World Energy Outlook: 36% More by 2035

International Energy Agency (IEA) released its annual World Energy Outlook (WEO) yesterday. The 2010 edition tries to look at what the world will be using for energy by 2035. Interestingly, the chief WEO baseline is what the IEA calls "New Policies" which assumes that the nations of the world will cut their greenhouse gas emissions by the amounts they pledged at the end of the failed Copenhagen climate conference last year. Looking over the IEA fact sheets, a couple of issues caught my eye.

The WEO states that global fossil fuel subsidies totaled $312 billion in 2009, and that was down from $558 billion in 2008 when oil prices spiked. For a more detailed analysis, take a look at this really depressing International Monetary Fund round up of oil and gas subsidies (although I am not at all sure about how the IMF calculates what it calls additional "tax subsidies.") So, according to the IEA, how do the subsidies break out?

In 2009, oil products and natural gas were the most heavily subsidised fuels, attracting subsidies totalling $126 billion and $85 billion, respectively. Subsidies to electricity consumption were also significant, reaching $95 billion in 2009. At only $6 billion, coal subsidies were comparatively small. The vast majority of these subsidies are in non-OECD countries, which are projected to contribute 93% of incremental global energy demand to 2035 in the New Policies Scenario.

Naturally, dumping subsidies would mean that consumers and businesses would pay higher prices which would dampen demand. By how much?

WEO-2010 estimates that a universal phase-out of all fossil‑fuel consumption subsidies by 2020 — ambitious though it may be as an objective — would cut global primary energy demand by 5%, compared with a baseline in which subsidies remain unchanged....Oil demand would be cut by 4.7 mb/d by 2020, or around one-quarter of current US demand.

Hooray! Let's do it!

On the other hand, the IEA report holds disappointing news for renewable fuels boosters:

In the New Policies Scenario, renewables-based generation triples between 2008 and 2035 and the share of renewables in global electricity generation increases from 19% in 2008 to almost one-third (catching up with coal). The increase comes primarily from wind and hydropower, though hydropower remains dominant over the Outlook period. Electricity produced from solar photovoltaics increases very rapidly, though its share of global generation reaches only around 2% in 2035. The share of modern renewables in heat production in industry and buildings increases from 10% to 16%. The use of biofuels grows more than four-fold over the Outlook period, meeting 8% of road transport fuel demand by the end (up from 3% now).

And the IEA says that the renewables will need to be subsidized:

We estimate that government support worldwide in 2009 amounted to $37 billion for electricity from renewables and $20 billion for biofuels. In the New Policies Scenario, total support grows to $205 billion (in year-2009 dollars), or 0.17% of global GDP, by 2035. Over the Outlook period, 63% of the support goes to renewables-based electricity. ...

Globally, government support to biofuels is projected to rise to about $45 billion per year between 2010 and 2020, and $65 billion per year between 2021 and 2035. Government support typically raises costs to the economy as a whole.

But what if we assume the nations of the world agree to be more aggressive and decide to try to limit accumulated greenhouse gases in the atmosphere to the equivalent of 450 parts per million (ppm) of carbon dioxide. The current level is 388 ppm, up from the pre-industrial level of 280 ppm. How much would the world need to spend to follow that energy production and usage trajectory?

In the 450 Scenario in this year’s Outlook, the additional spending on low‑carbon energy technologies (business investment and consumer spending) amounts to nearly $18 trillion (in year- 2009 dollars) more than in the Current Policies Scenario, in which no new policies are assumed, in the period 2010‑2035. It is around $13.5 trillion more than in the New Policies Scenario.

I continue to hope that perhaps next year the IEA will concoct a scenario just for fun in which all energy subsidies are eliminated.

Finally, take a look at the IEA's projected global energy mix for 2035 below. World primary energy demand increases by 36% between 2008 and 2035, or 1.2% per year on average.

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  • Tman||

    Ron,

    Were there any details about nuclear power subsidies and how an increase in use of nuclear power could change these predictions for usage of fossil fuels?

  • ||

    Tman: Hmmm. Under the 450 Scenario, nuclear and renewables together produce 38 percent of the world's electricity in 2035. Got to be some subsidies in there somewhere.

  • waffles||

    That sounds super-optimistic and this is from someone who from time to time works on submitting new nuke construction and operating licenses. But hey! Subsidies are like free money for me!

  • Tman||

    Well, we know that there are subsidies for both, but that's the $64,000 question. Which gets more subsidies?

    I'm curious to see what Nuclear power is getting in terms of subsidies, in order to compare this with the capital costs of investing in new nuclear plants. My point being that government regulation is cost-prohibitive in terms of investments for new nuclear energy plants.

