|
|
 |
|
|
November 13, 2004
Energy/Environment:
$16 Trillion in Worldwide Energy Investment Needed by 2030, IEA Chief Says
"If present trends continue, the world will need to invest $16 trillion over the next three decades to maintain and expand energy supply," the head of the Paris-based International Energy Agency told a business audience in New York today.
|
|
This is equivalent to one percent of total global GDP over the period, according to IEA Executive Director Claude Mandil. "Without new policy actions, world energy demand will rise by two-thirds between now and 2030, and the world economy will falter if these energy supplies are not made available," he said.
At a joint meeting of USCIB’s Environment Committee and BIAC’s Energy Committee, held at the headquarters of McGraw-Hill, Inc., Mr. Mandil briefed executives on the IEA's "World Energy Investment Outlook," which was released last week. IEA, an autonomous agency linked with the OECD, serves as the forum of 26 industrialized countries for joint measures on energy policy and information.
The IEA report is the first detailed look at the global energy investment challenge over the next 30 years. International organizations such as the World Bank and OPEC contributed data to the study, with input also coming from major energy companies and leading investment banks.
|
Claude Mandil, executive director of the International Energy Agency, described long-term energy needs
|
|
Among the report’s key observations, Mr. Mandil emphasized:
· Electrical power generation, transmission and distribution will absorb almost 60 percent of global energy investment – nearly $10 trillion, with China alone requiring $2 trillion – with improvement and expansion of power grids accounting for more than half of this figure.
· Some 80 percent of the $4 trillion of upstream investment in the oil and gas sectors will be needed simply to maintain production capacity at current levels, taking into account depleted or obsolete operations.
· More of the capital needed for energy projects will have to come from private and foreign sources than in the past. More private-sector involvement in developing countries will be required, and governments everywhere will have to pay attention to how the policy, legal and regulatory framework affects investment risks and how barriers to investment can be lowered.
Mr. Mandil called the World Energy Investment Outlook “a wake-up call” for governments. He said governments must play an integral role in creating the necessary framework for effective energy investment, pursuing liberalization of markets while creating fiscal and regulatory incentives to develop advanced technologies in such areas as carbon sequestration and alternative sources of energy.
|
|
Brian Flannery (ExxonMobil), Norine Kennedy (USCIB) and Volker Heck (RWE AG) at the joint USCIB-BIAC meeting following Mr. Mandil’s briefing
|
This was a sentiment echoed by one of the industry participants: Brian Flannery, science strategy and programs manager at ExxonMobil. Mr. Flannery cited the European Union’s impending establishment of an energy trading mechanism to curtail greenhouse gas emissions, expressing frustration with the lack of a clear governmental framework just 14 months before the system is slated to go into effect.
Participants at the briefing included industry representatives from a number of OECD countries. The briefing was followed by a closed-door session between BIAC and USCIB members, chaired by Volker Heck, vice president for political affairs with RWE AG of Germany, who heads BIAC’s Energy Committee.
|
|
Mr. Mandil was roundly supportive of the new BIAC Energy Committee Vision Statement – so much so that he said that he could have written it himself. The Vision Statement focuses on fostering a long-term and consistent energy framework, avoiding market distortions in the energy sector, encouraging innovation and technology, and improving developing countries’ access to energy.
Other guest speakers at the USCIB-BIAC meeting were Dr. James Edmonds of Battelle Labs, Walter Shearer of the UN’s Energy and Transport section, and Susan McDade of the UN Development Program.
Mr. Mandil said the IEA report posits different scenarios for energy usage. This reflects the fact that energy investment patterns, and the eventual cost of energy to users, will be significantly affected by policy decisions in such areas as greenhouse gas emissions and liberalization of energy markets.
Industrialized countries face significant challenges in financing electricity investments, Mr. Mandil observed, due in part to public resistance to expanding transmission networks, which lag behind in generation capacity in terms of investment. Recent power failures in the northeast United States and in European countries such as Italy have called attention to this issue.
But he said the biggest and most pressing challenge is financing the $5 trillion of required investments in developing countries, particularly in Africa and South Asia. The financial needs in these countries are larger than those of OECD countries, yet the investment risks are higher, especially for domestic electricity and downstream gas projects. Therefore, far-reaching reforms are urgently needed.
Media contact: Jonathan Huneke
Staff contact: Norine Kennedy
IEA website
BIAC website
More on USCIB’s Environment Committee
|
|
|
|
|
