Experts Debate Future of Global Energy Consumption

For the first time in nearly three decades, global energy use has decreased this year, mainly due to the worldwide financial crisis, the deputy executive director of the International Energy Agency (IEA) said on Nov. 30 at Fordham University.

“But with current energy policies in place, it will quickly resume its long-term trend once the global economic recovers,” said Ambassador Richard H. Jones, a former American diplomat with a wide range of energy policy experience.

Jones gave an overview of forecasts provided in the 2009 World Energy Outlook (WEO), an annual publication containing medium- to long-term energy projections and analysis.

It is produced by the economic analysis division of the IEA, an intergovernmental agency that advises 28 member countries on ensuring reliable, affordable and clean energy.

Since the release of the WEO on Nov. 10, Jones has traveled internationally on behalf of the Paris-based agency to discuss its findings. His visit to Fordham was part of the Global Energy Outlook Forum sponsored by the Graduate School of Business Administration and the Business Council for International Understanding.

The WEO comes in advance of the United Nations Climate Change Conference, which will be held from Dec. 7-18 in Copenhagen. There, delegates will attempt to draft a successor treaty to the Kyoto Protocol, a resolution governing greenhouse gas emissions that is set to expire in 2012.

The WEO is presented in two scenarios. The reference scenario “provides a baseline picture of how global energy markets would evolve if governments make no changes to their existing policies and measures.” In what is described as a 450 scenario, however, the report “depicts a world in which collective policy action is taken to limit the long-term concentration of greenhouse gases in the atmosphere,” he said.

“This is the scenario which, according to the intergovernmental panel of climate change, will limit global warming to about 2 degrees centigrade,” Jones said, adding the WEO provides both caution and grounds for optimism.

“Caution, because a continuation of current trends in energy use puts the world on track for a rise in temperature of up to 6 degrees centigrade and poses serious threats to global energy security,” he said. “Optimism, because there are cost-effective solutions to avoid severe climate change while also enhancing energy security.”

Among the findings in the WEO are predictions that fossil fuels will continue to dominate the energy mix, accounting for more than 75 percent of incremental demand. China and India, countries that are not members of the Organization for Economic Cooperation and Development (OECD), will account for over 90 percent of this increase.

The reference scenario projections imply a persistently high level of spending on oil and gas imports by almost all importing countries.

“China will overtake the U.S. soon after 2025, to become the world’s biggest spender on oil and gas imports, while India will surpass Japan soon after 2020 to take third place,” Jones said.

Also projected in the reference scenario, 1.3 billion people will lack access to electricity in 2030, compared to the 1.5 billion today.

Containing climate change is possible, but would require a profound transformation of the energy sector, Jones said.

It also recommends massive worldwide investment in infrastructure changes and changes to energy usage. These investments are required to avoid not only climate change, but also to enhance energy security. Transportation system change is perhaps the largest part of that investment, and the report recommend a large-scale switch to less carbon intensive vehicles.

“There are lots of different things we need to do, but the more we look at the real situation around the globe, the more we can design those intelligent policies, and the better we’ll all be,” Jones said.

Dominick Salvatore, Ph.D., Distinguished Professor and chair of the Department of Economics at Fordham, discussed economic implications of carbon regulations.

Salvatore said the hypothesis that global temperature is rising should not be rejected.

Regarding China’s recent promise to cut “carbon intensity,” a measure of carbon dioxide emissions per unit of gross domestic product (GDP), by 40 to 45 percent by 2020, Salvatore suggested caution.

“Who is going to pay for it? With a straight face, China suggests that we, the advanced countries, pay for 1 percent of GDP to them,” he said. “It’s not an insignificant amount and for them to ask this, it’s unbelievable. We have to help the poorest countries more than China.”

Other presentations on the topic were made by Jorge Rodriguez, Ph.D., the former minister of economy and energy for Chile and dean of the business school at the University of Alberto Hurtado; and Jerry Eyster, senior vice president for investment strategy for GE Energy Financial Services.