America’s Energy Security: President Obama’s Plan

Summary.  Global warming due to man-made greenhouse gas emissions remains a serious, unsolved problem facing the world.  Many major emitters, including the United States, remain without effective plans to reduce their emissions. 

As the Libyan oil crisis continues to contribute to a sudden spike in crude oil futures prices, leading to a sudden increase in gasoline prices in the U. S., President Obama delivered a speech on America’s Energy Security on March 30, 2011.  Emphasizing measures to modulate gasoline prices, he set forth goals of reducing foreign oil imports and promoting alternative energy sources.  The speech failed to seize the moment, however, to teach the American public about the critical need for curbing use of all fossil fuels and developing alternatives.  The U. S. still needs a comprehensive energy policy for the future.  We must hope that this Administration can remedy this failing.

Introduction.  According to T. Boone Pickens, the “Oracle of Oil”, the U. S. is the only country without a national energy plan (presentation at Yale U., 03/24/11).  The U.N.’s Intergovernmental Panel on Climate Change recommends that global warming from the start of the industrial revolution be limited to 3.6 deg F.  This principle is incorporated into the Cancun conference agreement of November 2011. Drastic reductions in emissions of greenhouse gases need to be implemented right away.  Climate scientists show that even if no new facilities using fossil fuels were built starting now, the global average temperature would continue rising before leveling off because of existing fuel-burning facilities.

European and U. S. Regional Energy Plans.  The European Union recently issued its Energy Roadmap for 2050, with the goal of reducing greenhouse gas emissions by 80% from the levels measured in 1990 by 2050.  In the U. S., by contrast, the absence of a national energy policy has led in recent years to three regional programs, the Western Climate Initiative, the Midwest Greenhouse Gas Reduction Accord, and the northeast and mid-Atlantic Regional Greenhouse Gas Initiative.  Although the three plans differ in the details of their goals and coverage, all use a cap-and-trade mechanism to reduce emissions. This patchwork of plans begs for a single nation-wide plan. 

President Obama’s energy plan, presented in his speech and Fact Sheet: America’s Energy Security of March 30, 2011, proposes to cut imports of oil into the U. S. by one-third by 2025. This goal appears to be a response to the Libyan revolution-induced oil crisis, which has led to increased gasoline prices.  Since imports make up more than half of total U. S. oil use, this reduction corresponds to only about 16% of overall usage by 2025.  This is to be achieved by a combination of increasing domestic and international oil production, a switch to natural gas and biofuels from petroleum, and increased production of cars and trucks with higher fuel economy.  The plan also calls for expanded production of electric vehicles.  It promotes a Clean Energy Standard by which 80% of electricity generation in the U. S. will be from sources that avoid greenhouse gas emissions by 2035, including “clean coal”.  Overall, this plan presents many useful and worthy objectives to improve the U. S.’s energy situation.

The President’s plan, however, falls short in many respects.  Rather than formulating a single unified distinct goal such as the E.U.’s Roadmap, or any of the regional American accords, the President’s approach resembles more a shopping list of things “to-do”. The emphasis is on retaining or even expanding petroleum or natural gas for vehicle fuel, and on biofuels.  The global warming threat, however, requires weaning the country from all fossil fuels right away.  Similar emphasis was placed on domestic natural gas, which should not be a long-term solution.  Practically no mention was made of eliminating coal, the fuel producing the most CO2 emissions compared to the useful energy obtained, from electric power.  The notion of “clean coal”, mentioned only in passing, remains to be vindicated as a successful method capable of application at the large scale required.  It is imperative to move away from coal.   Furthermore, there is no incentive, such as cap-and-trade, a carbon tax, or other policy, to motivate relinquishing conventional energy sources and adoption of alternative energy sources.

Conclusion.  Warmgloblog believes the President missed an important opportunity on March 30 to teach and lead the nation in developing a coherent energy policy for the future.  In November, Secretary of Energy Steven Chu spoke of the present era, with respect to developing renewable energy sources, as a new “Sputnik moment”. It is hoped that future actions can remedy the present patchwork approach, leading to a comprehensive, funded plan to move the U.S. to a renewable energy economy.

