage systems in use now deliver 1 or 2 megawatts for a few hours.

SustainX doesn't have any customers yet, but Kepshire said the company is targeting utilities looking to use more renewable energy. The company's technology, if it proves efficient enough, can be scaled to stored many hours of energy and deliver large amounts of power, he said.

BOSTON--If you attached a cost to putting greenhouse gases into the atmosphere, how would the energy business change?

Steven Koonin, the undersecretary for science at the Department of Energy and former chief scientist of BP, has thought this question over. Koonin was the keynote speaker Thursday at the Fifth Annual Conference on Clean Energy here, where he offered a big-picture analysis of how the U.S. should convert to low-carbon energies.

Steven Koonin, undersecretary for science in the U.S. Department of Energy (DOE).

(Credit: DOE)

The main drivers toward cleaner energy are efforts to improve the country's energy security and to cut greenhouse gas emissions. But there are many paths to that destination and we won't get there by only putting a price on carbon, Koonin said.

"Now the economists will tell you that all you need to do (is put a price on carbon emissions) and the market will take care of itself after that," Koonin said. "And that may be true, but as a technologist I have the ability and in fact the responsibility to look ahead and ask what the likely responses will be if there is a carbon price."

Establishing a significant, long-lasting, and universal carbon price would act as a "supply side" signal to the energy industry and favor certain technologies, he said.

One clear implication for the U.S. would be a greater shift toward natural gas, which is significantly less-polluting than coal for making electricity. Recent drilling improvements allow for capturing large amounts of natural gas from shale in the U.S., Koonin said.

Onshore wind is economically competitive in many areas in the U.S. and has the potential to supply 20 percent of the country's electricity by 2030. Another clean source of power is small and medium-size hydro power, which can supply tens of gigawatts from small dams.

Nuclear fission, which now supplies about 20 percent of the electricity in the U.S., is also poised to expand in an economy with a carbon price because there are no emissions during power generation. Carbon capture and storage facilities attached to coal-power plants, too, are needed because existing coal plants will continue to operate, he said.

Finally, increased conservation and efficiency are required in both the transportation field and for heating and power, he said.

Not just about technology
Koonin favors a cap-and-trade system to regulate carbon emissions, a system proposed in the energy and climate legislation now being debated in the Senate. Under cap and trade, heavy polluters such as utilities are given pollution permits and can buy additional permits to stay under a government-set limit on carbon.

But other policies are required, in part because the energy industry by its nature changes very slowly. Koonin specifically mentioned portfolio standards, where utilities need to get a portion of their electricity supply from renewable sources or a "low carbon" portfolio standard.

"One of the most important things we need to do beyond technology is to accelerate energy change," he said. "It takes decades to affect significant changes in the energy system."

It's a mistake to look at the IT industry as a model for how quickly energy can change, Koonin said. Whereas digital technologies evolve very quickly, energy changes slowly because power plants and buildings last decades and even cars last 15 years.

The first hybrid passenger car came to the U.S. in 2001, and even now, eight years later, there are fewer than 1 million sold, out of a total 150 million cars, he noted.

The scale and investments required to adopt different energy technologies is much bigger in than IT, and the energy industry is dominated by incumbents with well-optimized processes, he added.

To accelerate changes in energy, the DOE has established different types of research centers. This year, there will be $25 million a year to fund three "innovation hubs" at universities focused on specific problems, such as advances in nuclear. The DOE also recently awarded grants for ARPA-E, research aimed at breakthrough technologies.

Updated on November 13 at 1:11 p.m. PT to clarify and correct technical details.

Big levitated spinning disks will provide electricity to the grid in a project set to begin next month.

Flywheel energy storage company Beacon Power on Tuesday said it plans to begin construction of a 20-megawatt storage facility in Stephentown, N.Y. Provided on a continuous basis, twenty megawatts could power thousands of homes. But flywheels are used only for providing power for short periods.

