World Energy Report 2012: The Good, the Bad, and the Really, Truly Ugly

Posted on Nov 28, 2012

Keoni Cabral (CC BY 2.0)

By Michael T. Klare, TomDispatch

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But wait, suggests the IEA, there’s still one wild card hope out there: Iraq.  Yes, Iraq.  In the belief that the Iraqis will somehow overcome their sectarian differences, attain a high level of internal stability, establish a legal framework for oil production, and secure the necessary investment and technical support, the IEA predicts that its output will jump from 3.4 million barrels per day this year to 8 million barrels in 2035, adding an extra 4.6 million barrels to the global supply.  In fact, claims the IEA, this gain would represent half the total increase in world oil production over the next 25 years.  Certainly, stranger things have happened, but for the obvious reasons, it remains an implausible scenario. 

Add all this together—declining output from Russia and Saudi Arabia, continuing strife in Iraq, uncertain results elsewhere—and you get insufficient oil in the 2020s and 2030s to meet anticipated world demand.  From a global warming perspective that may be good news, but economically, without a massive increase in investment in alternate energy sources, the outlook is grim.  You don’t know what bad times are until you don’t have enough energy to run the machinery of civilization.  As suggested by the IEA, “Much is riding on Iraq’s success… Without this supply growth from Iraq, oil markets would be set for difficult times.”

Continuing Reliance on Fossil Fuels

For all the talk of the need to increase reliance on renewable sources of energy, fossil fuels—coal, oil, and natural gas—will continue to provide most of the additional energy supplies needed to satisfy soaring world demand.  “Taking all new developments and policies into account,” the IEA reported, “the world is still failing to put the global energy system onto a more sustainable path.”  In fact, recent developments seem to favor greater fossil-fuel reliance. 

In the United States, for instance, the increased extraction of oil and gas from shale formations has largely silenced calls for government investment in renewable technology.  In its editorial on the IEA report, for example, the Wall Street Journal ridiculed such investment.  It had, the Journal’s writers suggested, now become unnecessary due to the Saudi Arabian-style oil and gas boom to come.  “Historians will one day marvel that so much political and financial capital was invested in a [failed] green-energy revolution at the very moment a fossil fuel revolution was aborning,” they declared.

One aspect of this energy “revolution” deserves special attention. The growing availability of cheap natural gas, thanks to hydro-fracking, has already reduced the use of coal as a fuel for electrical power plants in the United States.  This would seem to be an obvious environmental plus, since gas produces less climate-altering carbon dioxide than does coal.  Unfortunately, coal output and its use haven’t diminished: American producers have simply increased their coal exports to Asia and Europe.  In fact, U.S. coal exports are expected to reach as high as 133 million tons in 2012, overtaking an export record set in 1981.

Despite its deleterious effects on the environment, coal remains popular in countries seeking to increase their electricity output and promote economic development.  Shockingly, according to the IEA, it supplied nearly half of the increase in global energy consumption over the last decade, growing faster than renewables.  And the agency predicts that coal will continue its rise in the decades ahead.  The world’s top coal consumer, China, will burn ever more of it until 2020, when demand is finally expected to level off.  India’s usage will rise without cessation, with that country overtaking the U.S. as the number two consumer around 2025.

In many regions, notes the IEA report, the continued dominance of fossil fuels is sustained by government policies.  In the developing world, countries commonly subsidize energy consumption, selling transportation, cooking, and heating fuels at below-market rates.  In this way, they hope to buffer their populations from rising commodity costs, and so protect their regimes from popular unrest.  Cutting back on such subsidies can prove dangerous, as in Jordan where a recent government decision to raise fuel prices led to widespread riots and calls for the monarchy’s abolition.  In 2011, such subsidies amounted to $523 billion globally, says the IEA, up almost 30% from 2010 and six times greater than subsidies for renewable energy.

No Hope for Averting Catastrophic Climate Change

Of all the findings in the 2012 edition of the World Energy Outlook, the one that merits the greatest international attention is the one that received the least.  Even if governments take vigorous steps to curb greenhouse gas emissions, the report concluded, the continuing increase in fossil fuel consumption will result in “a long-term average global temperature increase of 3.6 degrees C.”

This should stop everyone in their tracks.  Most scientists believe that an increase of 2 degrees Celsius is about all the planet can accommodate without unimaginably catastrophic consequences: sea-level increases that will wipe out many coastal cities, persistent droughts that will destroy farmland on which hundreds of millions of people depend for their survival, the collapse of vital ecosystems, and far more.  An increase of 3.6 degrees C essentially suggests the end of human civilization as we know it.

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