By Carola Hoyos and Ed Crooks in
Published: November 10 2009 20:29 | Last updated: November 10 2009 20:29
The International Energy Agency has warned that the price of carbon credits will have to more than double from the levels they now trade at in
In its annual World Energy Outlook report released on Tuesday, the rich countries’ watchdog also warns that the world’s use of fossil fuels – coal, oil and natural gas – will have to peak by the early 2020s.
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Fatih Birol, the IEA’s chief economist, argues the world needs a “revolution” in the energy and vehicle industries.
“We need a deal in Copenhagen [at the climate talks]. We need a signal for the energy industry. Without that, nothing will move,” he says.
In industrialised countries the price of a permit to emit a tonne of carbon dioxide will need to reach $50 by 2020 and $110 by 2030. In developing countries the price would need to reach $30 a tonne by 2020 and $50 by 2030.
Carbon permits now trade at $21 a tonne in the European Union. In the
But the IEA argues that important technology, such as carbon capture and storage, and widespread use of electric and hybrid cars would be economic only if a high price for carbon penalised those extracting and using dirtier energy sources, such as coal and petrol.
Mr Birol says the IEA’s recommendation “is much higher than the current EU price and higher than the discussions taking place in the
Better energy efficiency, especially in power use, rapid growth in renewable energy, and increased use of nuclear power will also be critical to move the world away from fossil fuels, the IEA believes. Second-generation biofuel, which uses plant waste rather than crops, will only make a small contribution, it says.
The greatest responsibility to reduce emissions and help others to do so lies with the
The IEA warns that a quick rebound in global economic growth could again lead to an energy supply crunch similar to the one that helped tip the world into recession in July last year, as supply is constrained by political barriers and the recent drop in investment.
Mr Birol is optimistic that the world will pass energy legislation that will keep atmospheric concentrations of greenhouse gases at 450 parts per million – the level that scientists believe gives the world a 50 per cent chance of keeping the increase in global temperatures within limits thought to be safe.