New world energy order
By ELAINE ANG
WITH high oil price and expectations that supply would dwindle as consumption continues to increase globally, some energy experts are anticipating a new world energy order in the future.
According to the International Energy Agency (IEA), the global energy sector is evolving into a “new world energy order” whereby demand and supply equations are changing and new active players are emerging in the international arena.
This is leading to changes in terms of demand, price, climate change issues and other factors.
In a June 2 report, Emirates Business quoted IEA chief economist Dr Fatih Birol as saying that the US, Europe and Japan were no longer the drivers of energy demand growth.
Dr Pola Singh
“Now we see China, India and the Middle East taking this role. They are deciding how much the world will need from energy suppliers as well as the composition of energy demand, including oil, gas and coal.
“Any decision by China or India in the energy sector will dominate the interest of producing and consuming countries. Both nations are dominating the energy market in terms of economy and population.
“By 2010, China will take over the role of the US as the largest energy consumer in the world,” he said.
Hampshire College professor of peace and world security studies Michael T. Klare, in an essay highlighted on Asia Times Online recently, said the world was facing a frightening reality: a marked slowdown in the expansion of global energy supplies just as demand rose precipitously.
Klare, who is also the author of Resource Wars and Blood and Oil, opined that the combination of rising demand, emergence of powerful new energy consumers and contraction of the global energy supply was demolishing the familiar energy-abundant world and creating in its place a new world order.
“This new world order will be characterised by fierce international competition for dwindling stocks of oil, natural gas, coal and uranium, as well as by a tidal shift in power and wealth from energy-deficit states like China, Japan and the United States to energy-surplus states like Russia, Saudi Arabia and Venezuela.
“In the process, the lives of everyone will be affected in one way or another, with poor and middle-class consumers in the energy-deficit states experiencing the harshest effects,” he said.
In the essay Klare emphasised five key forces in the new world order which would change the planet:
Intense competition between older and newer economic powers for available supplies of energy: Until very recently, the mature industrial powers of Europe, Asia and North America consumed the lion's share of energy and left the dregs for the developing world. However, by 2010, the developing world's share of energy use is expected to reach 40% and, if current trends persist, 47% by 2030.
The insufficiency of primary energy supplies: The global supply of oil will expand for perhaps another half a decade before reaching a peak and beginning to decline, while supplies of natural gas, coal and uranium will probably grow for another decade or two before peaking and commencing their own inevitable declines.
The painfully slow development of energy alternatives: These alternatives, which now contribute only a tiny percentage of the world's net fuel supply, are simply not being developed fast enough to avert the multifaceted global energy catastrophe that lies ahead.
A steady migration of power and wealth from energy-deficit to energy-surplus nations: The transfer of wealth alone is already mind-boggling. The oil-exporting countries collected an estimated US$970bil from the importing countries in 2006, and the take for 2007, when finally calculated, is expected to be far higher.
A growing risk of conflict: Throughout history, major shifts in power have normally been accompanied by violence - in some cases, protracted violent upheavals.
Energy analyst and former Economic Planning Unit deputy director (energy section) Dr Pola Singh said energy efficiency efforts and conservation would need to be intensified.
“The higher the price of energy in a country, the greater will be the efficiency and conservation efforts (for example in Japan).
“However, renewable energy technologies would take time before they become cost-effective due to a lack of economies of scale,” he said, adding that success stories could be found in countries where the governments had intervened in assisting the development of renewable energy such as Germany's solar photovoltaic energy.
Although fossil fuels would continue to play an important role in the world, Royal Dutch Shell plc chief executive Jeroen van der Veer expects to see breakthroughs in renewable energy in future.
“There is a huge amount of brainpower in the world vis-a-vis energy. With technology and a longer time span, we may get breakthroughs which we did not foresee,” he said, adding that Shell invested a lot of money on research and development.
Van der Veer sees potential in renewable energy technologies using hydrogen, algae, carbon dioxide and nuclear power.
“Biofuels will only take off if they are sustainable,” he said.
Pola stressed that energy consumption was on the rise in the country.
According to the Ninth Malaysia Plan (9MP), average annual growth rate of energy demand is expected to increase to 6.3% during the 9MP period (2006 to 2010) from 5.6 % for the 8MP period.
Pola believes Malaysia needs to intensify energy-efficient efforts in the industrial and transport sectors.
“We need to harness, with greater commitment, renewable energy, especially biomass from oil palm waste, and as a last resort, impose fuel rationing,” he said.