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(MARK RALSTON/AFP/Getty Images)
(MARK RALSTON/AFP/Getty Images)

Economy Lab

Switch to renewables will take generations, not years Add to ...

Jock Finlayson is the executive vice-president, policy, for the Business Council of British Columbia



The latest world energy outlook released by the International Energy Agency is a useful reminder of the enduring place of fossil fuels in the global energy mix. Energy demand and supply patterns change only slowly, and moving away from existing carbon-intensive energy systems will take generations, not years. Despite widespread worries about climate change, there is little evidence that the global energy picture is about to be transformed within the next two decades.



According to the IEA, even if governments around the world fully deliver on the commitments they have made to reduce greenhouse gas emissions and phase out fossil fuel subsidies - a very big 'if' - world primary energy demand is set to increase by 36 per cent between 2008 and 2035. Moreover, fossil fuels account for more than half of the growth in overall energy use, with oil remaining the dominant source of energy (albeit its share diminishes over time). Global oil demand rises by 15 million barrels to reach 99 million barrels per day by 2035, with 100 per cent of the incremental demand coming from emerging economies. Among the OECD economies, demand actually drops by six million barrels per day.



Coal-fired electricity generation continues to expand on a world basis, even as dependence on coal declines in Europe, the U.S. and other advanced economies. The reason is continued growth in coal-fired generation in emerging markets, above all China. Indeed, the IEA's boffins estimate that the amount of new coal-fired generation capacity developed in China to 2035 will exceed the current installed capacity in the U.S., the EU and Japan collectively. King coal is far from dead, despite frequent pronouncements to the contrary from environmentalists and politicians.



This year's IEA outlook report shines a spotlight on the growing importance of natural gas in the global energy equation. While consumption actually fell in 2009 as the economic downturn took its toll, global natural gas demand is projected to climb by 44 per cent by 2035, outpacing that for other fossil fuels. This reflects the abundance of natural gas available around the world and its attractive economic, environmental and practical attributes - e.g., its relatively low cost and carbon-intensity, and the fact that gas-fired power plants can be built in close proximity to key population centres. Use of natural gas is expected to increase the fastest in China, but the IEA believes the fuel will also become more popular in many other markets.



What about the various renewable, carbon-free energy sources touted by environmentalists and supported by so many governments? With "new policies" in place, the IEA hopes that renewables will supply one-third of the world's electricity by 2035, up from 19 per cent today. Hydro-power and wind are the main drivers of this increase. But there is less scope to adopt renewables in other parts of the energy system. In transportation, for example, renewables might meet 8 per cent of world road transport fuel demand by 2035, compared to 3 per cent now; in the case of heat production in industry and for buildings, the IEA's "new policies" scenario looks to renewables to provide 16 per cent of world demand a quarter-century from now, compared to 10 per cent today.



All of this underscores the immense challenges involved in shifting energy systems away from existing fuel sources and infrastructure. It's hard to see how renewable energy can be expanded on the scale necessary to make a dent in global greenhouse gas emissions over the medium-term.

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