A worrying outlook for the climate

Guest post by chinadialogue London intern Ellen Percival.

When the International Energy Agency published its annual World Energy Outlook on Monday, it revealed just how wide the gulf is between plans to limit carbon emissions and what would really be needed to keep CO2 levels to no more than 450ppm, which most scientists predict should prevent temperatures from rising above 2°C. This discrepancy will be even more unnerving for those who would like to see CO2 closer to 350ppm.

The Outlook bases its predictions on three scenarios: ”Current Policies”, ”New Policies” and the ”450 Scenario”. “New Policies” is a fairly optimistic view of efforts such as those set out in the Copenhagen Accord. Yet in 2035 this still sees atmospheric concentrations of greenhouse gases above 450ppm. Unless this agreement is fully implemented, the IEA believes this goal will be all but impossible to achieve. The report pins blame on the failure of nations to agree a new global treaty on climate change in Copenhagen last year. Even if commitments are fully implemented, the reductions needed after 2020 will be steeper and costlier than if more ambitious, earlier targets had been pledged. The additional spending required in 2030 will also be US$1 trillion (6.64 trillion yuan) more than predicted last year. Evidently, the Copenhagen Accord makes a difference but is nowhere near enough.

Nobuo Tanaka, executive director of the IEA, says that it is “hard to overstate” the growing importance of China in all of these scenarios. “How the country responds to the threats to global energy security and climate posed by rising fossil-fuel use will have far-reaching consequences for the rest of the world.” For example, global oil demand continues to grow steadily in the “New Policies” scenario, reaching 99 million barrels per day (mb/d) by 2035 — 15 mb/d higher than in 2009. Almost half of the net growth comes from China, while demand in the OECD countries actually falls by over 6 mb/d.

Simultaneously, Chinese electricity demand is expected to triple. Over the next 15 years, the country is projected to add generating capacity equivalent to the current capacity of the United States, more than making up for the drop in coal-fired generation anticipated in OECD countries. Consequently, China (32%) and the US (18%) account for the majority of the cumulative emissions abatement needed between 2010 and 2035 if we are to move beyond current policies to those that would actually limit concentrations of greenhouse gases to 450 ppm.

Nevertheless, the IEA predicts that the sheer size of the Chinese market, together with its push to expand the role of low-carbon energy technologies, is poised to play a key role in driving down green-tech costs, to the benefit of all countries. Renewables may be entering the mainstream, but this year’s Outlook stresses that strong government support is still crucial to their future competitiveness — a point reinforced by Chinese experience. The report also warns that a gas glut, produced by lower demand during the economic crisis, combined with a boom in US gas production, could hinder investment in renewables, cleaner coal and nuclear energy. In this situation, government support would become even more essential.

Ultimately, the report concludes that getting prices right, by phasing out fossil-fuel subsidies, is currently the single most effective measure to cut energy demand and move the world towards 450ppm in 2035. Yet the impact of failure at Copenhagen also demonstrates that strong, ambitious targets need to be set in coming climate talks and, even more importantly, stuck to by governments.