© 2011 Henry Auer

U. S. Federal Spending Proposals for Energy R&D – 2011 and 2012

Summary:   Global warming due to man-made emissions of greenhouse gases, arising from burning fossil fuels and other sources, threatens to cause large scale disruptions in our planetary agricultural and economic activities, and of the ecological balance across the face of the earth.  In the past two years the U. S. Department of Energy has implemented new programs and expanded others directed toward identifying new technologies that would reduce greenhouse gas emissions.  Most recently, however, the funding environment for these programs has grown uncertain due to a change in the political landscape in the U. S. Congress.  At this writing the situation is in flux. This post summarizes the present uncertain status of funding for energy programs.

Introduction.  On Nov. 29, 2010 U.S. Energy Secretary Steven Chu addressed the National Press Club (see the post reporting this speech here).  He advocated support for new federal programs to create domestic U. S. industries in the fields of alternative and sustainable energy, and energy efficiency.  This theme was reinforced by President Barack Obama in his State of the Union Speech in January 2011.

As part of the American Recovery and Reinvestment Act of 2009 (the anti-recession fiscal  “stimulus” bill) the Department of Energy received considerable one-time funding, with a duration of two years, to support new research and development in the areas of renewable and sustainable energy, and energy conservation research, among others.  As an example of the programs established, a recent post reported on the Advanced Research Project Agency-Energy (ARPA-E) support for new startup companies, many of which have progressed to receiving additional venture capital funding to expand their activities.  This is considered to be a significant achievement that helps vindicate the ARPA-E program, since the venture capital firms made their decisions as little as one year after the initial ARPA-E awards.  As noted, the federal budget support for these programs ends after two years, i.e., more or less at the present time.

Fiscal Year 2011.  The U. S. fiscal year 2011 runs from Oct. 1, 2010 to Sept. 30, 2011.  Every year the President and his Administration submit a proposed budget for a given fiscal year more than six months before it begins, so that the Congress can consider it and prepare the various appropriations.  The Congress, however, (repeating a pattern common in recent years) failed to enact any appropriations before Oct. 1, 2010.  When this happens, Congress typically passes one or more of a series of “continuing resolutions” (CRs) that continue federal spending levels from the preceding fiscal year into the actual fiscal year whose budget has not yet been acted on.  This has happened for the present fiscal year, 2011; no federal budget has passed Congress.  At this writing, the current CR expires March 4, 2011.

The U. S. Congressional elections of Nov. 2, 2010 resulted in a new Congress, the 112^th Congress.  It took office in January 2011. The majority in the House of Representatives changed from the Democratic Party to the Republican Party, and the Senate Democratic Party majority was narrowed.  Since fiscal year 2011 is almost half over, the new Republican majority in the House has introduced a proposal for an extended CR to last through the rest of the fiscal year, one which involves drastic reductions in many programs. 

The Republican CR addresses so-called “discretionary funding” in the budget, and focuses on that portion, about 15% of the total, to which it proposes to apply pronounced reductions.  (The CR leaves Social Security and Medicare, whose expenditures are governed by the legal rights of the recipients, as well as spending for the Department of Defense, untouched.)   In this 15% slice of the overall Federal budget, the CR now proposes to reduce spending by $60 billion in the remaining 6 months or so of the fiscal year, compared to the spending rates extended from the previous fiscal year. 

For programs in the Department of Energy related generally to addressing global warming and energy efficiency, the proposed reductions in the various programs are very severe, as included in the table presented below:

                              gov/hudportal/HUD?src=/program_offices/cfo/reports/2011/main_toc; “FY 2011 Budget

                              and Related Information”, available at http://www.usgs.gov/budget/2011/2011Index.asp.

                              Source: http://www.americanprogress.org/issues/2011/02/budget_cuts_innovation.html

Chairman Hal Rogers of the House Appropriations Committee, in a press release dated February 11, 2011, summarized the reductions proposed for the FY 2011 CR.  In it, he states in part, concerning energy-related reductions,

“Funding for non-core research … have been reduced in the bill, and most agencies are prohibited from starting new programs without Committee approval. The Committee also sought to reduce excess and unnecessary spending by cutting Energy Efficiency and Renewable Energy (EERE) and Science accounts – both of which received huge funding levels in the stimulus bill.” 

This proposed CR is almost certain to pass the House of Representatives with little or no change.  It is not likely to pass the Democratic-controlled Senate, however, in its present form.  And even if it does, President Obama will most likely veto it. 

