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Renewable Energy Highlights and Commentary

In Part I, I presented the notes on renewable energy that I took as I read through the 2008 International Energy Agency (IEA) World Energy Outlook. Here in Part II, I organize those notes, and then provide some general comments and conclusions. I am now offline for a few days. Happy holidays to those who celebrate Thanksgiving.

————————-

As I read through the 2008 International Energy Agency (IEA) World Energy Outlook, I had the distinct impression that I was reading contributions from people with completely opposite points of view. The pessimist warned that we are facing a supply crunch and much higher prices. The optimist in the report said that oil production won’t peak before 2030.

This trend held in the section on renewable energy. The optimist noted that renewable energy is expected to ramp “expand rapidly.” The pessimist noted that biofuels are predicted to only supply 5% of our road transport fuel in 2030. And so the report goes, part rampant optimism and part rampant pessimism.

I guess the good news then is that there is something in there that will appeal to everyone, regardless of your outlook. The bad news? The claims that are directly opposed to your views will have you questioning the credibility of the report. And if you are like me – and note that between last year’s report and this year’s report they dropped their 2030 oil demand forecast by 10 million bpd – you are left wondering whether there is any credibility at all in forecasts that far out.

But for what’s worth, here’s what the IEA had to say about renewable energy.

Report Highlights

World energy demand is forecast to grow from 11,730 Mtoe (million metric tons of oil equivalents) in 2006 to 17,010 Mtoe in 2030. Fossil fuels, with oil as the primary source, will account for 80% of energy used in 2030.

China and India will be responsible for over half of the increased energy demand between now and 2030. Global demand for oil (excluding biofuels) is forecast to rise from 85 million bpd in 2007 to 106 million bpd in 2030. This forecast was revised downward by 10 million bpd since last year’s forecast.

World demand for electricity forecast to rise from 15,665 TWh in 2006 to 28,141 TWh in 2030. Renewable energy will displace gas to become the second largest producer of electrical energy by 2015, but will still lag far behind coal. For OECD countries, the increase in renewable electricity is greater than the increase in electricity from fossil fuels and nuclear. The share of nuclear power in the world energy mix falls from 6% in 2008 to 5% in 2030.

Electricity generation from PV and CSP in 2030 is forecast to be 245 TWh and 107 TWh, respectively. Solar PV will continue to have the highest investment cost of all commercially deployed renewable energy sources.

Geothermal and wave technologies are forecast to produce 180 TWh and 14 TWh of electricity in 2030. Over 860 TWh of electricity from biomass is forecast to be produced in 2030. Present conversion of biomass to electricity is at 20% efficiency.

Global output of wind power is forecast to grow from 130 TWh in 2006 to more than 660 TWh in 2015 to 1,490 TWh in 2030. It will become the 2nd largest source of renewable electricity (after hydropower) by 2010. Potential for hydropower in non-OECD countries is still large. Most good sites in OECD countries have been utilized.

Energy storage is rarely the cheapest way of dealing with variability of wind and solar power, but several next generation storage technologies are under development. These include ultracapacitors, superconducting magnetic systems, and vanadium redox batteries. Electrolysis to produce hydrogen, later used in fuel cells on demand is an option, but the overall efficiency is only 40%.

Carbon dioxide emissions from coal combustion are forecast to rise from 11.7 billion metric tons in 2006 to 18.6 billion metric tons in 2030. The ability of carbon sequestration to limit carbon dioxide emissions by 2030 is limited.

The reference scenario presumes that by 2030 the U.S. will only meet 40% of the biofuel mandate set in 2007. In Brazil, biofuels are projected to account for 28% of road-transport fuel demand by 2030. The present amount supplied is equivalent to 13% of road-transport fuel demand. Demand for biodiesel is expected to grow faster than demand for ethanol.

Biofuels in 2006 provided the equivalent of 0.6 million bpd, representing around 1.5% of global road transport fuel demand. The United States is the largest user of biofuels, and most of the recent growth has been in the U.S.

The share of biofuels in road transport fuels is forecast to grow from 1.5% in 2006 to 5% (3.2 million bpd) in 2030. Second generation biofuels based on lignocellulosic biomass, converted via enzyme hydrolysis or biomass gasification (BTL) are expected to become commercially viable. However, the contribution will be minor, and not until after 2020. Capital costs for cellulosic ethanol are “significantly more” than sugarcane or grain-based facilities. As a result, full commercialization hinges on “major cost reductions.”

The United States and Brazil both export soybean biodiesel to the EU. Some countries are beginning to scale back their biofuels policies due to concerns about environmental sustainability. Shortages of water availability will be a potential constraint for further expansion of biofuels.

Most biomass will still come from agricultural and forestry residues in 2030, but a growing portion will come from biomass farmed for biofuels. A growing share of biomass is also projected to fuel combined heat and power (CHP) plants.

