Tokyo (Platts)--6Jun2008

The world needs to invest a total of $45 trillion between now and 2050 to
halve greenhouse gas emissions, the International Energy Agency said Friday,
warning that current energy trends were not sustainable.

Launching the agency's latest study on Energy Technology Perspectives,
IEA head Nobuo Tanaka said achieving this cut would need a "global energy
revolution" involving weaning the world off oil and the "decarbonization" of
the global power generation sector.

"Given the growing demand for electricity, this would mean that on
average per year 35 coal and 20 gas-fired power plants would have to be fitted
with CO2 capture and storage technology, between 2010 and 2050 at a cost of
$1.5 billion each," he said in a statement.

"Furthermore, we would have to build an additional 32 new nuclear plants
each year and wind capacity would have to increase by approximately 17,500
turbines each year," he said.

"In addition to all this, we would also have to make an eightfold
reduction of the carbon intensity of the transport sector. This represents the
most difficult and costly step due to the ongoing rapid demand growth and
limited potential based on existing technology."

Halving emissions by 2050 would mean having to harness all options up to
a cost of $200/mt of CO2, the IEA said. Even this figure is based on
"optimistic assumptions," it said. "Under less optimistic assumptions, options
that would cost up to $500/mt CO2 may be needed."

ENERGY REVOLUTION NEEDED

"There should be no doubt meeting the target of a 50% cut in emissions
represents a formidable challenge. We would require immediate policy action
and technological transition on an unprecedented scale. It will essentially
require a new global energy revolution, which would completely transform the
way we produce and use energy," Tanaka said.

If achieved, this revolution would see oil demand by 2050 fall 27% from
the level seen in 2005. Nonetheless, "massive investments in remaining
reserves will be needed to make up for the shortfall as low-reserve provinces
are exhausted," he said.

The total spending implied in this scenario amounts to $100-200
billion/year in the coming decade, rising to $1-2 trillion/year in the
following decades, equivalent to 1.1% of average annual global GDP over the
period.

The IEA's study also included a baseline scenario outlining what would
happen if current energy trends continued unchanged.

"If governments around the world continue with policies in place to date
...CO2 emissions will rise by 130% and oil demand will rise by 70%. This
expansion in oil equals five times today's production of Saudi Arabia," the
IEA said.

"Such growth of oil demand raises major concerns regarding energy supply
access and investment needs," Tanaka said.

UNSUSTAINABLE DEVELOPMENT

"We are very far from sustainable development, despite the widespread
recognition of the long-term problem. In fact, CO2 emissions growth has
accelerated considerably in recent years," Tanaka said.

"Higher oil and gas prices result in a rapid switch to coal. Moreover,
rapid growth in China and India, both coal-based economies, has also
contributed to this deteriorating outlook."

The IEA also outlined another scenario where emissions could be brought
back to current levels by 2050, which would need a CO2 price of up to $50/mt,
much lower than the price needed to achieve a halving in emissions.

COOPERATION NECESSARY FROM DEVELOPING COUNTRIES

Tanaka said cooperation with developing counties, such as China or India,
is necessary to reduce CO2 emission.

"It is natural that CO2 emission increases in developing countries, such
as BRIC countries [Brazil, Russia, India China; due to sharp economic
development]. We need to act together," Tanaka said at a news conference at
Japan National Press Club.

"These countries use coal for electric power, which produces more CO2.
Economic development is good for them but they also need to become green,"
Tanaka said.

Asked about possible IEA memberships of China and India, Tanaka said
discussions had already started . "We have been exchanging information about
energy already," said Tanaka.

"Currently, IEA members are only limited to OECD countries. We have to
change this to let China and India become IEA members," Tanaka added.

The ETP is the IEA's latest biennial study on energy trends and their
implications, which it said was in response to a call from the G8 for guidance
from the IEA on "how to achieve a clean, clever and competitive energy
future."

Tanaka is due to attend a meeting of energy ministers from G8 countries
and other leading oil consumers in Japan this weekend.

Tanaka said he hopes that G8 energy ministers show their commitments to
energy efficiency measures at the meeting.
--Staff, newsdesk@platts.com