World to Struggle to Break Oil Addiction to 2050
Date: 09-Jan-07
Country: UK
Author: Alex Lawler and Muriel Boselli
Production in some regions is expected by then to be past its peak, and alternative fuels and efforts to combat climate change may restrain demand. But oil's share of the energy mix will remain substantial.
"In the next several decades, 2040 to 2050, it will be very difficult to lessen our addiction to oil, but we may lessen it a little," said Fatih Birol, chief economist at the International Energy Agency, adviser to industrialised countries.
The IEA's 2006 World Energy Outlook to 2030 foresees ever-rising oil demand led by Asia met by a dwindling band of major producers, mainly in the Middle East.
World consumption would hit 116 million barrels per day (bpd) by 2030 or 103 million bpd if governments adopt policies to curb use -- in either case, up from 84 million bpd in 2005.
Oil represented about 35 percent of the world energy mix in 2004 and is expected to account for around 33 percent by 2030 in the IEA's business-as-usual case.
By 2050, many would assume oil consumption could still be higher than today but down from its highest ever, said Paul Horsnell, analyst at Barclays Capital in London.
"Most forecasts going that far down the curve (to 2050) would have oil use, if not lower than it is today, having passed some kind of peak," he said.
An official at oil exporters' group OPEC said oil's share of the world energy mix may be smaller in 2050 than today but it would remain important.
"As OPEC we believe whatever the energy mix will be, it will complement the use of oil," said Hasan Qabazard, head of research at OPEC, source of more than a third of world supply.
"Oil will continue to play an important role in developing and poor countries, as it played a very important role in the development of industrialised countries in the past."
NEW FUELS, TECHNOLOGY
Many forecasters see a greater future role for biofuels, nuclear, wind and solar power, and for so-called non-conventional oil extracted from tar sands in places such as Canada or from plentiful reserves of coal.
Non-conventional oil and measures to curb demand could delay the conventional oil supply peak, which may happen after 2030 if demand grows as quickly as in the last two or three decades, Birol said.
"If we reach a peak just after 2030, one would expect the prices would shoot up substantially," he said.
"After 2030, if the prices go up and the technology improves, we can have a lot of non-coventional oil coming. We may see the oil era continue some time longer."
Oil, gas and coal reserves are enough to meet the 4.7 trillion barrels of oil equivalent of demand expected to 2050, said a British report by former World Bank chief economist Nicholas Stern last year, citing World Energy Council estimates.
The Paris-based IEA says the pace of technological change and the extent of environmental concern will determine whether the reserves are used up.
Some technology such as burying carbon dioxide underground, is important as it allows continued fossil fuel use under policies to curb emissions, said the Stern report, which called for urgent action to combat climate change.
But carbon capture and storage, which can be used at power stations and at hydrogen or oil and gas production sites, needs commercially viable costs, says BP, which is using the technology at an Algerian gas field.
Other technology, such as hydrogen and fuel cells, could curb oil dependence. In the IEA's most optimistic outlook, hydrogen fuel cells could power about 700 million vehicles, or 30 percent of the global fleet, by 2050.
Still, fuel cells need technical breakthroughs, huge investment, lower costs and government support, the IEA says.
PRICES KEEP RISING
Oil prices, which hit a record high of US$78.40 a barrel last year, are set to increase in future decades.
The IEA's World Energy Outlook assumes oil could hit US$130 in 2030 if the billions of dollars of investment ne