There is considerable room for growth of solar water heating (water heating consumes 20% of all residential energy consumption). China currently has 60% of the world’s installed solar water heating capacity. Solar water and space heating projected to grow from 7.6 Mtoe in 2006 to 45 Mtoe in 2030.

Hybrid vehicles are commercially viable today; electric vehicles have yet to gain traction. Electric vehicle technology is advancing rapidly, but further improvements in storage technology are needed for efficiency and cost improvements. Long term, electric hybrids, fully electric vehicles, and fuel cell vehicles have the most potential for minimizing the need for oil-based fuels. In the very long term – projecting out to 2050 – fuel cell vehicles are forecast to make up 33% to 50% of new vehicle sales in the OECD.

Cumulative investment in renewable energy between 2007 and 2030 is projected to be $5.5 trillion, with 60% of that for electricity generation.

Commentary

The report reiterates the points I have argued on numerous occasions: Biofuels will not scale up to produce more than a small fraction of our fuel demand, and even then with potentially serious consequences. While the report spreads the blame for higher food prices on a combination of competition with biofuels, higher energy prices, poor harvests, and various agricultural policies, it correctly identifies water as a (highly underrated) issue in the future scaling of biofuels. On the other hand, the report identifies Latin America and Africa as regions with the potential for boosting biomass production by modernizing farming techniques.

I think the report correctly identifies renewable electricity and renewable heating (especially solar water heating) as areas poised for growth. However, it also predicts that carbon dioxide emissions will continue to rise. This was a controversial issue I tackled earlier in the year, when I predicted “we won’t collectively do anything that will reduce worldwide greenhouse gas emissions.”

The following figure was very interesting to me:

This figure suggests that by 2030, the cost for solar PV and CSP will still be higher than all other renewable technologies are today. And not just a little higher; solar PV is predicted to be twice as expensive in 2030 as hydro and onshore wind are today. So much for Moore’s Law applying to solar PV.

However the nagging issue for me is the credibility of the predictions. How much stock can I put into the renewable energy predictions from an agency that thinks oil production won’t peak until 2030, and that demand will exceed 100 million bpd (contrary to the opinions of two Big Oil executives)?

Conclusions

The renewable energy portion was a tale of two technologies: Renewable electricity and renewable biofuels. Renewable electricity is forecast to grow rapidly, and make up an increasing portion of electricity supplies. The share of nuclear power falls, but coal usage is projected to rise 60% by 2030 (with 90% of that increase in non-OECD countries). The expected increase in coal usage helps explain why greenhouse gas emissions are forecast to continue rising.

Renewable biofuels, by contrast, are forecast to still make a very small contribution to overall road transport fuel by 2030. Cellulosic ethanol will be slow to be commercialized, and the contribution to fuel supplies by 2030 is small. Concerns about negative externalities will grow, and the impact of biofuel production on water supplies will be hotly debated.

November 26, 2008 Posted by | alternative energy, biomass, iea, weo | 48 Comments

Renewable Energy Highlights and Commentary

In Part I, I presented the notes on renewable energy that I took as I read through the 2008 International Energy Agency (IEA) World Energy Outlook. Here in Part II, I organize those notes, and then provide some general comments and conclusions. I am now offline for a few days. Happy holidays to those who celebrate Thanksgiving.

————————-

As I read through the 2008 International Energy Agency (IEA) World Energy Outlook, I had the distinct impression that I was reading contributions from people with completely opposite points of view. The pessimist warned that we are facing a supply crunch and much higher prices. The optimist in the report said that oil production won’t peak before 2030.

This trend held in the section on renewable energy. The optimist noted that renewable energy is expected to ramp “expand rapidly.” The pessimist noted that biofuels are predicted to only supply 5% of our road transport fuel in 2030. And so the report goes, part rampant optimism and part rampant pessimism.

I guess the good news then is that there is something in there that will appeal to everyone, regardless of your outlook. The bad news? The claims that are directly opposed to your views will have you questioning the credibility of the report. And if you are like me – and note that between last year’s report and this year’s report they dropped their 2030 oil demand forecast by 10 million bpd – you are left wondering whether there is any credibility at all in forecasts that far out.

But for what’s worth, here’s what the IEA had to say about renewable energy.

Report Highlights

World energy demand is forecast to grow from 11,730 Mtoe (million metric tons of oil equivalents) in 2006 to 17,010 Mtoe in 2030. Fossil fuels, with oil as the primary source, will account for 80% of energy used in 2030.

China and India will be responsible for over half of the increased energy demand between now and 2030. Global demand for oil (excluding biofuels) is forecast to rise from 85 million bpd in 2007 to 106 million bpd in 2030. This forecast was revised downward by 10 million bpd since last year’s forecast.

