China, India and Russia will drive global energy growth in the next 25 years, any significant withdrawal from nuclear will have “alarming implications”, and a major cut in renewable energy subsidies because of economic austerity would make it “very difficult for the sector to come back to life”.
The countries driving growth in energy demand will be outside of the OECD, the IEA’s chief economist Fatih Birol told a press conference in London this morning.
“Decisions will be made in Beijing, New Delhi and Moscow that will have an impact on all of us, even the OECD countries,” he said.
He said that the long-term future of coal, more than any other energy source, depended on the actions of the Chinese and Indian governments and how much they decide to embrace clean coal technologies and carbon capture and storage.
Adding India “will be the new China by 2020 in terms of coal imports”, while China will join the US as the foremost player in the unconventional gas market. Indeed, he predicted “we are entering a golden age for gas which will make gas markets much less challenging”.
The IEA forecasts that global consumption of natural gas will catch up with coal by 2035, with shale gas and coal-bed methane playing a role, providing environmental concerns over both can be addressed.
On nuclear, the IEA presented two scenarios.
The first – and most likely – sees nuclear output continuing to rise by more than 70 per cent by 2035, which is much in line with the IEA’s forecast a year ago.
However, in the wake of the Fukushima disaster, it presented a second scenario which envisaged what would happen if there was a substantial shift away from nuclear, with no new OECD reactors built and only half of those predicted in scenario one built in non-OECD countries.
If this second scenario were to come true, “the implications are alarming”, said Birol.
“Coal and natural gas would be the major winners and this would be bad for economics, bad for energy security and bad for climate change.”
IEA executive director Maria van der Hoeven, who took over the role in September, added: “If you phase-out nuclear you have less eggs in your basket when it comes to energy security.
“If you decide to phase-out nuclear you have to ask: how are we going to bridge the gap? What does it cost? And what are we going to do about security?”
The future of renewables came with a caveat. The WEO predicts that renewables will account for 18 per cent of the global energy mix by 2035, from 13 per cent today.
But the subsidies needed to achieve that extra 5 per cent will rise from $64bn last year to $250bn in 2035. And the IEA says that this is support “that in some cases cannot be taken for granted in this age of fiscal austerity”.
Birol warned: “Governments are giving a second look at renewable energy subsidies. If these are cut once, it might be very difficult for the renewable energy industry to come back to life later.”
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