$45 trillion to wean the world off oil

06 June 2008

The world will face a bill in excess of $45 trillion to keep global temperature increases below 2.4°C - and would need to build 32 new nuclear power plants per year to help achieve it, says a new report from the International Energy Agency (IEA).


Energy Technology Perspectives is a biennial publication from the OECD agency in response to the G8's call for guidance on how to achieve a "clean, clever and competitive" energy future. Launching the report in Tokyo, IEA executive director Nobuo Tanaka said, "A global energy technology revolution is both necessary and achievable; but it will be a tough challenge."


Tough indeed. The IEA presents three ranges of scenarios: baseline, or "business-as-usual", which foresees at best a 70% increase in oil demand and 130% increase in CO2 emissions by 2050; 'ACT', which would bring CO2 levels back to current levels by 2050; and 'BLUE', which would reduce CO2 to 50% below today's levels by 2050. The Intergovernmental Panel on Climate Change (IPCC) has identified this sort of cut as the minimum required if global warming is not to exceed 2.4°C, and G8 leaders agreed at the Heiligendamm Summit in 2007 seriously to consider a global 50% CO2 reduction.


According to the IEA, the current "business as usual" path is not sustainable, and the paths it identifies under its ACT scenarios rely on increased energy efficiency and cutting emissions from power generation to bring down emissions to current levels by 2050 after peaking in 2020-2030. This would not be cheap: the IEA estimates it would require extra energy sector investment of $17 trillion between now and 2050, or around $400 billion per year.


But this, says the IEA, is not enough. To achieve the 50%-by-2050 target would need a "virtual decarbonisation of the power sector", entailing investments in technology and deployment of a further $45 trillion - or 1.1% of annual global GDP - over the period. As well as widespread introduction of carbon capture and storage (CCS) at coal- and gas-fired power stations, 32 new nuclear plants and 17,500 wind turbines would have to be built every year, the Agency has concluded.


The IEA highlighted issues such as NIMBYism, a shortage of engineering and technical graduates, and the availability of sufficient geological formations for the storage of captured CO2 and nuclear waste as issues that would need to be investigated or overcome.


Meeting the 50% emissions cut target represented a formidable challenge which would require immediate policy action and technological transition on an unprecedented scale, Mr Tanaka said. "It will essentially require a new global energy revolution which would completely transform the way we produce and use energy", he stressed, but noted that the benefits from such a development in terms of energy security would be "tremendous".