World demand for electricity forecast to rise from 15,665 TWh in 2006 to 28,141 TWh in 2030. Renewable energy will displace gas to become the second largest producer of electrical energy by 2015, but will still lag far behind coal. For OECD countries, the increase in renewable electricity is greater than the increase in electricity from fossil fuels and nuclear. The share of nuclear power in the world energy mix falls from 6% in 2008 to 5% in 2030.

Electricity generation from PV and CSP in 2030 is forecast to be 245 TWh and 107 TWh, respectively. Solar PV will continue to have the highest investment cost of all commercially deployed renewable energy sources.

Geothermal and wave technologies are forecast to produce 180 TWh and 14 TWh of electricity in 2030. Over 860 TWh of electricity from biomass is forecast to be produced in 2030. Present conversion of biomass to electricity is at 20% efficiency.

Global output of wind power is forecast to grow from 130 TWh in 2006 to more than 660 TWh in 2015 to 1,490 TWh in 2030. It will become the 2nd largest source of renewable electricity (after hydropower) by 2010. Potential for hydropower in non-OECD countries is still large. Most good sites in OECD countries have been utilized.

Energy storage is rarely the cheapest way of dealing with variability of wind and solar power, but several next generation storage technologies are under development. These include ultracapacitors, superconducting magnetic systems, and vanadium redox batteries. Electrolysis to produce hydrogen, later used in fuel cells on demand is an option, but the overall efficiency is only 40%.

Carbon dioxide emissions from coal combustion are forecast to rise from 11.7 billion metric tons in 2006 to 18.6 billion metric tons in 2030. The ability of carbon sequestration to limit carbon dioxide emissions by 2030 is limited.

The reference scenario presumes that by 2030 the U.S. will only meet 40% of the biofuel mandate set in 2007. In Brazil, biofuels are projected to account for 28% of road-transport fuel demand by 2030. The present amount supplied is equivalent to 13% of road-transport fuel demand. Demand for biodiesel is expected to grow faster than demand for ethanol.

Biofuels in 2006 provided the equivalent of 0.6 million bpd, representing around 1.5% of global road transport fuel demand. The United States is the largest user of biofuels, and most of the recent growth has been in the U.S.

The share of biofuels in road transport fuels is forecast to grow from 1.5% in 2006 to 5% (3.2 million bpd) in 2030. Second generation biofuels based on lignocellulosic biomass, converted via enzyme hydrolysis or biomass gasification (BTL) are expected to become commercially viable. However, the contribution will be minor, and not until after 2020. Capital costs for cellulosic ethanol are “significantly more” than sugarcane or grain-based facilities. As a result, full commercialization hinges on “major cost reductions.”

The United States and Brazil both export soybean biodiesel to the EU. Some countries are beginning to scale back their biofuels policies due to concerns about environmental sustainability. Shortages of water availability will be a potential constraint for further expansion of biofuels.

Most biomass will still come from agricultural and forestry residues in 2030, but a growing portion will come from biomass farmed for biofuels. A growing share of biomass is also projected to fuel combined heat and power (CHP) plants.

There is considerable room for growth of solar water heating (water heating consumes 20% of all residential energy consumption). China currently has 60% of the world’s installed solar water heating capacity. Solar water and space heating projected to grow from 7.6 Mtoe in 2006 to 45 Mtoe in 2030.

Hybrid vehicles are commercially viable today; electric vehicles have yet to gain traction. Electric vehicle technology is advancing rapidly, but further improvements in storage technology are needed for efficiency and cost improvements. Long term, electric hybrids, fully electric vehicles, and fuel cell vehicles have the most potential for minimizing the need for oil-based fuels. In the very long term – projecting out to 2050 – fuel cell vehicles are forecast to make up 33% to 50% of new vehicle sales in the OECD.

Cumulative investment in renewable energy between 2007 and 2030 is projected to be $5.5 trillion, with 60% of that for electricity generation.

Commentary

The report reiterates the points I have argued on numerous occasions: Biofuels will not scale up to produce more than a small fraction of our fuel demand, and even then with potentially serious consequences. While the report spreads the blame for higher food prices on a combination of competition with biofuels, higher energy prices, poor harvests, and various agricultural policies, it correctly identifies water as a (highly underrated) issue in the future scaling of biofuels. On the other hand, the report identifies Latin America and Africa as regions with the potential for boosting biomass production by modernizing farming techniques.

I think the report correctly identifies renewable electricity and renewable heating (especially solar water heating) as areas poised for growth. However, it also predicts that carbon dioxide emissions will continue to rise. This was a controversial issue I tackled earlier in the year, when I predicted “we won’t collectively do anything that will reduce worldwide greenhouse gas emissions.”

The following figure was very interesting to me:

This figure suggests that by 2030, the cost for solar PV and CSP will still be higher than all other renewable technologies are today. And not just a little higher; solar PV is predicted to be twice as expensive in 2030 as hydro and onshore wind are today. So much for Moore’s Law applying to solar PV.