Rather have many hours of stored energy on standby, the flywheels will store and dispatch bursts of electricity for what's called frequency regulation in the utility industry. Because of fluctuations in power demand, power generators need to deliver power to the grid to maintain a steady signal frequency. Beacon Power's flywheels are designed to provide one megawatt of power for 15 minutes.

George King, supervisor of flywheel assembly at Beacon Power, stands next to the company's 100-kilowatt flywheel.

(Credit: Beacon Power)

With flywheels, electrical energy is converted into mechanical energy and stored by the spinning disks. By absorbing electricity and dispatching it for quick bursts of a few minutes, utilities can maintain the frequenc with a system that uses no fossil fuel and responds quickly, according to Beacon Power.

The project will help the utility better use renewable energy that supplies electricity intermittently to the grid, according to the New York State Public Service Commission.

The installation in upstate New York will be the first large-scale use of Beacon Power's technology, according to the company. The Tyngsboro, Mass.-based company secured a Department of Energy loan guarantee in July for $43 million to partially finance the project.

Until now, Beacon Power has operated two smaller 1-megawatt facilities, where 10 flywheels are placed in a shipping container-size structure. The wheels themselves are made of carbon fiber composites, rather than metal, and spin at 16,000 revolutions per minute. To reduce friction, the mechanical components are stored in a vacuum and levitated with a permanent magnet, according to the company.

Another idea that has been pursued by Google for frequency regulation is using networks of electric-vehicle batteries. Rather than dispatch stored energy from batteries, plugged-in cars could have the charge rate throttled back, which a grid management system could use to maintain frequency.

Painting the Golden Gate Bridge yellow might cause less fuss than trying to install a wind farm off Cape Cod's historic coast.

But when you're trying to build where the wind is strongest or the sun is brightest, you never know what obstacles you may run into.

In Massachusetts, a proposed wind farm called Cape Wind was dealt a blow last Friday that will delay what would be the first offshore wind farm in the U.S. The Massachusetts Historical Commission agreed with local Indian tribes who claim that the location for the wind farm should be considered for listing in the National Historic Register because the Wampanoags' history and culture are "inextricably linked to Nantucket Sound," according to the opinion.

An offshore wind farm in north Wales, U.K.

(Credit: Vestas)

"If the tribes are successful, that would have a severe chilling effect (on the entire wind industry) because tribes up and down the coast could make the same claim," said Mark Rodgers, the communications director for Cape Wind. "Never before has an open ocean been caught up in this kind of declaration."

Then again, never before has a rare combination of private and government investment pumped so much into alternative energy projects. As these projects grow in frequency and scale, a new breed of NIMBY (not in my backyard) is emerging: Opponents of wind or solar installations who generally support renewable energy, just as long as they are built somewhere else. Coal and nuclear plants, it turns out, aren't the only energy facilities people don't want built in their backyards...or coastlines.

The Cape Wind fight, in particular, has brought together a testy combination of excellent wind conditions, opposition from well heeled local residents including members of the Kennedy clan, and a surprising assertion of Native American rights.

The National Historic Register is expected to make a ruling on whether the Sound can be considered eligible for protection as a traditional cultural property within 45 days. In its environmental review, the U.S. Minerals Management Service had previously concluded that it should not because the agency found the visual effects from the farm would be minor, and no historical archaeological resources in the Sound were identified. (Click for PDF of report excerpt).

Two tribes of the Wampanoags, who are descendants of the people who greeted the 17th century Pilgrims to Massachusetts, say they have long opposed Cape Wind because an unobstructed view of the ocean is vital to their culture, which calls for them to greet sunrise each day.

If there is a ruling in favor of the Wampanoags, it could delay approval by up to a year, according to reports. So far, Cape Wind, which is run by a group of investors who developed natural gas plants in the past, has spent $40 million over eight years. Developing the project, which would benefit from a tax credit or cash subsidy, is expected to cost more than $1 billion.

