5 questions with former Executive Director, International Energy Agency, Nobuo Tanaka

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Q1. The nuclear crisis in Fukushima has triggered a major review of the energy landscape not only in Japan, but globally. What do you think would be the eventual impact on the global energy mix?

Nobuo Tanaka: The devastating Fukushima Daiichi nuclear accident has further complicated energy markets by raising questions about the future role of nuclear power in meeting the world’s energy needs. A few countries have already changed policies, either abandoning previous steps towards building new nuclear plants, as in Italy, or accelerating or introducing timetables for the phase-out of nuclear plants, as in Germany and Switzerland.

According to the International Energy Agency (IEA), possible consequences of a much smaller role for nuclear power in the global energy mix would put upward pressure on energy prices, raise concerns about energy security and make it harder and more expensive to combat climate change. Countries that have limited indigenous energy resources and which were projected to rely relatively heavily on nuclear power, such as Japan and South Korea, could be particularly affected.

However, it is important to stress that in IEA’s base case scenario, a dramatic shift away from nuclear power is actually not projected, as the key economies that are driving expansion of the industry–such as China, India, Russia and Korea–are unlikely to change track.

Q2. The geopolitics of energy insecurity will be a key theme for the 21st Century. What are your thoughts on that?

NT: While the need to mitigate the effects of short-term disruptions in oil markets by taking emergency measures remains important, which has been the IEA’s core mission, in the 21st century, we need to capture the energy landscape under the concept of “comprehensive energy security”. Today, we need to respond to developments arising from the use of more diverse energy sources, including gas and electricity from renewables and nuclear. Energy security in the new era means responding to diverse energy sources interlinked together through new technologies. Here, emerging economies must play a more important role. Our collective energy security can be strengthened by correctly predicting changes and taking the necessary measures.

Q3: You once said: “For the longer-term, to meet environmental concerns, we will require a new global energy revolution to transform the way we produce and use energy.” Can you elaborate on that?

NT: I have consistently called for an “energy technology revolution” that would encompass energy efficiency, renewables, nuclear, carbon capture and storage, smart grids and electric vehicles to realise a secure and sustainable energy future. There is no silver bullet. While we see encouraging developments, we must further accelerate and lock in the revolution in all areas. Governments have an important role to promote R&D in innovative technology within the energy and environmental fields. Companies should take advantage of low-carbon technologies and develop the business opportunities ahead.

Q4. With world demand for energy growing, natural gas is increasingly seen as a more environmentally-friendly option to coal, an alternative to oil and nuclear, and a more mature technology than alternative energy sources such as solar and wind. However, issues such as control of transit pipelines, lack of access to pipeline routes, and the availability of cheap resources such as coal have constrained natural gas consumption in many parts of the world. What should Asian governments and industry do to promote greater adoption of natural gas?

NT: Unconventional gas is shifting the landscape of global natural gas market today. IEA recently released a special report titled “Are We Entering a Golden Age of Gas?”, which presented a scenario in which global use of gas rises by more than 50 percent from 2010 levels and accounts for more than a quarter of global energy demand by 2035. The scenario assumes a rapid increase in gas consumption due largely to low prices from the expansion of unconventional gas exploitation. China accounts for nearly 30 percent of the growth (rising from 110bcm (billion cubic metres) today to 630bcm in 2035). India has also experienced very strong growth in natural gas, but from a low base (quadrupling to 234bcm).

The report concluded that there is strong potential for gas to take on a larger role, but also for the global gas market to become more diversified, and therefore improve energy security. At the same time, gas has a role to play in a low-carbon energy economy, particularly together with carbon capture and storage technology. However, increased gas use in itself is far from sufficient to reach the 2 degrees Celsius goal.

In the Asia-Pacific region, while we have rich gas resources exceeding 220 years of current consumption, further investment to exploration, development as well as LNG facilities is important to match the growing demand.

Q5. Asian countries, particularly China and India, are big consumers of energy. At the same time, many Asian countries including China and India are also making huge investments in energy technologies and R&D. What are the implications for the energy landscape and what role do you see Asia playing in the global energy space?

NT: As IEA’s Outlook clearly tells us, Asian countries are set to play an increasingly important role in global energy markets in the decades ahead. Global energy demand is set to rise by nearly 40 percent between now and 2035, or 1.2 percent per year on average. We expect that emerging economies will make up 93 percent of the growth. China and India alone are expected to account for 36 percent and 18 percent of the rise, respectively. Also, the primary energy demand of the ASEAN countries will expand by more than 80 percent come 2035, an average annual rate of growth of 2.3 percent–which is much faster than the rest of the world.

As a result of these trends, the OECD (Organisation for Economic Co-operation and Development) share of global primary energy demand (which declined from 61 percent in 1973 to 44 percent in 2008) will fall to just 33 percent in 2035. The use of renewable energy will increase substantially in the Asian region as well; increasing six-fold between 2008 and 2035 in China, and four-fold in India.

As a leader, not a follower of the global energy growth in the future, Asia should lead the charge towards establishing a new green growth model that is even more efficient than Japan and Europe today. Through further promoting energy efficiency, renewable energy, nuclear power, carbon capture and storage (CCS), smart grids and electric vehicles, each country can step up its own energy security and sustainability, and consequently, contribute in the global context.

Also, phasing out fossil fuel subsidies in some countries is important. This would represent a triple-win solution of enhancing energy security, reducing greenhouse gas emissions, and bringing about immediate economic gains.

Mr Nobuo Tanaka took over as Executive Director of the IEA on 1 September 2007 and recently stepped down on 1 September 2011. Prior to that, he had been Director for Science, Technology and Industry at the Paris-based Organisation for Economic Co-operation and Development (OECD).

Mr Tanaka will share his views and perspectives on the changing energy landscape at this year’s Singapore Energy Lecture at Singapore International Energy Week 2011, which will take place from 31 Oct to 4 Nov 2011. For more information, visit http://siew.sg/.

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