However the nagging issue for me is the credibility of the predictions. How much stock can I put into the renewable energy predictions from an agency that thinks oil production won’t peak until 2030, and that demand will exceed 100 million bpd (contrary to the opinions of two Big Oil executives)?

Conclusions

The renewable energy portion was a tale of two technologies: Renewable electricity and renewable biofuels. Renewable electricity is forecast to grow rapidly, and make up an increasing portion of electricity supplies. The share of nuclear power falls, but coal usage is projected to rise 60% by 2030 (with 90% of that increase in non-OECD countries). The expected increase in coal usage helps explain why greenhouse gas emissions are forecast to continue rising.

Renewable biofuels, by contrast, are forecast to still make a very small contribution to overall road transport fuel by 2030. Cellulosic ethanol will be slow to be commercialized, and the contribution to fuel supplies by 2030 is small. Concerns about negative externalities will grow, and the impact of biofuel production on water supplies will be hotly debated.

November 26, 2008 Posted by | alternative energy, biomass, iea, weo | 47 Comments

The 2008 IEA WEO – Renewable Energy Highlights

I am working on an essay on the renewable energy portion of the recently released 2008 IEA World Energy Outlook. In Part I, I merely present some of the highlights of the report (actually the notes I jotted down as I read it). Part II will involve more commentary and analysis. Note that these are the IEA projections, and do not necessarily reflect my opinion.

Report Highlights

World energy demand is projected to grow from 11,730 Mtoe (million metric tons of oil equivalents) in 2006 to 17,010 Mtoe in 2030.

Fossil fuels, with oil as the primary source, will account for 80% of energy used in 2030.

China and India will be responsible for over half of the increased energy demand between now and 2030.

Global demand for oil (excluding biofuels) is forecast to rise from 85 million bpd in 2007 to 106 million bpd in 2030. This forecast was revised downward by 10 million bpd since last year’s forecast.

Solar PV has the highest investment cost of all commercially deployed renewable energy sources.

The share of nuclear power in the world energy mix falls from 6% in 2008 to 5% in 2030.

Renewable energy will displace natural gas to become the second largest producer of electrical energy by 2015, but will still lag far behind coal

Carbon dioxide emissions from coal combustion are forecast to rise from 11.7 billion metric tons in 2006 to 18.6 billion metric tons in 2030.

The ability of carbon sequestration to limit carbon dioxide emissions by 2030 is limited.

Biomass, geothermal, and solar thermal are forecast to grow from 6% of total global heating demand in 2006 to 7% in 2030.

Global output of wind power is forecast to grow eleven-fold by 2030, and become the 2nd largest source of renewable electricity (after hydropower) by 2010.

The share of biofuels in road transport fuels is forecast to grow from 1.5% in 2006 to 5% in 2030. Second generation biofuels (e.g., cellulosic ethanol) will make a very small contribution by 2030.

Shortages of water availability are a potential constraint for further expansion of biofuels.

Most biomass will still come from agriculture and forestry residues in 2030, but a growing portion will come from biomass farmed for biofuels.

A growing share of biomass is projected to fuel combined heat and power (CHP) plants.

Latin America and Africa are regions that can boost agricultural production by modernizing farming techniques.

Renewable-based electricity is forecast to grow dramatically. Most of the increase is expected to come from hydro and onshore wind power.

For OECD countries, the increase in renewable electricity is greater than the increase in electricity from fossil fuels and nuclear.

Costs for renewable power expected to continue to fall.

Potential for hydropower in non-OECD countries is still large. Most good sites in OECD countries have been utilized.

Global wind power expected to increase from 130 TWh in 2006 to more than 660 TWh in 2015 to 1,490 TWh in 2030.

Energy storage is rarely the cheapest way of dealing with variability, but several next generation storage technologies are under development. These include ultracapacitors, superconducting magnetic systems, and vanadium redox batteries.

Electrolysis to produce hydrogen, later used in fuel cells on demand is an option, but the overall efficiency is only 40%.

World demand for electricity forecast to rise from 15,665 TWh in 2006 to 28,141 TWh in 2030.

Electricity generation from PV and CSP in 2030 is forecast to be 245 TWh and 107 TWh, respectively.

Geothermal and wave technologies are forecast to produce 180 TWh and 14 TWh in 2030.

Over 860 TWh of electricity from biomass is forecast to be produced in 2030. Present conversion of biomass to electricity is at 20% conversion efficiency.

Biofuels in 2006 provided the equivalent of 0.6 million bpd, representing around 1.5% of global road transport fuel demand. The United States is the largest user of biofuels, and most of the recent growth has been in the U.S.

In 2030, total biofuel supply is expected to be 3.2 million bpd, amounting to only 5% of worldwide demand.

Reference scenario presumes that by 2030 the U.S. will only meet 40% of the biofuel mandate set in 2007.

In Brazil, biofuels are projected to account for 28% of road-transport fuel demand by 2030. The present amount supplied is equivalent to 13% of road-transport fuel demand.

