scenarios for a future energy supply
5.1 price projections for fossil fuels and biomass
The recent dramatic fluctuations in global oil prices have resulted in slightly higher forward price projections for fossil fuels. Under the 2004 ‘high oil and gas price’ scenario from the European Commission, for example, an oil price of just $34 per barrel was assumed in 2030. More recent projections of oil prices by 2030 in the IEA’s WEO 2009 range from $2008 80/bbl in the lower prices sensitivity case up to $2008 150/bbl in the higher prices sensitivity case. The reference scenario in WEO 2009 predicts an oil price of $2008 115/bbl.
Since the first Energy [R]evolution study was published in 2007, however, the actual price of oil has moved over $100/bbl for the first time, and in July 2008 reached a record high of more than $140/bbl. Although oil prices fell back to $100/bbl in September 2008 and around $80/bbl in April 2010, the projections in the IEA reference scenario might still be considered too conservative. Taking into account the growing global demand for oil we have assumed a price development path for fossil fuels based on the IEA WEO 2009 higher prices sensitivity case extrapolated forward to 2050 (see Table 5.1).
As the supply of natural gas is limited by the availability of pipeline infrastructure, there is no world market price for gas. In most regions of the world the gas price is directly tied to the price of oil. Gas prices are therefore assumed to increase to $24-29/GJ by 2050. For the Advanced Energy [R]evolution scenario, the local coal price projections are assumed, which are significantly lower than world market price projections.
5.2 cost of CO2 emissions
Assuming that a CO2 emissions trading system is established across all world regions in the longer term, the cost of CO2 allowances needs to be included in the calculation of electricity generation costs. Projections of emissions costs are even more uncertain than energy prices, however, and available studies span a broad range of future estimates. As in the previous Energy [R]evolution study we assume CO2 costs of $10/tCO2 in 2010, rising to $50/tCO2 by 2050. Additional CO2 costs are applied in Kyoto Protocol Non-Annex B (developing) countries only after 2020.