The claim is coming to a head at a time when Cape Wind had cleared all state-level environmental and siting permits, despite opposition from well organized local groups and powerful politicians, including the late senator Edward Kennedy. The family's compound would have a view of the 130 turbines, which would be placed five miles off the coast of Cape Cod. The project would supply about 75 percent of the electricity used on Cape Cod with 130 offshore turbines that would be visible as small spikes on the horizon, according to simulations.

Interior Secretary Ken Salazar said last week that he wanted his agency to make a decision on whether to give Cape Wind federal approval by the end of year--a deadline that is now in question.

On Monday, Massachusetts representative Edward Markey, who heads the House Committee on Energy Independence and Global Warming, sent a letter to Salazar on Monday, urging his department to approve the project before the start of the U.N. Climate Change Conference in early December because it would "send a strong message to international negotiators about the United States' commitment to developing sources of clean energy and reducing global warming pollution."

Green vs. green
Wind isn't the only form of clean energy that's running into opposition. Earlier this year, the U.S. Chamber of Commerce established a Web site called Project No Project, where it lists dozens of energy-related projects caught up in "green tape." The Chamber blames delays on NIMBY or "radical environmentalism."

The Chamber of Commerce has come under fire by environmentalists and a handful of its members for its opposition to proposed climate change legislation, but a number of renewable energy projects, mostly in wind, are being held up along with coal and nuclear projects, according to the Chamber.

Directly related to renewable energy is the thorny issue of transmission lines. Most of the wind and solar resources are in the middle of the country, far away from the areas of heavy electricity demand, which means that new lines need to be built to take advantage of the country's renewable resources.

There are a number of proposals to carry renewable energy around the country, including high-voltage power lines where less electricity would be lost in transmission. But many face local opposition because of the visual impact from these added wires.

For example, a coalition in Texas has formed called Protect North Palo Duro Canyon, where there is a proposal to string transmission lines across the canyon to carry electricity generated by wind turbines. The group wants to stop the development because of the environmental and historical significance of the place, the group says.

"Wind energy generated in the Texas Panhandle can serve the needs of populous cities such as Dallas and Austin and is important to the future of this state, but not at the cost of natural treasures such as the north Palo Duro Canyon and other beautiful areas in Texas," said Bob Currie, a coalition member.

In addition to drawing opposition from local landowners, the national push for clean energy is raising a "green vs. green" debate between the environmental benefits of renewable energy versus preservation of valuable ecosystems.

An illustration of the proposed Ivapah project in the Mojave Desert shows how much land is needed for utility-scale solar. This project, still being pursued by BrightSource Energy, would take up six square miles to supply electricity to 140,000 homes per year, using mirrors arrayed in a circle around a tower. Using less than 2 percent of the Mojave Desert's land would supply electricity for all the homes in California and cut carbon emissions by 30 million tons a year, according to the company.

(Credit: BrightSource Energy)

Driven by a California state mandate that utilities get a significant portion of their electricity from renewable sources, there's a land grab going in the desert areas of the U.S. Southwest that get the direct sunlight suitable for concentrating solar power.

These machines, which concentrate the sunlight to make steam for an electricity turbine, require large tracts of land for utility-scale power generation. As a result, most of these project developers have submitted project proposals to the Bureau of Land Management for siting and environmental reviews, which has created a backlog of applications.

BrightSource Energy, which has been picked to supply hundreds of megawatts of electricity to utilities, last month had to scrap a plan to build a solar power plant in a region of the Mojave Desert that had been set aside for conservation by the environmental group Wildlands Conservancy. California senator Dianne Feinstein said that specific location is not suitable for wind or solar development because it would lead to destruction of the desert ecosystem. Although she supports solar and wind development, she is proposing added protections for the region near other conservation lands, including Joshua Tree National Park.