Demand for biodiesel is expected to grow faster than demand for ethanol.

Second generation biofuels based on lignocellulosic biomass, converted via enzyme hydrolysis or biomass gasification (BTL) are expected to become commercially viable. However, the contribution will be minor, and not until after 2020.

Some countries are beginning to scale back their biofuels policies due to concerns about environmental sustainability.

Food prices are being driven by a combination of competition with biofuels, higher energy prices, poor harvests, and various agricultural policies.

The United States and Brazil both export soybean biodiesel to the EU.

Capital costs for cellulosic ethanol are “significantly more” than sugarcane or grain-based facilities. As a result, full commercialization hinges on “major cost reductions.”

There is considerable room for growth of solar water heating (water heating consumes 20% of all residential energy consumption).

China currently has 60% of the world’s installed solar water heating capacity.

Solar water and space heating projected to grow from 7.6 Mtoe in 2006 to 45 Mtoe in 2030.

Cumulative investment in renewable energy between 2007 and 2030 is projected to be $5.5 trillion, with 60% of that for electricity generation.

November 24, 2008 Posted by | alternative energy, biomass, iea, weo | 30 Comments

World Energy Outlook 2008 Released

Today the International Energy Agency (IEA) released their much anticipated (and previously leaked) World Energy Outlook 2008. The full report costs €150, but there is a lot of publicly available information on their website. They have a presentation for the press, an executive summary, and key graphs available. I will comment in more detail after I have had time to read through the report.

A preliminary look appears to me to be a full-fledged endorsement of the possibilities of peak lite. Reuters has more on that:

Credit crisis adds to risk of oil supply crunch

The agency’s World Energy Outlook for 2008 stopped short of sounding the alarm that oil supplies may have peaked, but highlighted obstacles to accessing new fields that include the increasing dominance of national oil companies.

The gap between what was being built in terms of new capacity and what would be needed to keep pace with demand was set to widen sharply after 2010, the IEA said.

More later, but for now here is the press release that accompanied the report:

New Energy Realities – WEO Calls for Global Energy Revolution Despite Economic Crisis

12 November 2008 London —

“We cannot let the financial and economic crisis delay the policy action that is urgently needed to ensure secure energy supplies and to curtail rising emissions of greenhouse gases. We must usher in a global energy revolution by improving energy efficiency and increasing the deployment of low-carbon energy,” said Nobuo Tanaka, Executive Director of the International Energy Agency (IEA) today in London at the launch of the World Energy Outlook (WEO) 2008 – the latest edition of the annual IEA flagship publication. The WEO-2008 provides invaluable analysis to help policy makers around the world assess and address the challenges posed by worsening oil supply prospects, higher energy prices and rising emissions of greenhouse gases.

In the WEO-2008 Reference Scenario, which assumes no new government policies, world primary energy demand grows by 1.6% per year on average between 2006 and 2030 – an increase of 45%. This is slower than projected last year, mainly due to the impact of the economic slowdown, prospects for higher energy prices and some new policy initiatives. Demand for oil rises from 85 million barrels per day now to 106 mb/d in 2030 – 10 mb/d less than projected last year. Demand for coal rises more than any other fuel in absolute terms, accounting for over a third of the increase in energy use. Modern renewables grow most rapidly, overtaking gas to become the second-largest source of electricity soon after 2010. China and India account for over half of incremental energy demand to 2030 while the Middle East emerges as a major new demand centre. The share of the world’s energy consumed in cities grows from two-thirds to almost three-quarters in 2030. Almost all of the increase in fossil-energy production occurs in non-OECD countries. These trends call for energy-supply investment of $26.3 trillion to 2030, or over $1 trillion/year. Yet the credit squeeze could delay spending, potentially setting up a supply-crunch that could choke economic recovery.

“Current trends in energy supply and consumption are patently unsustainable – environmentally, economically and socially – they can and must be altered”, said Nobuo Tanaka. “Rising imports of oil and gas into OECD regions and developing Asia, together with the growing concentration of production in a small number of countries, would increase our susceptibility to supply disruptions and sharp price hikes. At the same time, greenhouse-gas emissions would be driven up inexorably, putting the world on track for an eventual global temperature increase of up to 6°C.”

In addition to providing a comprehensive update of long-term energy projections to 2030, WEO-2008 takes a detailed look at the prospects for oil and gas production. Oil will remain the world’s main source of energy for many years to come, even under the most optimistic of assumptions about the development of alternative technology. But the sources of oil, the cost of producing it and the prices that consumers will have to pay for it are extremely uncertain. “One thing is certain”, stated Mr. Tanaka, “while market imbalances will feed volatility, the era of cheap oil is over”.

