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In a global energy glut, what next for emissions?

Thanks to a boom in oil and gas from shale by around 2020, the United States is projected to become the largest global oil producer. That’s concerning for the environment.

The International Energy Agency has released its projection of the potential future picture of the energy sector. If you worry about having enough oil and gas to go round then the picture is pretty rosy; if you worry about the environment it’s extremely concerning.

Thanks to a boom in oil and gas from shale by around 2020, the United States is projected to become the largest global oil producer (overtaking Saudi Arabia until the mid-2020s). In addition, because the US is implementing quite stringent fuel economy regulatory standards, there is a continued fall in US oil imports to the extent that in conjunction with Canada’s oil sands, North America becomes a net oil exporter around 2030.

The chart from the IEA report illustrates US current net oil imports at about 9.5 million barrels per day (red dashed line). This then declines, due firstly to increased oil supply up to 2016 but from thereafter improved vehicle fuel efficiency (yellow area) becomes increasingly important, with biofuels and natural gas also playing a more minor role.

United States — causes of reduction in net oil imports¬†

However, while North America becomes more self-sufficient, on a global basis we become more dependent on the volatile OPEC nations, primarily in the Middle East. Output from OPEC countries rises, particularly after 2020, bringing the OPEC share in global production from its current 42% up towards 50% by 2035.

In particular oil markets will be heavily dependent on Iraq recovering from widespread sectarian violence and maintaining order as the IEA expects it will be the source of most of the growth in oil supply. Under its forecast, Iraq becomes the second-largest global exporter by the 2030s, overtaking Russia. According to the IEA: “Without this supply growth from Iraq, oil markets would be set for difficult times, characterised by prices that are almost $15/barrel higher than the level in the New Policies Scenario by 2035.”

Looking at renewables, the IEA projects that half of all new electricity generating capacity is based on renewable energy over the outlook to 2035. By 2015, renewables, including hydro, become the world’s second-largest source of power generation but still only about half that of coal. By 2035, renewables account for almost one-third of total electricity output and approach coal as the primary source of global electricity.

This growth is critically dependent on government’s maintaining policy support for renewables, with subsidies on a global basis growing from $88 billion in 2011 to around $240 billion in 2035. Nonetheless, these subsidies are still substantially smaller than those given to fossil fuels, which the IEA estimate were $523 billion in 2011.

Substantial growth in renewables is not enough to contain greenhouse gas emissions globally. Based on the IEA’s New Policies scenario, the OECD nations make major in-roads in reducing their emissions, but the emissions growth of poorer nations outstrips these reductions:

Energy-related CO2 emissions in selected countries and regions in the New Policies Scenario

The IEA warns if the globe is to contain temperature rise to around 2 degrees, almost four-fifths of the CO2 emissions allowable by 2035 are already locked in by existing power plants, factories, buildings, etc. If action to reduce CO2 emissions is not taken before 2017, all the allowable CO2 emissions would be locked-in by energy infrastructure existing at that time.

On a positive note, the IEA estimates tapping already economically viable and technically straightforward energy efficiency improvements could halve the growth in global primary energy demand to 2035. In addition, oil demand would decline before 2020 and by 2035 could be reduced by the equivalent of the entire current oil production of Russia and Norway combined.

This would enable energy related carbon dioxide emissions to peak before 2020, with a decline thereafter consistent with a long-term temperature increase of 3 degrees. In addition it would boost cumulative economic output to 2035 by $18 trillion.

Perhaps most importantly, it buys us more time to contain temperature rise below 2 degrees, pushing out to 2022 the point at which we need to stop adding further fossil fuel infrastructure, or otherwise end up with a bunch of expensive stranded assets.

*This article was originally published at Climate Spectator

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