Save $600 bn or spend $360 bn?

The output from the world’s oilfields is declining faster than believed to be. With a natural annual rate of oil output decline of 9.1 percent, India, China and other developing countries’ demand for oil will require investments of $ 360 bn each year until 2030. Even with investment, the annual rate of oil output decline is 6.4 per cent.

That is the gist of a leaked version of the International Energy Agency’s annual report.

The Financial Times that obtained a copy of the report said the watchdog's annual World Energy Outlook report, which studied the biggest fields, showed that without extra investment to raise production, the natural annual rate of output decline was 9.1 percent.

It goes on to acknowledge that current energy trends are not sustainable and that a better balance must be found between the three Es – energy security, economic development and protection of the environment. Energy, it says, must be part of the solution.

In a closely related report, the WWF warns that our global footprint now exceeds the world’s capacity to regenerate by about 30%. If our demands on the planet continue at the same rate, by the mid-2030s we will need the equivalent of two planets to maintain our lifestyles.

As to how we can return to sustainability, WWF advises that we need to reduce natural resource demand by reducing population levels, individual consumption, and lowering the resources used and waste products emitted by producing goods and services.

Sustainable and efficient are clearly the keywords ringing everywhere. Mckinsey Global Institute finds that, under current policies, energy demand in developing countries will increase by 65 percent in the period to 2020, representing 80 percent of global energy demand growth. These countries currently account for 51 percent of global energy demand, and this share will rise to 60 percent in 2020 without further action.

By choosing more energy-efficient cars and appliances, improving insulation in buildings, and selecting lower-energy-consuming lighting and production technologies, developing countries could cut their annual energy demand growth by more than half from 3.4 to 1.4 percent over the next 12 years. This would leave energy consumption some 22 percent lower than otherwise, says MGI.

All this can be achieved by using solely existing technologies. Consumers and businesses in developing countries could secure savings of an estimated $600 billion a year by 2020. Far from costing money, investing in energy productivity generates energy savings that could ramp up to $600 billion annually by 2020 across all developing regions.

Is there any reason why there are no takers? Are there hidden issues?