“A sea change is underway in the upstream oil and gas industry with international oil companies facing dwindling opportunities to increase their reserves and production. In contrast, national companies are projected to account for about 80% of the increase of both oil and gas production to 2030”, said Mr. Tanaka. But it is far from certain that these companies will be willing to make this investment themselves or to attract sufficient capital to keep up the necessary pace of investment. Upstream investment has been rising rapidly in the last few years, but much of the increase is due to surging costs. Expanding production in the lowest-cost countries – most of them in OPEC – will be central to meeting the world’s oil needs at reasonable cost.

The prospect of accelerating declines in production at individual oilfields is adding to these uncertainties. The findings of an unprecedented field-by-field analysis of the historical production trends of 800 oilfields indicate that decline rates are likely to rise significantly in the long term, from an average of 6.7% today to 8.6% in 2030. “Despite all the attention that is given to demand growth, decline rates are actually a far more important determinant of investment needs. Even if oil demand was to remain flat to 2030, 45 mb/d of gross capacity – roughly four times the current capacity of Saudi Arabia – would need to be built by 2030 just to offset the effect of oilfield decline”, Mr. Tanaka added.

WEO-2008 also analyses policy options for tackling climate change after 2012, when a new global agreement – to be negotiated at the UN Conference of the Parties in Copenhagen next year – is due to take effect. This analysis assumes a hybrid policy approach, comprising a plausible combination of cap-and-trade systems, sectoral agreements and national measures. On current trends, energy-related CO2 emissions are set to increase by 45% between 2006 and 2030, reaching 41 Gt. Three-quarters of the increase arises in China, India and the Middle East, and 97% in non-OECD countries as a whole.

Stabilising greenhouse gas concentration at 550 ppm of CO2-equivalent, which would limit the temperature increase to about 3°C, would require emissions to rise to no more than 33 Gt in 2030 and to fall in the longer term. The share of low-carbon energy – hydropower, nuclear, biomass, other renewables and fossil-fuel power plants equipped with carbon capture and storage (CCS) – in the world primary energy mix would need to expand from 19% in 2006 to 26% in 2030. This would call for $4.1 trillion more investment in energy-related infrastructure and equipment than in the Reference Scenario – equal to 0.2% of annual world GDP. Most of the increase is on the demand side, with $17 per person per year spent worldwide on more efficient cars, appliances and buildings. On the other hand, improved energy efficiency would deliver fuel-cost savings of over $7 trillion.

The scale of the challenge in limiting greenhouse gas concentration to 450 ppm of CO2-eq, which would involve a temperature rise of about 2°C, is much greater. World energy-related CO2 emissions would need to drop sharply from 2020 onwards, reaching less than 26 Gt in 2030. “We would need concerted action from all major emitters. Our analysis shows that OECD countries alone cannot put the world onto a 450-ppm trajectory, even if they were to reduce their emissions to zero”, Mr. Tanaka warned. Achieving such an outcome would require even faster growth in the use of low-carbon energy – to account for 36% of global primary energy mix by 2030. In this case, global energy investment needs are $9.3 trillion (0.6% of annual world GDP) higher; fuel savings total $5.8 trillion.

WEO-2008 demonstrates that measures to curb CO2 emissions will also improve energy security by reducing global fossil-fuel energy use. But the world’s major oil producers should not be alarmed. “Even in the 450 Policy Scenario, OPEC production will need to be 12 mb/d higher in 2030 than today.” Mr. Tanaka noted. “It is clear that the energy sector will have to play the central role in tackling climate change. The analysis set out in this Outlook will provide a solid basis for all countries seeking to negotiate a new global climate deal in Copenhagen.”

November 12, 2008 Posted by | iea, Peak Lite, Peak Oil | 91 Comments

IEA Report Leaked

Update: IEA Dismayed Over Leaked Report (says final version to be released on November 12th).

——————

A much anticipated report from the International Energy Agency (IEA), World Energy Outlook, has been obtained in draft by Financial Times. The headline says it all:

World will struggle to meet oil demand

Output from the world’s oilfields is declining faster than previously thought, the first authoritative public study of the biggest fields shows.

Without extra investment to raise production, the natural annual rate of output decline is 9.1 per cent, the International Energy Agency says in its annual report, the World Energy Outlook, a draft of which has been obtained by the Financial Times.

The findings suggest the world will struggle to produce enough oil to make up for steep declines in existing fields, such as those in the North Sea, Russia and Alaska, and meet long-term de­mand. The effort will become even more acute as prices fall and investment decisions are delayed.

And while they have slashed their consumption forecasts for 2030, they still look incredibly optimistic to me:

The IEA predicted in its draft report, due to be published next month, that demand would be damped, “reflecting the impact of much higher oil prices and slightly slower economic growth”.

It expects oil consumption in 2030 to reach 106.4m barrels a day, down from last year’s forecast of 116.3m b/d.