As noted above, the present situation must be resolved by March 4, 2011.  It is not clear at this time how this apparent impasse will be resolved.  One solution would be to extend the FY 2010 CR unchanged to the end of this fiscal year.

Fiscal Year 2012.  President Obama has presented a proposed budget for FY 2012, which begins Oct. 1, 2011.  Overall, he proposes budget reductions of $1.1 trillion over 10 years, as a start to addressing growing annual deficits and the expanding U. S. national debt.  However, in the face of this effort, the President proposes increasing funding for renewable energy and related programs in the Department of Energy, according to Platts.com's web site.  The overall budget for the department is proposed to increase by 12% over 2010 levels to $29.5 billion.  Importantly, renewable energy research and development programs are proposed to increase by 70% -- almost $1 billion -- for renewable energy R&D, such as solar, biomass, geothermal, and building and industrial energy efficiency, compared to FY 2010 levels. 

According to Platt.com, the Energy budget proposes funding of $550 million for ARPA-E, identified above.  ARPA-E has so far only received $400 million in the 2009 stimulus bill, since the program was not supported by the Republican Party at that time.  The proposal also seeks $5.4 billion for the Department’s Office of Science, a $500 million increase about 2010 levels. This is contrary to Chairman Rogers’ proposal (see above). 

For those who support the need to address global warming, reduce America’s dependence on imported fossil fuels, and stimulate new economic activity based on renewable energy and energy conservation, the President’s budget proposal is truly heartening.  It is clear that the President and his administration whole-heartedly support expanding these programs in face of the overall atmosphere of reducing federal expenditures.  This budget proposal is only the first step in arriving at actual spending levels, however.  The actual appropriations bill must be written and an identical version agreed to in each chamber of the Congress.  Then the President has to sign the result, if he agrees to its terms.  As seen from recent experience and the fact that the Congress is divided between Republicans and Democrats, considerable hurdles remain to be overcome before the proposed programs are supported by actual expenditures.

Conclusion.  The appropriations that could support federal research and development projects in renewable energy and energy conservation, and related clean energy projects, are in a high state of flux at present.  The funding levels both for current spending and for the year beginning Oct. 1, 2011 remain to be determined.  This is highly disadvantageous for creating new enterprises in this field, because the high level of uncertainty hinders private equity investors from committing to supporting these innovations.  Yet the participation of private funding is critical for development of alternative energy regimes.

© 2011 Henry Auer

Renewable Energy Tax Credits Enacted in the U. S.

Summary:  Various investment tax credits and tax grants directed to fostering growth of the alternative or renewable energy industry were slated to expire at this time.  Recognition of this impending expiration inhibited planning and investment needed for developing new alternative energy projects.  The Middle Class Tax Relief Act signed into law today extends these tax policies for one year.  This will foster additional creation of alternative energy projects, contributing to reducing greenhouse gas emissions and creating or preserving thousands of jobs in the U. S.

Introduction:  Various tax policy incentives have been in place in recent years to promote creation and development of commercial businesses devoted to alternative, renewable and/or sustainable sources of energy.  Important sections of enabling legislation for these policies expire at this time.

As an example, a Treasury Grant Program (TGP), also called the section 1603 program, granted direct payments to companies creating new renewable energy facilities.  According to a letter by 26 senators addressed to the U.S. Senate leadership on November 29, 2010, the TGP makes direct payments to such companies to substitute for failure of the companies to form “tax equity partnerships” with investors as a result of the Great Recession starting in 2008.  According to the letter, TGP payments resulted in about $18.2 billion invested in renewable energy projects, creating 8,600 megawatts of renewable energy generation up to October 2010.  The program is credited with saving 55,000 jobs in the wind energy industry.

During the recent Cancun conference sponsored by the United Nations Framework Convention on Climate Change, Peter Kelly from the American Wind Energy Association (AWEA) participated in a webcast news conference on Dec. 8, 2010.  As of that day, he indicated that the section 1603 tax grant had not been included in the tax bill being put together in the Congress.  He stated that in each of the two years, 2008 and 2009, that the program was in effect, wind energy installations increased 40% per year, but that, fearing the termination of the program, installations fell by 45% in the 2010 year to date.  He said the wind industry employed 85,000 workers during the recession.  The AWEA foresees that 20% of electricity generation in the U. S. will come from wind by 2020, reducing greenhouse gas emissions by 25%.