Common sense?
With the list of clean-energy projects growing, there are efforts to speed up reviews. The Interior Department said last week that it would fast-track environmental reviews of six solar power plant proposals in California. Altogether, these projects would occupy 28,000 acres of land--almost the same area covered by the City of San Francisco--and generate 2.5 gigawatts of electricity, or enough for two million homes, Salazar told reporters.

In Massachusetts, which is encouraging development of clean energy businesses, state officials are considering a way to unblock reviews of a number of stalled wind energy projects.

Massachusetts governor Deval Patrick said last week's decision on Nantucket Sound and historic preservation listing was "ridiculous." In a statement, he said, "We are going to have to get serious about alternative energy installations where they make sense, and every environmental and regulatory review has concluded that Cape Wind makes sense."

The project's well organized opposition group, the Alliance to Save Nantucket Sound, says that placing turbines offshore will damage the environment and hurt tourism. It even recruited regular Martha's Vineyard visitor Walter Cronkite to record radio and TV spots, but he later changed his position, saying he "hadn't done his homework."

Meanwhile, environmental groups are trying to find ways to distinguish NIMBY sentiment from the real need for environmental protection. In general, groups like the Sierra Club favor renewable energy development, even though wind turbines, for example, do pose a danger to birds and bats. Even the Massachusetts chapter of the Audubon Society, which counts many birders in its members, has given conditional support to Cape Wind.

What's needed is data to rule out specific locations that pose too many risks, environmental groups say. Environmental advocacy group the National Resources Defense Council earlier this year developed an online mapping tool to choose the sites best suited for renewable energy. The point of the application is to show people the most suitable sites, which should avoid roadblocks during the review process.

"We need to develop our renewable resources if we are to address the challenge of climate change, but that development must be carried out in an environmentally responsible way," said Johanna Wald, a senior attorney at the NRDC in a blog post. "If it is done right, informed environmentalists will, I believe, stand up in support."

Would you be willing to pay for home security services if they could also help cut your electricity bills?

In a nutshell, that's what start-up iControl is pitching to consumers with its energy management software and home automation gear. The Palo Alto, Calif.-based company is also working with utilities to get its energy management system installed as part of smart-grid trials.

On Tuesday, it said that its home automation equipment can now use the Zigbee wireless protocol to communicate with two-way smart meters.

Will home energy management enter through home automation networks?

(Credit: iControl Networks)

It's part of the company's plan to enter the field of home energy efficiency, where there are dozens of companies already vying for business. The path it's taking is either through security service companies, utilities, or broadband suppliers, such as cable companies or phone companies, said CEO Paul Dawes.

iControl's technology is software for managing home area networks for home security. It also makes reference designs for Internet gateways and networked thermostats manufactured by third parties. The system allows a person to set up a network of security cameras which can be controlled by a touch-screen device.

With some additional equipment, the system can also be used to monitor energy usage and help homeowners cut energy usage, said Dawes. He expects these services will be offered for free as part of monthly security services, which cost about $30 to $35 per month. Security company ADT said that it plans to use iControl's software system to include services beyond home security, he added.

iControl's energy management system will also work with smart meters installed by utilities. Using a Zigbee-based gateway box and a networked thermostat, the system can get data via the smart meter which can help cut consumers' electricity bill, Dawes said.

For example, the meter can signal when cheaper rates are in effect or when there is a demand-response program in effect. In those cases, appliances on the iControl network can be scheduled to take advantage of those lower rates.

By buying some additional equipment, a consumer could program lighting and heating and cooling using the system, but the company is mainly working through utilities at this point.

"We don't see consumers willing to pay a recurring fee for energy management. They're willing to spend $50 for some energy management solution. What's going to change is when utilities go to time-of-use metering (where there are different prices at different times). Then, the economic incentive is much higher," Dawes said.

iControl is expecting that telecommunications and cable providers will start offering Internet-based home security services and then home energy management. But at this point, it's not clear how those companies will make money in energy management, Dawes said.

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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