It’s not just me who thinks that consumption number looks far too high. A year ago Total CEO Christophe de Margerie and ConocoPhillips CEO Jim Mulva were both quoted as saying those numbers didn’t look achievable (as reported on here). Here’s Mulva:

ConocoPhillips (COP) Chief Executive James Mulva had earlier told a New York financial conference that he doubted that world oil producers would be able to meet forecast long-term energy demand growth. The International Energy Agency, the energy watchdog for western economies, has projected 2030 world oil demand of 116 million barrels a day. But Mulva said he doesn’t believe oil supply will ever exceed 100 million barrels a day. He didn’t offer a price forecast.

“Demand will be going up, but it will be constrained by supply,” Mulva said. “I don’t think we are going to see the supply going over 100 million barrels a day and the reason is: Where is all that going to come from?”

The increased consumption, the IEA predicts, will come from emerging countries. Demand in developed countries is expected to fall.

A related article in FT has more:

Investment key to meeting oil demand

“Saudi Arabia remains the world’s largest oil producer throughout the projection period, its production climbing from 10.2m b/d in 2007 to 15.7m b/d in 2030,” the report says. “Its willingness and ability to make timely investments in oil production capacity will be a key determinant of future oil price trends.”

While I have stated many times that I don’t think Saudi has peaked – and I think they have a lot of oil left to produce – I have read comments from the Saudis themselves that say these projections of 15 million bpd are sheer fantasy.

Finally, there’s this nugget:

The draft report has found that the planet is far from running out of oil, as some so-called “peak oil” theorists argued. But it also finds that output from the world’s oil fields, some of them discovered more than 30 years ago, is declining much faster than previously thought. That means the oil industry will need to invest more than expected.

This business about “running out of oil” is a gross mischaracterization. The fact is we could peak and not run out of oil for a hundred years. Peak oil does not mean “running out of oil”, and it is this misunderstanding that has helped prevent the public from absorbing the potential implications of peak oil. “Peak oil? Nah, we have plenty of oil.” Of course we do have plenty of oil. The question is whether supply can continue to grow. And I think we are nearing the end of supply growth. How that plays out is one of the things we spend a lot of time debating here.

As soon as I get a chance I want to write up something on OPEC mismanagement, and the problems that poses for the world economy. They have announced deep cuts, and are contemplating deeper cuts. These are the sorts of cuts that helped the big price run-up, so if OPEC maintains discipline we may be headed back up the roller coaster by next summer.

October 29, 2008 Posted by | iea, oil consumption, oil production, Peak Oil | 431 Comments

My ASPO Slides are Available

I just learned today that the two presentations I made at this year’s ASPO conference are now available. The slides are pretty self-explanatory, but they only served as background for the talk so people could read through them as I made my points. I intend to write up my notes and post them as time allows.

First up, the slides I presented on the energy information agencies:

The Energy Information Providers

Here is a sample slide from that presentation:

Second was my presentation on biofuels:

Biofuels: Facts and Fallacies

A couple of sample slides from that presentation:

If they make the video available, I will post that link as well.

September 27, 2008 Posted by | ASPO, biofuels, cera, EIA, iea | 18 Comments

My ASPO Slides are Available

I just learned today that the two presentations I made at this year’s ASPO conference are now available. The slides are pretty self-explanatory, but they only served as background for the talk so people could read through them as I made my points. I intend to write up my notes and post them as time allows.

First up, the slides I presented on the energy information agencies:

The Energy Information Providers

Here is a sample slide from that presentation:

Second was my presentation on biofuels:

Biofuels: Facts and Fallacies

A couple of sample slides from that presentation:

If they make the video available, I will post that link as well.

September 27, 2008 Posted by | ASPO, biofuels, cera, EIA, iea | 137 Comments

Outline for ASPO Talks

I am scheduled to deliver two presentations at this year’s ASPO conference in Sacramento. You can see the agenda overview here. I will be speaking on the EIA, IEA and CERA on the 21st, and then I have a presentation on biofuels scheduled for the 23rd.

For the first talk, the draft of my slides is heavily slanted toward the EIA. I will discuss what they do well (in my opinion they are the best source of energy data around) and what they historically haven’t done so well (forecast). I will also devote some space to This Week in Petroleum.

For the biofuels talk, my slides are roughed out. Below is the outline. If you think I missed something important, let me know. I only have about 20 minutes, so I will be limited to 20-30 slides. I want to cover a lot of ground, which means I can’t delve too deeply.

Here is the outline of what I have prepared. Comments or suggestions are welcome:

Stacking up the contenders

•Ethanol
– Crop-based (corn, sugarcane)
– Cellulosic and Lignocellulosic (gasification)
•Diesel
– Biodiesel
– Green diesel (hydrocracked, Fischer-Tropsch)
•Miscellaneous
– LS9
– DME
– Butanol

Can we emulate Brazil?

