Global Perspectives on Energy in 2009

by Karen Harbert

As we start a new year it is always useful to take stock of where we've been--and also where we might be going.  Last month the International Energy Agency (IEA) issued its World Energy Outlook 2008 (WEO 2008), which outlines IEA's projections for global energy demand through 2030.  While the Outlook takes the global economic slowdown and higher energy prices into account, its projections are sobering nonetheless.

• World demand for oil is expected to increase by 25% with 100% of this increase coming from non-OECD countries.
• World energy demand will expand by 45% in 2030, with coal accounting for more than a third of the overall rise.
• Non-hydro renewables (ie. wind, solar, geothermal, etc.) will be the fastest growing source of electricity increasing to 4% of total world power generation from 1% today.
• Global energy investment of $26 trillion, or more than $1 trillion/year, is needed, but the credit squeeze could delay spending, potentially setting up a supply-crunch once the economy recovers.
• Global energy-related CO2 emissions are projected to rise by 45% with 97% of the projected increase expected to come from non-OECD countries.

The largest driver of projected increases in demand for almost all energy sources is the significant growth expected from non-OECD (Organization for Economic Cooperation and Development) countries, specifically China and India.  Those two countries are projected to account for over half of the increase in world energy demand.  Moreover, all of the expected growth in demand for oil is projected to come from non-OECD countries, with 80% coming from China, India, and the Middle East alone.  World demand for coal is expected to increase causing its total share of world energy demand to rise from 26% to 29%.  The electricity sectors in China and India alone will account for 85% of that growth.  Additionally, 97% of the projected increase in energy-related CO2 emissions is expected to come from non-OECD countries - three-quarters from China, India, and the Middle East.

It's often difficult to understand how events occurring a world away in developing countries affect Americans.  But energy resources are global commodities, and increases in demand in one part of the world create upward pressure on global energy prices.  If we do not aggressively act to fully develop our domestic resources, we run the risk of losing access to our foreign competitors for many of the resources we depend on now.  This is another stark reminder that our nation must look at these future projections and adopt a comprehensive, long-term energy policy that ensures we have reliable access to clean, affordable, and diverse sources of energy.  The Institute outlined a path to accomplish this for President-elect Obama and the new Congress last month in our Transition Plan for Securing America's Energy Future.  Our work in the coming year will be to ensure this plan is implemented.  With your continued support and active involvement, we can do this. To view the Institute's nearly 90 energy policy recommendations, visit us at www.energyxxi.org.