Block’s Indicator of Sustainable Growth

by Ray Block

Nobuo Tanaka, executive director of the International Energy Agency (IEA) spoke on the international energy challenge to the China Energy and Environment Summit in Beijing on July3 2009.

The title of the IEA’s leader’s power point presentation was International Energy Co-operation and Global Energy Security.

The energy challenge, set against the necessity of climate change to a low carbon economy, was premised on the inevitability of crude oil shortages becoming evident in coming years.

Tanaka says just to maintain the current level of crude oil production, there will be a need for gross additions to supply of 45 million barrels a day, or four times the current oil capacity of the world’s largest oil field in Saudi Arabia. This addition to supply will be needed from 2007 to 2030.

Against that background, to achieve reductions in carbon in the 450 policy scenario will require the world to cut CO2 emissions by 65 per cent. That is equivalent to a reduction in CO2 of 9.5 Gt. In other words, a reduction of 9.5 million metric tons. The major countries have tokenly agreed to a 80 per cent reduction in CO2 emissions by 2050.

The 450 scenario is set in terms of  the findings of the UN Iinternational Panel on Climate Change scientists, who are saying that atmospheric emissions must be limited to 450 parts per million (450ppm) by 2100. They are currently around 385ppm.

The IPCC says that  global temperatures must not rise by more than 2 degrees Celsius by 2100. And secondly, for this to be achieved, global emissions will have to peak by 2015, and then rapidly decline to avert the worst consequences of global warming.

Set against these goal posts, the IEA is assuming that renewables and biofuels will have to supply 23 per cent of world energy. The successful deployment of carbon capture and storage to develop clean coal would supply 14 per cent of world energy, and nuclear energy to contribute 9 per cent.

This adds up to 46 per cent. The balancing 54 per cent would come from greater energy efficiency, which would include the employment of a smart grid in electricity transmission and distribution, smart meters and so on.

Renewables would include electric and hydrogen fuel cell vehicles, solar and wind energy, biomass, energy efficiency in buildings, energy efficient motor systems, and efficient industry processes starting with cement.

One small advantage of the global recession could see a drop of as much as 3.5 per cent in 2009 global electricity consumption.

To achieve the 450 policy scenario, the IEA is saying that the incremental investment in the low carbon economy will require governments to increase funds committed to a four-fold increase in investment relative to their recent stimulus packages.

That indeed is a big ask.

The IEA says that the economic and financial crisis has sharply reduced global investment all the way down the energy support chain, from production to end use.

However, the crisis is an opportunity to place a clean energy new deal at the heart of economic stimulus packages globally. Long-term clean energy strategies must be at the heart of these packages.

The Chinese leadership is alive to the growth opportunities thrown up  by Nobuo Tanaka. My concern is whether the European, American and other developed nation leaders, who talk the talk, are equally capable of walking the walk.