MercoPress. South Atlantic News Agency

IEA: world's energy economy is not on sustainable path

“With oil prices surging over 110 US dollars a barrel and growing concerns over the environmental repercussions of the world's spiraling energy demand, the dialogue between energy producing and consuming countries is more meaningful than ever”, said Nobuo Tanaka, Executive Director of the International Energy Agency (IEA).

In his key note address to the 11th International Energy Forum (IEF) in Rome on Monday, Tanaka stressed "current oil prices are too high, especially for developing countries which face other significant cost increases, and considering the threats to global economic growth at the moment". According to the IEA a combination of different factors have had an impact, primarily strong demand growth in the developing world coupled with constraints in bringing new oil to the market, for example during the past five years, spare capacity has fallen below the 3 to 4 million barrels per day of the past decade. IEA analysis shows that there is no quick fix on the supply side and spare capacity is likely to remain tight. "Investment is one of the main challenges we are facing in the global energy sector", Mr. Tanaka said adding that "22 trillion US dollars in investment will be needed in energy-supply infrastructure by 2030. The oil sector alone needs 5.4 trillion. Although spending has recently increased, supply growth could remain sluggish, because of increasing costs and a proliferation of above-ground risks, such as more frequent access limitations and tighter fiscal and regulatory regime". IEA believes that unless current policies change world energy demand will more than double by 2030. In the short to medium term, increased energy efficiency can yield substantial savings in energy consumption and can help improve the country's energy security while at the same time reducing CO2 emissions. IEA also addressed climate change, another key challenge, against the background that fossil fuels will still continue to dominate the global energy mix in the foreseeable future. "Without new policies, CO2 emissions could jump 56% by 2030, leading to an eventual increase in average global temperature of up to 6oC". Summing up Tanaka said "the world's energy economy is on a pathway that is not sustainable". This is valid for the oil market, where there is an urgent need for investment, to ensure an adequate cushion between supply and demand returns to the market. This is also true from an environmental perspective. "In the long term, to meet environmental concerns, we will require a veritable energy revolution that completely transforms the way we produce and use energy. However, the energy sector should not be viewed only as the cause of the climate problem but also as part of the solution" Mr. Tanaka emphasized.