Speaker

Nobuo Tanaka Executive Director International Energy Agency (IEA)

At Thursday's opening keynote, Daniel Yergin, IHS CERA Chairman, welcomed everyone to Power Day at CERAWeek 2010 and thanked CERAWeek Central Sponsor Microsoft for its support. He then invited Nobuo Tanaka, Executive Director, International Energy Agency (IEA), to share his thoughts on the IEA's current energy outlook. Mr. Tanaka pointed out that the IEA's original mission was to ensure oil security for OECD countries. More recently the organization's role is becoming more comprehensive. The growing supply of shale gas in the United States has changed the global natural gas market, leading to possibly greater use and thus supply concerns. Managing energy demand is becoming more important. Electricity security is also becoming more significant as electric power producers move to incorporate more renewables into the supply mix. Currently government renewable energy policies are "off again, on again." Needed are consistent policies that send the right signals to investors. In response to a question about long-term outlooks, Mr. Tanaka commented that a "historic transformation" is under way, and he envisions an "oil-less recovery" in OECD countries.

In the longer term the IEA envisions a sustainable energy scenario that would enable the world to achieve levels of 450 parts per million (ppm) of greenhouse gas emissions by 2050. This scenario would require the transportation sector to shift away from current technologies and toward a mix of plug-in hybrids, hybrids, and fuel cells. Growth in nuclear power would also be required to meet lower carbon emissions targets. A total of 18 new nuclear power plants by 2030 in China, the United States, and developing economies would be needed. Mr. Tanaka noted that there is already a strong desire in developing economies to use nuclear power. However, security and safety remain key issues. In a lower carbon scenario, the assumption is that these issues can be resolved.

Dr. Yergin asked about IEA's view on China's role in global energy. Mr. Tanaka responded that China could lead the world in greater energy efficiency. He noted that "the next energy surprise could be China's revolution in the use of energy." In the IEA's 445 ppm scenario, the assumption is that China's energy demand peaks in 2002. That will be difficult for China to achieve at the current rate of economic growth.

Mr. Tanaka then turned to China's relationship with the IEA. He noted that he sees a "step-by-step" engagement. The big obstacle to China's membership in the IEA is that membership is restricted to OECD countries. The cooperation between China and IEA member countries is there, and China is interested in best practices of OECD economies, as well as cleaner coal technologies and other areas of mutual interest.

In response to questions about energy efficiency, Mr. Tanaka noted that the "cheap energy age is over." He said he envisions a very different message for consumers as energy efficiency becomes more significant in addressing fundamental energy demand. He also believes that more transparency will be introduced into the market as a way to reduce price volatility. To ensure oil security, oil consumers countries will need to maintain their strategic stockpiles, and energy producers will need to continue their investments.