The Middle Class Tax Relief Act of 2010 was signed into law on Dec. 17, 2010.  Among its provisions are several related to alternative energy.  First, the section 1603 TGP was extended through 2011.  The Act also encourages production of ethanol as a biofuel by extending the per gallon tax credits and payments through 2011, as well as imposing a $0.54 per gallon tariff on imports.  A $1 per gallon tax credit for biodiesel and renewable diesel fuel derived from biomass sources is also extended.  There is also additional funding of $2.5 billion for a tax credit used in manufacturing advanced energy equipment, originally enacted as part of the American Recovery and Reinvestment Act (the stimulus act of 2009). 

Karl Gawell, Executive Director of the Geothermal Energy Association, welcomed the TGP provisions of the bill.  He said it would facilitate installation of several hundred megawatts of new geothermal electricity capacity.  The concern is that projects such as these have a multiyear completion schedule.  It is therefore difficult to operate in an environment of short term adjustments to tax policy.  Denise Bode, CEO of AWEA, also praised passage of the bill with its extension of TGP.  In her statement, she noted that in Iowa, wind energy already supplies 20% of the electricity, and as much as 25% in Texas.

Conclusion:  The President and the U. S. Congress have converged to an agreement on important tax policies promoting creation of alternative energy installations in the U. S.  These tax incentives lead to increased ability to generate electricity without emitting greenhouse gases into the atmosphere.  They also promote economic growth and creation and/or preservation of jobs.  These latter considerations are highly important in the fragile state of the economy in the U. S. at the present time.

© Henry Auer 2010

Steven Chu, U. S. Energy Secretary, Advocates “Sputnik” Level Support for Energy R&D

Introduction.  On Nov. 29, 2010 U.S. Energy Secretary Steven Chu addressed the National Press Club   on implementing new programs to create domestic U. S. industries in the fields of alternative and sustainable energy.   He recognized a need for major federal support for research and development in this area, likening the present situation to the time when, after the first Soviet Sputnik was launched, President Eisenhower instituted massive new federal programs in education, training and research in the sciences, mathematics and technology.  In the present environment, Secretary Chu sees China as fulfilling the role in energy technology that the Soviet Union played with respect to space technology.  In both instances, the U. S. had ceded global leadership to the adversary.  Presently this requires major federal support to regain the U. S. initiative in alternative energy development.

Global Warming Is Proceeding More Rapidly, and with More Serious Consequences, Than Previously Thought.  In previous posts on this blog (see http://warmgloblog.blogspot.com/2010/10/we-need-to-achieve-alternativesustainab.html and http://warmgloblog.blogspot.com/2010/10/why-we-need-massive-effort-for.html) we have discussed current analyses of global warming arising from man-made greenhouse gas emissions.  For example, the United Kingdom National Weather Service  found that greenhouse gas emissions are proceeding at an even higher rate than was thought only a few years earlier.  It predicts that the global average temperature could be 4 deg C (7 deg F) higher than today (note: 4.7 deg C higher than preindustrial revolution times) by 2100, using a “high-end emissions scenario”. 

These results are in broad agreement with predictions made in 2007 by the Intergovernmental Panel on Climate Change (IPCC), the United Nations consortium of thousands of climate scientists from around the world.

The International Energy Agency released its World Energy Outlook 2010 in November 2010.  The Outlook analyzes the commitments that nations of the world made at the 2009 Copenhagen climate change conference.  It finds that those measures are inadequate to restrict greenhouse gas emissions sufficiently to keep the global average temperature within Copenhagen goal of 2 deg C above the temperature that prevailed in the pre-industrial revolution period.

In general, analyses such as these propose the need for a massive, immediate effort by the worldwide community significantly to reduce emissions of greenhouse gases by mid-century.  Only in this way can the worst consequences of global warming on the planet be avoided, according to these scientific projections.