    By the way Ron, you should put a link to your excellent piece on Energy Futures anytime you bring up electricity and subsidies just so we can get the facts as they are known quickly available. Ideally this would deflate the spurious debates over what the numbers really are in terms of subsidies, thus making these debates less of a rehash of previously settled talking points.

  • Libertarian douche||

    My point being that government regulation is cost-prohibitive in terms of investments for new nuclear energy plants.

    Because why would we need to have regulations for nuclear power plants...

    We should just let the market sort that out. Nobody will want to buy power from a company whose reactors blow.

  • Tman||

    We should just let the market sort that out. Nobody will want to buy power from a company whose reactors blow.

    Nice strawman. That's not what I said. I didn't say there should be "no regulations".

    I said I believe that the current level of government regulation is cost prohibitive for investors in terms of designing plans for a new nuclear plant.

    Perhaps waffles, who says that he works on submitting new nuke construction and operating licenses might have a more specific perspective.

  • Montani Semper Liberi||

    Slight threadjack:

    Scientific American is conducting an opinion survey on global warming/climate change, and the results might be surprising for the resident statists among the commentariat.

  • ||

    The last two questions are ridiculous and couldn't be answered by a sane skeptic.

  • ||

    The last two questions are ridiculous and couldn't be answered by a sane skeptic.

    Yeah that Survey was terrible. I took it and had to lie simply because the answer i wanted to give was not in the choices...and it would not allow you to leave answers blank.

    It was a terrible and obvious Push Poll that either made you agree with all the global warming nonsense or you had to agree with complete strawman arguments that no skeptic believes.

    It is funny that the public choose to answer agreement with the strawman arguments rather then agree with the "global warming Consensus" though.

    People would rather choose intentionally stupid answers then choose the answers Scientific American wanted them to choose.

  • ||

    Fusion! Where's my fusion! [Looks out window and points] See? They have it on Sol!

  • ||

    [Looks out window and points] See? They have it on Sol!

    you are lucky...daylight savings has blocked the sun from life for the next 6 months.

  • MNG||

    When are we going to wake up and start meeting our energy needs with dilithium crystals? When we run out of them we can just get the Romulans to sell us artificial quantum singularity systems.

  • ||

    I thought we were moving towards an Unobtanium-based economy?

  • ||

    [Points out window to large fusion reactor about 93 million miles away].

  • waffles||

    you want to enslave the sun!? but it will kill us all!

  • waffles||

    you want to enslave the sun!? but it will kill us all!

  • ||

    It's just a big chariot. I can handle it.

  • AlmightyJB||

    You replace all of the workstations in peoples cubicles with stationary bikes hooked up to a generator which helps power the workstation. Free energy, free gym membership:)

  • ||

    +1

  • IceTrey||

    The solution to the world's energy needs has already been found, Liquid Fluoride Thorium Reactors (LFTR).

    http://energyfromthorium.com/

  • C'mon man||

    IceTrey,

    Have you ever considered looking into Liquid Fluoride Thorium Reactors? I've seen a few people comment on them.

  • Gilbert Martin||

    "(although I am not at all sure about how the IMF calculates what it calls additional "tax subsidies.")

    I would suspect it's in the same vein as leftists claiming "the rich" are getting "subdized" by some tax deduction or other - which is economic nonsense.

    The only way to prove anyone is getting "subsidized" by any government entity is to prove that the absolute dollar amount he pays in taxes is less than the absolute dollar value of the particular government services provided to him calculated on a user fee basis.

  • ||

    I suspect it has to do with things like depreciation allowances.

  • ||

    When your taxes are reduced, then everyone else's taxes must be raised to meet a given level of expenditures.

    Let's put it another way, what's the difference between me giving you a $1000 tax credit, or just a $1000 check. (assuming you have tax liabilities)

    But result in you getting $1000, and both result in the treasury having $1000 less.

    Both are subsidies.

  • ||

    In the 450 Scenario in this year’s Outlook, the additional spending on low‑carbon energy technologies (business investment and consumer spending) amounts to nearly $18 trillion (in year- 2009 dollars) more than in the Current Policies Scenario

    That's a little bit more than what Chad was claiming.

  • ||

    That's a little bit more than what Chad was claiming.

    Chad is the same idiot that claimed Greenland would melt and flood New York with 20 meters of sea water...

    Of course the IPCC which expects 3-6 degrees of warming claims the rise will be a few inches over the next 100 years.

    Both temperature rise and sea level rise for the last 30 years have been below IPCC estimates.

    With climate change Chad consistently finds an exaggerated claim and then exaggerates it even more by a factor of 10 or more.

  • Trueofvoice||

    If the Greenland ice sheet were to melt it WOULD raise sea level 20 meters.

  • Ecotretas||

    You should check out what the 312 billions really mean at http://ecotretas.blogspot.com/.....-2010.html

    Ecotretas

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