IEA Supply Book Sees Ample Energy to 2020 and Beyond but "Massive" Investment Needed to Exploit it
(Buenos Aires) — 23 October 2001
The world has plenty of energy reserves to meet its needs for the next twenty years and for decades beyond.
But, while resources are ample, supply is not guaranteed. Mature oil reservoirs in OECD countries will soon peak and decline. Consumers will grow more dependent on a small number of Middle East oil suppliers. Huge infrastructure additions are needed to bring natural gas to market and to burn coal more cleanly. The cost of renewable energy sources must fall so that they can compete with fossil fuels. Fears about plant safety and waste disposal still inhibit the use of nuclear energy.
To meet these challenges and exploit the favourable reserves situation, massive investments will be required in infrastructure and technology.
These are the over-arching conclusions of a groundbreaking new study by the Paris-based International Energy Agency. Released today at the World Energy Congress in Buenos Aires, the book's formal title is "World Energy Outlook, 2001 Insights: Assessing Today's Supplies to Fuel Tomorrow's Growth" - or, less formally, "the supply book." Introducing the book to the world's energy press earlier today, Robert Priddle, the IEA's executive director, said: "I am proud to present what we believe will be an indispensable reference book for years to come."
Prepared by a team of 15 analysts from every part of the IEA and extensively reviewed by outside experts, the 421-page study considers all forms of energy - from biomass made of corn stubble to nuclear fission and fusion. It projects developments in each fuel under varying price and cost scenarios. It probes the new technologies that will help discover more reserves, render energy use more efficient and reduce energy-related damage to the world environment. The book is "fuel neutral" - no one energy source is recommended over another.
In an absolute first, "WEO 2001 Insights" contains material provided by the secretariat of the Organisation of Petroleum Exporting Countries - "A clear sign," said Mr. Priddle, "that the producer-consumer dialogue is moving briskly along."
The book, Mr. Priddle cautioned, is "much too rich to sum up in a few words." At the same time, it conveys a very clear message. "We have absolutely no reason to worry about 'running out of energy' in the coming decades," he said. "But all of us, producers and consumers alike, face some daunting short-term challenges. The energy resources to fuel the world's economy are in place; but to exploit them efficiently and sustainably, vast amounts of capital must be mobilised to locate, develop and deliver energy to the markets where it is needed."
"WEO 2001 Insights" calculates that hundreds of billions of dollars of new investment will be required to find and lift the abundant and cheap oil of the Middle East. Huge sums will be required to develop the oil wealth of the Former Soviet Union. In each case, foreign investment will be forthcoming only if the business climate in the host countries is congenial and only if oil prices guarantee investors a fair return on their money. Much the same is true of the earth's vast reserves of "unconventional oil" in Venezuela, Canada and elsewhere, which bid fair to supplement conventional oil in some energy services.
The past decade has seen an explosion in the discovery and use of natural gas. Competitive prices and heightened ecological concerns have made gas more desirable as a power-generation source. But gas reservoirs are often situated thousands of miles from markets, as in Latin America, requiring the construction of very long pipelines or the development of other transportation methods, such as Liquefied Natural Gas.
World coal reserves are sufficient to cover current demand for hundreds of years. The international coal market is competitive and growing. But if coal is to reach its full potential, new technologies must be applied to limit its emissions of carbon dioxide and other noxious gases.
"WEO 2001 Insights" pays particular attention to renewable energy sources, which include hydropower, wind and solar power, biomass, photovoltaic and hydrogen cells and tidal power. Several renewable energies are on the verge of becoming commercially competitive. Others have the potential to do so. The study urges increased public and private support for renewables research and development and for their wider deployment.
Availability of supply is not an issue in nuclear energy. Cheap and plentiful uranium, together with the plutonium produced by uranium use, could fuel nuclear plants for the foreseeable future. Here the issue is one of public acceptability. The study notes that some countries are planning to extend the life of existing nuclear plants. Others, which have built no new plants in decades, are reconsidering the nuclear option.
In its innovative final chapter, the study considers energy supply development in the years beyond 2020. It sketches a fascinating picture in which new technologies and new infrastructure will have transformed the energy world into something quite unrecognisable today. Better mining and manufacturing techniques will have expanded the availability of fossil fuels and other technologies will have sharply reduced their noxious side effects.
Some, if not all, renewable energies will have entered the market and been deployed worldwide. Diversification of supply, both geographically and by the use of a wider spectrum of fuels, will have produced a much more secure energy world.