Secretary Chu Proposes That a “Sputnik” Moment in Energy Race Is Upon Us.  Secretary Chu, in his speech  proposes large expenditures in alternative energy research and development (R&D) to make up for the lead that China currently holds in this regard.  Dr. Chu, rather than basing the need for new programs in alternative energy on various dire predictions of excessive global warming such as those summarized above, stresses the need for the U. S. to regain leadership in technological innovation as the underlying reason for R&D programs in alterative and sustainable energy.  Basing this view on theories of economic development, he states that science and technology R&D form the basis for innovation.  This “Sputnik” moment must be seized to restore U. S. primacy in innovation, which has migrated in recent years to China and other countries in the world.  He states that, according to a report from the National Academy of Sciences, “Rising Above the Gathering Storm” in 2010, U. S. “competitiveness … has … deteriorated” in the last five years.  This is illustrated in the following graphic:

Source: http://www.energy.gov/news/documents/Chu_NationalPressClub112910.pdf. Note that the marks along the horizontal axis denote years, with the digits written from bottom to top and overlapping with each other, at each position.

 

© 2010 Henry Auer

It is seen that since about 2000, the U. S. share of global exports has declined (blue line), whereas China’s share has significantly increased (green line).  China is dedicated to developing a major portion of its energy and transportation economy with alternative energy sources that avoid the burning of fossil fuels which produce greenhouse gases.  It is already well along such a path, with major expansions of efficient electric transmission lines, nuclear energy plant construction, high speed rail systems, and renewable energy installations, for example.

U. S. Energy R&D Funding is Miniscule.  In view of the leading role of China in the world energy economy, Dr. Chu finds it is critical for U. S. economic competitiveness to provide federal funding for innovative energy R&D.  Yet, as of 2010, energy R&D represents only 0.14% of the federal budget.  Characterized more broadly, in 2007 energy R&D, both government supported and industrial, represented only 0.3% of sales, while that for computers and electronics was 7.5%, and that for pharmaceuticals was 18.7%. 

The U. S. Department of Energy Is Funding Innovative R&D Among Diverse Projects.  Only the federal government can provide the requisite support for innovation R&D in the energy sector.  The benefits of such funding include first, that the results of such support would benefit all of society, and so the research is a legitimate governmental activity; and second, that because of the high risks involved, it is unreasonable and unlikely that corporate R&D would/could support such projects.

Currently the Department of Energy (DOE) is undertaking several projects using a short-term increase in funding provided by the American Recovery and Reinvestment Act (the “stimulus” act).  This funding endures for only a few years; it is hoped that it will be extended and expanded for the long term.  The following projects are examples of innovation “hubs” now being developed with the DOE and other sources, including many that support private or nonprofit R&D:

• Affordable electric vehicle batteries with a 500-mile range.

Supporting research at Arizona State University, this project is directed toward using oxygen in the air, a metal such as lithium, and a molten salt electrolyte instead of a water-based solvent.  This permits operating at a much higher temperature and bases the charge-discharge cycle on the oxygen and the metal.

• Transformative approaches to lowering the cost of bio-fuels.

Working with scientists at the California Institute of Technology, this project seeks to develop an artificial system that mimics the photosynthesis of green plants.  This would provide the carbohydrates (sugar-like molecules) made in green plants by absorbing the greenhouse gas CO2 from the air. (The carbohydrates can then be processed to bio-fuels.)

• Abundant, domestic fuel produced directly from the sun. This research is aimed at providing a solar-fuels generator that provides fuels directly from sunlight with very high efficiency.

Other projects include

• Solar photovoltaic energy (solar panels) at 1/4th the fully installed cost.

• Dramatically reduce carbon capture and storage (CCS) costs.

• Design by computer simulation that will eliminate costly development cycles requiring physical construction of pilot concepts.

Conclusion:  Secretary Chu envisions the present era as being another “Sputnik” moment.  When the Soviet Union launched its Sputnik the U. S. responded with a massive, decades-long program to foster science and technology development leading to the U. S. space program that is now the National Aeronautics and Space Administration.  This program included the promotion of education and training in science and engineering, as well as the myriad of technological developments required to sustain space exploration and space travel.

Similarly, Hoffert (Science 2010 Vol. 329, p. 1292-4; see Note 1; discussed in a previous blog), in analyzing the inadequacy of current strategies for addressing global warming, has stated that our present status requires “programs with the scale and urgency of the Manhattan atom bomb project. One goal should be to develop technologies that can … eventually provide [the required] power by mid-century…from ‘clean coal’ and from nuclear and renewable technologies.”