•The truth about Brazil
•The truth about the U.S.
•Those pesky differences

Separating fact from fiction

•Anything Into Oil
•Algae to biodiesel
•Ethanol for $1/gal

How Politicians Screw Things Up

Solutions

September 6, 2008 Posted by | ASPO, biofuels, EIA, iea | 115 Comments

Hurricane Gustav Threatens

I have been so preoccupied lately, that I have barely noticed that there is a potentially very dangerous hurricane moving into the Gulf of Mexico. Furthermore, Tropical Storm Hanna is not far behind. Here are a couple of graphics I picked up from The Oil Drum, which in my opinion always has consistently the best hurricane coverage – particularly as it relates to energy infrastructure:

Not only is it forcing the evacuation of lots of oil infrastructure (as did Katrina in 2005), but it is also projected to strike landfall in the same general vicinity.

One interesting note is that the IEA announced that they were prepared to release oil stocks if necessary:

IEA Ready to Release Oil Stocks if Gustav Hits GOM

The International Energy Agency IEA is ready to release strategic oil stocks if Tropical Storm Gustav hits the Gulf of Mexico oil hub early next week, the energy adviser to 27 rich nations said on Thursday.

“It’s too early to think of any implications yet but we are closely following this with the U.S. government,” Aad van Bohemen, head of the emergency planning and the preparation division at the IEA, told Reuters.

The agency, which co-ordinates emergency measures in times of oil supply disruption, released oil products stocks in 2005 when hurricanes crippled U.S. oil operations in the area.

That struck me as a little peculiar, because the IEA is an organization that provides information. I was a little surprised to hear them talking of energy stocks. So I dug a little bit:

Fact Sheet on IEA Oil Stocks and Emergency Response Potential

What is the level of IEA Member countries’ oil stocks?

• IEA Member countries are holding some 4.1 billion barrels of public and industry oilstocks, of which, roughly 1.4 billion barrels are government controlled for emergency purposes.

• IEA net oil importing countries have legal obligation to hold emergency oil reserves equivalent to at least 90 days of net oil imports of the previous year.

• IEA net exporting countries are at present: Canada, Denmark, Norway and the United Kingdom; they do not have stockholding obligations under the IEP. Denmark and the United Kingdom do hold stocks under consumption-based EU regulations, as do other EU Member countries.

There is a lot of good information on that fact sheet, including the fact that they made 2 million barrels a day available in the wake of Hurricane Katrina.

I probably don’t have to tell people this as they learned a hard lesson following Katrina, but keep your gas tanks full – even if you are hundreds of miles from the Gulf Coast.

August 29, 2008 Posted by | Hurricane Katrina, iea | 2 Comments

Hurricane Gustav Threatens

I have been so preoccupied lately, that I have barely noticed that there is a potentially very dangerous hurricane moving into the Gulf of Mexico. Furthermore, Tropical Storm Hanna is not far behind. Here are a couple of graphics I picked up from The Oil Drum, which in my opinion always has consistently the best hurricane coverage – particularly as it relates to energy infrastructure:

Not only is it forcing the evacuation of lots of oil infrastructure (as did Katrina in 2005), but it is also projected to strike landfall in the same general vicinity.

One interesting note is that the IEA announced that they were prepared to release oil stocks if necessary:

IEA Ready to Release Oil Stocks if Gustav Hits GOM

The International Energy Agency IEA is ready to release strategic oil stocks if Tropical Storm Gustav hits the Gulf of Mexico oil hub early next week, the energy adviser to 27 rich nations said on Thursday.

“It’s too early to think of any implications yet but we are closely following this with the U.S. government,” Aad van Bohemen, head of the emergency planning and the preparation division at the IEA, told Reuters.

The agency, which co-ordinates emergency measures in times of oil supply disruption, released oil products stocks in 2005 when hurricanes crippled U.S. oil operations in the area.

That struck me as a little peculiar, because the IEA is an organization that provides information. I was a little surprised to hear them talking of energy stocks. So I dug a little bit:

Fact Sheet on IEA Oil Stocks and Emergency Response Potential

What is the level of IEA Member countries’ oil stocks?

• IEA Member countries are holding some 4.1 billion barrels of public and industry oilstocks, of which, roughly 1.4 billion barrels are government controlled for emergency purposes.

• IEA net oil importing countries have legal obligation to hold emergency oil reserves equivalent to at least 90 days of net oil imports of the previous year.

• IEA net exporting countries are at present: Canada, Denmark, Norway and the United Kingdom; they do not have stockholding obligations under the IEP. Denmark and the United Kingdom do hold stocks under consumption-based EU regulations, as do other EU Member countries.

There is a lot of good information on that fact sheet, including the fact that they made 2 million barrels a day available in the wake of Hurricane Katrina.

I probably don’t have to tell people this as they learned a hard lesson following Katrina, but keep your gas tanks full – even if you are hundreds of miles from the Gulf Coast.

August 29, 2008 Posted by | Hurricane Katrina, iea | 10 Comments