Isramart Carbon price must rise, IEA director says

Isramart report

The price of carbon emissions must rise to US$180 a metric ton by 2030 to meet greenhouse gas reduction targets, the executive director of the International Energy Agency said.

"An energy revolution is necessary," Nobuo Tanaka said at the Asian Oil & Gas Conference in Kuala Lumpur. European Union carbon dioxide allowances for December traded US$18.82 a ton today on the European Climate Exchange in London.

United Nations scientists say greenhouse-gas output should peak by 2015 or temperatures may rise more than 2 degrees Celsius above pre-industrial levels, adding to the risk of droughts and flooding from climate change.

World energy demand will expand 45% between now and 2030 at an average rate of 1.6% a year, with coal accounting for more than a third of the overall increase, Tanaka said today. Developing nations outside the Organization for Economic Cooperation and Development will account for 97% of the increase in carbon emissions by 2030, he said.

Energy subsidies of about US$310-billion in 2007 in the 20 largest non-OECD countries led by Iran, Russia, China and India are aggravating the environmental damage, Tanaka said.

Governments must make a six-fold increase in spending on renewable ventures relative to recent economic stimulus to meet IEA's 450 parts per million carbon scenario, Tanaka said.

The IEA estimate is based on the world heading to a 450 parts per million of carbon dioxide equivalent trajectory in what IEA calls a 450 ppm scenario. That target for greenhouse gases in the atmosphere would keep temperature increases to about 2 degrees, IEA said. Without policies to curb emissions, temperatures will probably rise 6 degrees.

The implementation of the IEA recommendations globally could save 8.2 gigatons of carbon dioxide a year by 2030, Tanaka said. Renewable and nuclear energy will account for 40% of global power generation from 18% in 2006, he said.

A carbon price of US$50 a ton will boost the cost of producing so-called non-conventional oil, including tar sands, the most, Tanaka said. The cost may rise by as much as US$30 a barrel, he said.