Whether characterized as a Manhattan Project or a Sputnik response program, it is important to recognize that nothing short of major long-term public financing, coupled with venture funding in the private realm, is needed to stem the inexorable accumulation of greenhouse gases in the atmosphere, thus mitigating their effects on the global environment.  Funding support of this magnitude is readily achieved in a command economy such as is currently operating in China.  It is far more difficult, but no less critical, to implement in a representative democracy such as the United States.

                                                *          *          *          *

Note 1. Abstract available online free, or the full article for a fee or through personal or institutional subscription.  Many public libraries, and university libraries open to the public, receive the journal.

© 2010 Henry Auer

World Energy Outlook 2010: Climate and Energy Projections 2008-2035

Summary: The International Energy Agency recently published its World Energy Outlook (WEO) 2010.  The Outlook analyzes the commitments that nations of the world made at the 2009 Copenhagen climate change conference.  It finds that these measures are inadequate to restrict greenhouse gas emissions sufficiently to keep the global average temperature within 2 deg C above the temperature that prevailed in the pre-industrial revolution period.  The Outlook instead demonstrates that only more drastic actions, begun immediately, can achieve this objective.  This conclusion is in agreement with those expressed recently by individual climate scientists and other organizations.

Introduction. The International Energy Agency (IEA) is an autonomous organization associated with the Organization for Economic Cooperation and Development (OECD).  The IEA has 28 member states among developed countries of the world, including most European countries, the U. S., Japan, and Australia. 

The IEA recently published its World Energy Outlook (WEO) 2010, which analyzes present and projected world-wide production and consumption of energy over the period 2010-2035, and assesses scenarios for meeting various objectives for limiting the effects of global warming.  This posting is based on the WEO 2010 Press Release of Nov. 9, 2010, and the WEO 2010 Executive Summary, both of which are available as linked without charge.  The full publication is available for purchase.

The Copenhagen Accord of 2009.  The United Nations conference on climate change held in Copenhagen in 2009 was convened to establish an updated agreement to follow the Kyoto Protocol.  Considerable disagreement among the participants led to a weakened result.  The Copenhagen Accord is a nonbinding commitment to limit the increase in global temperature to 2 deg C (3.6 deg F) above pre-industrial levels.  (Currently the global average temperature is 0.7 deg C above this baseline.)  In addition the Accord set the goal for industrialized countries to provide funding directed toward reducing global warming and for remediation in developing countries, amounting to US$100 billion per year by 2020. 

WEO 2010.  According to WEO 2010, however, the actual commitments made, even if fully placed in effect, would fail to achieve the stated objective of limiting global warming to 2 deg C by in turn limiting emissions of greenhouse gases.  The significance of this finding is that considerably greater effort and higher expenditures will be needed in coming years, for example after 2020, to achieve the original objective.  The feasibility of this scenario is deemed questionable.  An important aspect of achieving this goal would be eliminating various national subsidies promoting the “wasteful” use of fossil fuels.

Three energy scenarios appear in WEO 2010.  The Current Policies Scenario projects developments in the global energy economy in the absence of overt actions limiting fossil fuel use or developing alternative energy sources.  The New Policies Scenario offers predicted changes in energy demand resulting from measures to be taken in response to the Copenhagen commitments (nonbinding and inadequate though they may be).  WEO 2010 judges that under this Scenario CO2 emissions continue to rise, by 21% over the level of 2008; this “trend would make it all but impossible to achieve the 2 deg C goal, as the required reductions in emissions after 2020 would be too steep” (emphasis in the original).  Rather, this Scenario would likely lead to an atmospheric concentration of 650 ppm CO2-equivalents, corresponding to a likely temperature rise of more than 3.5 deg C (6.3 deg F).

The more rigorous 450 Scenario, first presented in the WEO 2008 document, has the objective of restricting global average temperature rise to 2 deg C (3.6 deg F) above the average temperature of the pre-industrial revolution period, by limiting atmospheric greenhouse gas content to about 450 parts per million of CO2 equivalents (ppm).  Climate scientists concur that limiting global warming to 2 deg C requires very drastic reductions in CO2-equivalent emissions, including removal of fossil fuel subsidies, and pricing CO2-equivalents at about US$90-120 per ton by 2035.

A somewhat detailed summary of WEO 2010 appears directly below.  Those readers not wishing to go through those details can skip to the Conclusion at the end of this posting.

