New sources of energy in North America and Brazil mean the OPEC countries will be become less important in quenching the world’s thirst for oil over the next decade, according to the Paris-based International Energy Agency.
But in its new World Energy Outlook report released Tuesday, the IEA said China and India will increasingly drive world demand for energy.
"The dominance of Asia will be more and more visible," IEA executive director Maria van der Hoeven said. "Asia will be the clear centre of the global energy trade."
'We have the tools to deal with such profound market change. Those that anticipate global energy developments successfully can derive an advantage, while those that do not risk taking poor policy and investment decisions'- IEA's Maria van der Hoeven
Energy demand in OECD countries will stop rising over the next 20 years, as emissions targets are put in place and energy efficiency improves, the IEA predicts. But these changes, driven by the rapid expansion of wind and solar power will require a redesign of power markets to ensure adequate investment and long-term reliability, van der Hoeven said.
“Major changes are emerging in the energy world in response to shifts in economic growth, efforts at decarbonization and technological breakthroughs,” she said. “We have the tools to deal with such profound market change. Those that anticipate global energy developments successfully can derive an advantage, while those that do not risk taking poor policy and investment decisions.”
The IEA has 28 member countries and focuses on energy security, economic development and environmental awareness, in its monthly energy reports and yearly outlooks.
Carbon emissions to rise 20%
Its 2013 World Outlook warned that despite environmental policies being implemented by several of the world's largest consumers, including the U.S. and China, current projections show that energy-related carbon dioxide emissions will rise 20 per cent by 2035.
"This leaves the world on a trajectory consistent with a long-term average temperature increase of 3.4 degrees Celsius, far above the internationally agreed 2 degrees Celsius target," the IEA report said.
While Asian countries will increase their overall consumption, their per capital consumption will not approach OECD levels, the report said.
The United States will surpass Russia as the world’s top oil producer by 2015, because of shale gas. The IEA predicted the U.S. could be energy self-sufficient by 2035, but said the Middle East would continue to be an important source of energy for most of the world.
Technology is opening up new types of resources, such as oil and gas from shale and ultra-deepwater fields, that were until recently considered too difficult or expensive to access, but these technologies are only viable with high energy prices, which may tend to promote efficiency, the report said.
Divergence in energy pricing
The IEA noted the divergent prices of energy in different countries. Average Japanese or European industrial consumers pay more than twice as much for electricity as their counterparts in the United States, and even China’s industry pays almost double the U.S. level.
North Americans also enjoy a discount on natural gas, which will be an economic advantage over the near term, IEA economist Fatih Birol said.
“Lower energy prices in the United States mean that it is well-placed to reap an economic advantage, while higher costs for energy-intensive industries in Europe and Japan are set to be a heavy burden,” Birol said.
The IEA points to potential global gas market after LNG exports begin from North America which could equalize energy pricing across the world.