The International Energy Agency raised the alarm Wednesday with the release of its annual report, emphasizing that a revolution in the energy business is required to maintain economic growth and stabilize greenhouse gas emissions.
The IEA's World Energy Outlook 2008 report, written for policymakers, paints a troubling picture in terms of energy costs and global warming due to burning fossil fuels. It calls for "radical action" from governments at all levels and for a coordinated international response.
"Current trends in energy supply and consumption are patently unsustainable--environmentally, economically and socially--they can and must be altered," Nobuo Tanaka, the IEA's executive director, said at the release of the report.
Although softening demand has pushed the price for oil down recently, the rising cost of extraction, combined with declining productivity rates at oil fields, means that the "era of cheap oil is over," according to the report.
The study also lays outs the changes needed to stabilize carbon dioxide concentrations in the atmosphere and concludes that massive amounts of capital will be required.
To limit the increase in temperatures to 3 degrees Celsius by 2030 would require a huge increase of low-carbon energy--nuclear, hydropower, biomass, renewables, and underground carbon storage. That scenario would require a $4.1 trillion investment, or 0.2 percent of the world's annual GDP.
From the report's executive summary:
"It is not an exaggeration to claim that the future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient, and environmentally benign system of energy supply. What is needed is nothing short of an energy revolution."
The IEA's call to action to policymakers reemphasizes the long-term trends that many clean-technology businesses are already betting on. Even with the credit crunch and falling prices for fossil fuels, clean-energy investors and entrepreneurs predict positive growth in their sector over the long term.
In the U.S., the incoming administration of President-elect Barack Obama and a Democrat-controlled Congressfor policies that promote clean technologies to address economic development and climate change.