Projected Energy Demand Through 2035. The following table summarizes annual rates of increase in energy demand projected for each the three scenarios mentioned above.  As a point of reference, for the New

Energy demand, Annualized rates of increase

Scenario	Historic (past) Change 27 yrs, %/yr	Projected change 2008-2035, %/yr
Current Policies	2	1.4
New Policies		1.2
450		0.7

Policies Scenario, the overall projected increase is 36%, and represents an increase from the equivalent of about 12,300 million tons of oil-derived energy (Mtoe) as of 2008 to about 16,700 Mtoe in 2035 (see the graphic below).



Reproduced from World Energy Outlook 2010 © OECD/IEA.  The OECD has essentially similar membership as the IEA, plus 5 additional nations.   Data to the left of the solid vertical line at the year 2008 are actual.   Energy demand beyond 2008, to the right of the vertical line, is a projection based on the New Policies Scenario.  The dashed line indicates predictions based on the Current Policies Scenario (Reference Scenario).  Mtoe, energy demand (consumption) expressed as equivalents of millions of tons of oil.



The graphic above shows that the developed countries of the world, as represented by OECD (blue band), are projected not to contribute significantly to any increase in energy demand over the next 25 years.  Rather, China (orange band) and India and the rest of the countries of the world (yellow band) are projected to account for essentially all the increase in demand.  Together, nations outside the OECD account for 93% of the increase in overall energy demand in the New Policies Scenario (see the graphic above).  For example, the rate of growth of energy demand in China is projected to be 75%. 

This general result is understandable in view of the facts that

1.      these nations have populations far exceeding those of the OECD,

2.      their populations are growing at far faster rates than in the OECD, and

3.      their economic growth rates (and hence growth in energy demand) are higher than in the OECD, since they have only recently begun industrialization and urbanization.

The following Table illustrates some of these factors, for selected nations.  The U. S. and France are intended to exemplify OECD nations, whereas the other examples show data for developing, non-OECD, 

Nation	Population 2008, millions	Est. pop. 2050, millions	GDP, US$, billions, 2008	Rate of growth of GDP 2003-8, %
China	1,336.3	1,417	4,327	10.9
India	1,186.2	1,614	1,159	8.7
U.S.	308.8	404	14,093	2.4
Philippines	89.7	146	167	5.5
France	61.9	68	2,857	1.8

Source: The Economist, Pocket World in Figures, 2011 Edition, Profile Books, London, 2010.

nations.
The demand for energy is projected to be satisfied largely by conventional fossil fuels (oil, coal and natural gas).  Costs for these sources are likely to rise, contributing to a modulation in the demand for their use, being highest in the 450 Scenario.  Even so, the mix among these fuels is projected to shift, with demand for oil diminishing somewhat, and demand for coal and natural gas increasing.

China. WEO 2010 writes “[i]t is hard to overstate the growing importance of China in global energy markets.” China is now the largest national consumer of energy in the world in 2009, even though as recently as 2000 the country consumed only about half as much energy as the U. S.  Even so, its per capita energy use is still one third that of the OECD average.  China’s use of energy is expected to continue growing at similar high rates in coming years.  These observations may be visualized in the first graphic, presented above, and the following one, which includes China’s share of projected growth in sources of energy demand.

Reproduced from World Energy Outlook 2010 © OECD/IEA. 

The color scheme is the same as in the first graphic, above.  The bars for coal and oil to the left of the “0” line represent decreases in usage for these fuels over the period 2008-2035 in the OECD countries.  Single-handedly China accounts for profound increases in demand for fossil fuels over this period, as well as for renewable sources of energy.  Mtoe, energy demand (consumption) expressed as equivalents of millions of tons of oil.

Coal. According to WEO 2010, use of coal in the generation of electricity will expand greatly in the period 2008-2035 (see the following graphic).  Already in the period leading up to 2008, China was bringing new coal-burning facilities on line at a pace of 1-2 per week (note the expanding use of coal in that period).



Reproduced from World Energy Outlook 2010 © OECD/IEA.  Data to the left of the solid vertical line at the year 2008 are actual.   Coal-fired generation beyond 2008, to the right of the vertical line, is a projection based on the New Policies Scenario.   A watt-hour (Wh) is a unit of energy used in characterizing electricity generation and usage. TWh, terawatt-hours, or thousands of billion watt-hours.  The author presumes TWh refers to annual production of electric energy.



