What if...

"What if" is a game played out by analysts around the world who load data into their crystal balls to forecast the future. Change a couple of assumptions — the "what ifs" — and see how that affects the final result.

Nowhere is this practice more important than in forecasting global energy needs. Individual corporations, industries and governments all over the world need to know where supply and demand is headed for our major sources of energy — oil, natural gas, coal — as well as nuclear and the renewable forms of solar, wind and biomass. The answers are used to predict energy prices and economic growth.

So "what if" worldwide energy policies remain unchanged over the next 25 years?

The International Energy Agency, which serves as an energy adviser for the US and 25 other nations, recently tackled that question in its World Energy Outlook 2005 report. It found that the global demand for energy in 2030 will be 50 percent higher than it is today; more than 60 percent of that demand will be for oil and natural gas.

The IEA contends that the world's energy resources are sufficient to meet that increased demand, two-thirds of which is expected to come from economic and population growth in developing countries, led by China and India. In the US alone, the Department of Energy's Annual Energy Outlook 2005 reports, demand is expected to increase by 36 percent by the year 2025. That's a 1.4 percent annual increase in the US, compared to 1.6 percent globally over a slightly longer period.

Meeting increased demand will come at a huge price. First, the entire energy sector needs to invest about $17 trillion, or about $680 billion a year for 25 years, to keep pace, the international report says. Second, the continued increase in the burning of fossil fuels will raise carbon dioxide emissions by 52 percent, contributing to global warming.

"What if" the global energy sector doesn't ante up the investments? In the critical Middle East and North Africa (MENA) oil and gas fields alone, some $478 billion is needed to expand resources to meet demand. But the IEA notes that investment for production and refining has been stagnant for the past decade, contributing to a lagging supply and the current higher prices.

For instance, there was little interest to search for new resources or build new refineries when oil wallowed at $10.35 a barrel in 1998. With prices rising to $36 a barrel in 2004 (and spiking to $65 a barrel after hurricanes Katrina and Rita closed down refineries and oil rigs in the Gulf of Mexico), observers say more drilling rigs are in use now than anytime since 1986.

If recent trends hold, then investments in the Middle East region will come up 23 percent short of what's needed by 2030. The IEA analysts predict this will cut production in that region, driving up global oil and natural gas prices by a third and slowing down world economic growth.

There's another scenario. "What if" the major energy consuming nations implement the policies they've set for more efficient energy use and reduce their reliance on fossil fuels?

Representatives of the world's eight largest industrialized nations and several developing nations met at the Gleneagles summit in Scotland in July 2005 where they agreed to a 38-point program that promotes greater energy efficiency in cars, trucks, aviation, buildings, power generation and other sectors. The agreement also backed deploying new technologies for cleaner coal, hydrogen fuel cells, and renewable energy.

The IEA says several things happen if those goals are met. Overall energy demand drops to 37 percent from 50 percent in 2030. Oil remains the leading energy source, but its price is 15 percent lower than originally predicted. Coal use drops steeply, and renewable energy use (not counting hydroelectric or biomass) is 30 percent higher.

Further, the policies to use energy more efficiently and to employ fossil fuel alternatives will reduce the growth rate of carbon dioxide emissions. Nevertheless, those greenhouse gas emissions will rise 28 percent over current levels by 2030.

That leads to the biggest question: "What if" the leading industrial and developing nations adopt policies that turned back the growth of carbon dioxide emissions? That's a "what if" even the IEA doesn't address.