Oxygen - The Hard Facts of the Future of Energy

In this article head economist of the International Energy Agency,Fatih Birol, reveals what he thinks of the future for the energy industry, from fracking to renewable energy and Nuclear power

In the latest issue of Oxygen, Enel’s scientific magazine, head economist of the International Energy Agency (IEA) Fatih Birol has laid out the current situation and future for the energy industry, which is going through a period in which markets and institutions are facing challenges that will guide energy development over the coming decades.

The most obvious phenomenon that springs to mind is the recovery of gas and oil production in the United States, Canada and some countries in the Middle East, in part thanks to new technologies that enable the harnessing of non-conventional energy sources and improve the extraction of traditional sources.

Innovative fracking techniques for shale gas are turning the USA into one of the world’s top energy producers, surpassing Saudi Arabia for oil and Russia for gas. The oil market will move increasingly towards Asia, while the market for gas will globalise, making the European, American and Asian markets more uniform.

There are growing problems with environmental sustainability, however. Birol writes in Oxygen that low emissions energy sources are having difficulties and growing at a slower rate than what was expected. This is partly due to the fact that many countries place little focus on climate change, but also because the economic crisis has driven several nations to reconsider renewable energy incentives.

The future is equally uncertain for nuclear energy after the events of Fukushima: in the future it will probably be excluded from many countries’ energy mix – like in Germany – and will be reduced in others like France and Japan, while in the United States low gas prices render it uncompetitive. As a result Asia will likely lead the way.

One of the most important tools in reducing greenhouse emissions is energy efficiency, and while many countries have set themselves ambitious targets, they lack political initiatives that could turn these good intentions into tangible results, creating the risk that a golden opportunity might not be seized.