If the world is going to truly combat greenhouse gas emissions, China and India have to be part of the fight, the chief economist for the Paris-based International Energy Agency said Tuesday. Fatih Birol told oil and gas executives at the Offshore Technology Conference in Houston that the economies of China and India are growing at such a pace that they'll keep needing more energy, much of it from coal. Even if Europe cuts emissions by 20 percent in the next dozen years as pledged, it won't be enough to overcome emissions anticipated to increase in the developing giants, he said.But don't blame China, the bigger of the two, he said.
China's growth is "simply imitating" what developed countries have already done. Americans love their cars, and increasingly the Chinese do as well, driving most of the increase in that country's demand.
The nation is expected to overtake the U.S. in terms of car ownership in seven to eight years. And by 2030, 14 percent of Chinese will have cars, as opposed to 2 percent today.
By 2015, Birol said three countries will be key to denting climate change: China, India and the United States. Together they'll release half of the world's emissions, and without cooperation among them, he said, "we have no chance to make" a difference.
High oil prices no longer can be expected to shrink demand as it did during spikes in the past, when a vast majority of usage occurred in developed countries, Birol said. Growth in China, India and the Middle East more than offsets flat or shrinking demand in the U.S.
As prices have risen since 2004, global demand has risen alongside them. "Oil demand is much less responsive to high crude prices than in the past," he said.
Changing energy security
Amy Myers Jaffe, an energy analyst with Rice University's James A. Baker III Institute for Public Policy, said the run-up in oil prices has changed the nature of energy security, which once focused on protection against oil shocks.
After the 9/11 attacks, the term began referring more to dependence on oil regimes whose interests aren't necessarily U.S.-friendly. And government-run oil producers are flexing more muscle in terms of controlling their own resources in the high price environment.
Jaffe said she expected the world to increasingly rely on the Persian Gulf and unconventional oil, such as heavy bitumen from Canada's oil sands. Other unconventional sources include coal or natural gas turned to liquid, and oil found in shale.
However, while high oil prices make unconventional sources more economical to tap, they're also carbon-intensive to produce, Jaffe said.
"So climate security and energy security are not always two sides of the same coin," she said.
More coastal access
Randall Luthi, director of the Interior Department's Minerals Management Service, which oversees offshore U.S. production, said the security picture needs to include more access to U.S. areas currently off-limits — such as off the West and East coasts and the eastern Gulf of Mexico.
"We're so dependent on adequate, affordable energy," he said, noting that the federal government predicted in January that the average price for a gallon of regular unleaded gasoline would climb to $3.50 by this month. It reached $3.60 last week and now is expected to top $3.70 nationally by June.
Fossil fuel reliance
Despite growth in alternative and renewable fuels, the federal government and the International Energy Agency predict the vast majority of energy use to stem from fossil fuels through 2050. With that in mind, Luthi said, the only way to lower dependence on imports is to raise U.S. production.
In February the MMS opened the Chukchi Sea off Alaska's north coast for a lease sale. The agency received 667 bids on 488 tracts, and 292 leases have been issued. Companies that bought leases include ConocoPhillips, Italy's Eni, Spain's Repsol, Shell, and Norway's StatoilHydro.
"But the Gulf of Mexico remains the workhorse" of offshore U.S. production, and 85 percent of the nation's coastlines remain unavailable to the industry, he said.
Source: The Houston Chronicle|By KRISTEN HAYS