China has extensive domestic supplies of coal.  Use of coal is projected to almost double through 2035.  India is also greatly increasing its use of coal for electricity, whereas the OECD countries are projected to lower the use of coal for this purpose.

Oil.  Oil pricing has less than expected effects on supply and demand.  It is costly to identify and exploit new reserves, driving up the price, but demand does not respond accordingly, in part because of the use of oil in transport for which there is no alternative.  The graphic below depicts the projected growth in number of cars for 2020 and 2035.



Reproduced from World Energy Outlook 2010 © OECD/IEA.  Data through the year 2008 are actual.



In addition, many nations provide subsidies for purchase of oil products, as well as other fossil fuels, to their citizens.  Unconventional oil sources are being increasingly exploited, including tar sands in Canada and shale oil.  These sources require higher input of energy to extract the intended product than conventional drilling and pumping.

In the New Policies Scenario oil production grows to about 99 million barrels per day in 2035, up from 84 million barrels per day in 2009.  In this Scenario, production barely reaches a peak by the end of the period.  In the 450 Scenario, in contrast, oil production is seen to reach a maximum by 2020, and falls considerably thereafter.

Gas.  Use of natural gas increases strikingly in the projected period.  In the New Policies Scenario, its use grows by 44% by 2035, or about 1.4% per year.  Demand in China increases the most, averaging almost 6% per year.  Most expanded production originates in the Middle East.

Electricity Generation.  The global demand for electricity is projected to grow most intensely of all final forms of energy consumed.  In the New Policies Scenario it is expected to grow 2.2% per year, 80% of which occurs in non-OECD nations.  The profile of electricity generation is seen as shifting profoundly to use of alternative energy sources.  Coal, the least efficient source for generating electricity, is projected to fall from 41% of supply in 2008 to 32% by 2035.  Natural gas production, which is considerably more efficient both in terms of power generated and in terms of emitting less greenhouse gas, grows in absolute quantities but remains at about 21% of the overall mix. 

Renewable sources for electricity generation grow considerably (see the graphic below),

Reproduced from World Energy Outlook 2010 © OECD/IEA.  Mtoe, energy demand (consumption) expressed as equivalents of millions of tons of oil.

but will rely heavily on continued sizeable government support to sustain its growth.  The shift away from fossil fuels for electricity generation should reduce the emission of CO2 per unit of electricity provided by about one-third over the time period considered.  In order to make renewable fuels and biofuel production significant in the global energy economy, government support should increase from about US$57 billion in 2009 to about US$205 billion (present value) by 2035.

Conclusion.  WEO 2010 considers that the goal of limiting global warming to 2 deg C above pre-industrial levels is achievable using the 450 Scenario.  Oil demand would peak by 2020.  Coal demand likewise would peak at about the same time.  New coal-fired power plants to be built would largely be fitted with carbon capture and storage capability (which this author believes is unproven as of today), keeping their CO2 emissions out of the atmosphere.  Nuclear energy and renewable energy sources are foreseen playing a large and increasing role in the energy economy by 2035.

Because of global political delays in embarking on policies to reduce greenhouse gas emissions in the recent past, WEO 2010 projects the additional expense to implement the more vigorous measures needed to compensate for the delay would add about US$1 trillion to the cost estimate of about US$11 trillion that was proposed in WEO 2009. 

Overall, WEO 2010 deems that achieving the Copenhagen goal of limiting global warming to 2 deg C is “still (just about) achievable”, by embarking on the 450 Scenario.

This conclusion is in accord with other evaluations of the present status of global warming.  Davis, Caldeira and Matthews showed that even if no new installations burning fossil fuels were put in operation in the future, existing facilities would still emit atmospheric CO2 that would lead to further global warming.  In view of this result, Hoffert, in his commentary on the Davis article, emphasizes the very dire situation that we will actually face in the future.  Recent predictions of future global warming from the United Kingdom and the United Nations suggest that average global temperatures could rise 4 deg C (7 deg F) or more from today by the end of the century.  Hoffert emphasized the immediate need to undertake major, drastic efforts to cut back on global greenhouse gas emissions, and to develop renewable and sustainable energy sources.

In summary, it is clear that both individual climate scientists and official organizations agree on the need for bold, rapid, large-scale programs to supplant a fossil fuel-driven energy economy with a renewable, sustainable one.

© 2010 Henry Auer