Bridges Trade BioRes • Volume 6 • Number 20 • 17th November 2006

World Energy Outlook Calls for Increased Investment in Alternative Energy

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The World Energy Outlook 2006 - the flagship publication of the International Energy Agency (IEA) - was released to International Press in London on 7 November.

The Outlook presents two alternative scenarios for the state of world energy markets through 2030. A Reference Scenario predicts how energy markets are likely to evolve given current government energy policies, while an Alternative Policy Scenario explores the rosier energy future which is possible if governments implement all of the energy initiatives they are currently considering.

Under the Reference Scenario, the WEO predicts that China and India will lead a surge in global energy demand, which will increase by 53 percent by 2030. The Outlook also predicts that world oil demand will reach 116 million barrels/day over the next 25 years (up from 84mb/d in 2005). OECD countries and developing Asia will turn increasingly to oil and gas imports to keep up with their rising energy demands, which will be met primarily by a small number of major OPEC producers. Global carbon dioxide emissions will increase by 55 percent. All of these trends will exacerbate energy importers’ vulnerability to potential supply disruption and price shocks, as well as negatively affecting global climate change, the report says.

If governments around the world implement the energy policies they are currently considering, however, the future looks considerably brighter. The Alternative Policy Scenario included in the Outlook predicts that over the next 25 years global energy demand can be decreased by 10 percent and global carbon dioxide emissions can be reduced by 16 percent. The Outlook suggests that these changes could be achieved by improved efficiency of energy use along with an increased use of nuclear and renewable power sources.

The Outlook calls for a major push in investment in new energy supplies, especially in developing countries, and identifies under-investment in this area as one of the biggest future risks.

Claude Mandil, Executive Director of the IEA, expressed optimism over the needed changes. “These policies are very cost-effective,” Mr. Mandil explained at the WEO launch on 7 November. “There are additional upfront costs involved, but they are quickly outweighed by savings in fuel and expenditures.”

“Government Reactions to WEO,” WEO PRESS ROOM, November 2006; “The World Energy Outlook 2006 Maps Out a Cleaner, Cleverer and More Competitive Energy Future,” WEO PRESS RELEASE, 7 November 2006.