The head of the International Energy Agency said Friday that high crude prices could see its global oil demand forecasts cut further and that billions of dollars of investments are required to boost energy efficiency and cut emissions.
"The high prices have already triggered a demand fall...in some countries, demand is slowing down," IEA Executive Director Nobuo Tanaka said at a press briefing in Tokyo ahead of a meeting of G8 energy ministers and Tuesday's release of the Paris-based agency's widely watched monthly Oil Market Report.
Oil futures traded in New York were $129 a barrel earlier Friday, some 4% below the record $135.09 a barrel hit May 22.
"(While) we still see robust demand from India and China," there's a chance for global oil demand forecasts to be reduced further, he said.
While there are enough oil reserves across the world, resources nationalism, misappropriation of invested money, and other factors have hampered sufficient cash from flowing into new oil projects.
Recent high oil prices have prompted some countries to call for an output hike from the Organization of the Petroleum Exporting Countries. OPEC countries, however, have only partly addressed these calls, saying speculative buying is responsible for the rise. This has angered consumer countries, leading to calls to dissolve OPEC.
But Tanaka didn't blame the cartel. "Since we are not OPEC, we cannot tell them what to do. It's their decision," he said.
"What we can do as energy consuming countries is to become energy efficient," he added.
The IEA, the energy security watchdog of the Organization for Economic Cooperation and Development, May 13 cut its forecast for global oil demand growth this year for the second consecutive month, citing increasing evidence high prices were hurting demand in the U.S. and Europe.
In last month's report, demand growth was revised down by 230,000 barrels a day to 1 million, or up 1.2% from 2007.
Emissions Tanaka, reiterating past warnings, said countries around the world would have to jack-up spending on measures to cut carbon emissions, which are set to rise by 130% from current levels by 2050 if policies in place aren't changed.
The IEA chief said investments of $100 billion to $200 billion a year in the coming decade, and $1 trillion to $2 trillion a year in later decades, will be needed in measures like energy efficiency and carbon capture programs and new nuclear plants to cut carbon emissions in half by 2050.
Total investments of $45 trillion, or 1.1%, of average annual global economic activity are needed in carbon-cutting measures over the period to achieve a 50% cut in emissions by the middle of the century, Tanaka said.
The estimates include the cost of building 32 nuclear power plants a year globally between now and 2050, as part of the battle to cut carbon emissions. Nuclear plants emit virtually no emissions, but are opposed by most environmentalists because of the radioactive waste they produce.