The Crude View

Every year, the International Energy Agency publishes its World Energy Outlook. Every year, the numbers get bigger, the investment needed to avert environmental disaster less manageable and the language of IEA officials more Reaperesque.

In 2006, it talked about a “dirty, insecure and expensive” future and costed out necessary investment in energy-supply infrastructure between 2005 and 2030 at an eye-popping $20 trillion. But there was a note of comfort: the right policies could create a “clean, clever and competitive” alternative energy future.

Forward wind a year and the new IEA chief, Nobuo Tanaka, had upped the IEA’s projections for demand and emissions growth — signaling an acceleration in climate change. Coal was back big time, much of it being hoovered up by the new giants, China and India. It floated the idea of a supply-side crunch by 2015, with an abrupt escalation in prices. Still, though, there was time to act.

This week, the IEA released its 2008 version of the World Energy Outlook. The estimated investment need has ballooned to over $26 trillion by 2030 – over $1 trillion a year.

With existing fields in decline and demand expected to continue to tick up — with the Middle East joining China and India as big demand centres — supply will struggle to keep pace with the world’s energy needs. Even if oil demand was to remain flat to 2030 – which of course it won’t — four times the current capacity of Saudi Arabia would have to be added by 2030 just to offset the effect of oilfield decline, reckons the agency. Predictably, there is more talk of price spikes and supply crunches.

And, perhaps frustrated by the failure of the world to heed his warnings and worried that the financial crisis will make everyone forget about the – much more dangerous – energy crisis, Tanaka’s language has gradually taken on more colour — a very dark one — and a note of impatience. “Current trends in energy supply and consumption are patently unsustainable – environmentally, economically and socially,” he warned the world this week.

Climate catastrophe can be averted, but the sands of time are running out. A deal to replace the Kyoto Protocol is needed by the 2009 annual UN climate change meeting, suggests the IEA (it’s in Copenhagen in December). That would be a monumental achievement, especially if getting developing nations on board is, as the agency says, a necessary part of such an agreement.

It will be interesting to hear the language Tanaka adopts in the commentary that accompanies the 2009 report, next November, especially if a new global climate change deal is still a distant prospect. It might be time for Tanaka to go Old Testament. Or sarcastic – using the annual press conference to mime knocking on a door while shouting “hello?”, with rising intonation, as if to imply that the governments of the world may not be at home. Perhaps 2010 might see a more dramatic gesture: symbolic self-immolation might do it (although that would raise health and safety issues).

While the IEA’s warnings are becoming more urgent, at least the optimism hasn’t completely disappeared. Energy supply and consumption trends, while worrying, “can and must be altered”, Tanaka said this week.

So there’s still hope.

Tom Nicholls