It is “virtually impossible” for the world to keep CO2 emissions within the “safe” limits agreed by world governments just weeks ago in Cancun. Speaking what for climate alarmists is ‘the unspeakable’, Dr Fatih Birol, Chief Economist at the International Energy Agency, was addressing an audience at London’s Imperial College on January 19. And Dr Birol was unequivocal that the world can “kiss goodbye” to its CO2 emissions peaking target set for 2020.

Dr Birol said that the Cancun agreement, just weeks old, stands little chance of achieving the goal of keeping the world’s temperature from rising by 2 degrees C. He cited two main reasons. First, the key emitting nations are not serious about cutting CO2 growth. Second, the shale gas revolution threatens the viability of renewable energy projects worldwide.

EU efforts

Dr Birol’s comments were made within the framework of the European debate and current EU efforts to achieve CO2 emission cuts of 20 or 30 percent by 2020 against 1990 levels. Once again, Dr Birol was stingingly forthright in making the comparison that the EU’s carbon cutting targets goals were “equivalent to just two weeks of China’s emissions”. In a surprising show of negativity about the state of the world’s war on carbon, Dr Birol said, “We would need to double decarbonisation efforts, then double them again to keep emissions within 450 parts per million”. He added, “The bulk of the effort needs to take place in countries where climate change is not high on the policy agenda. We have to be realistic.”

Dr Birol went out of his way to make it clear that he did not blame China because emissions per capita and car ownership were both low and he also urged the EU and the UK to continue to show global “climate leadership”. But given the bleak global carbon war scenario Birol paints, the question must surely be: why bother when it’s game over? The admission from the IEA’s own chief economist is to say the least a damning one given the billions of dollars of public money being poured into a carbon war in which, so it seems, we can have such an insignificant impact.

As grave as that message must be to climate alarmists the world over, the problems don’t end there however. There’s a new kind on the block. And he’s moving in fast.

The impact of shale gas

Dr Birol warned his audience that the “world revolution in unconventional gas sources” was already playing a substantial role – by threatening to negatively impact future investment in global renewable energy projects. He informed the audience that the new shale gas boom in the United States had already led to a 50 percent fall in investment in renewable energy.

The transformation of the US domestic gas industry, directly attributable to the impact from shale gas, had brought US global gas prices down, he said. “It’s cheaper than it was and the supply is more assured. And it’s only half as polluting as coal.” Dr Birol predicted what this would mean. “There will be strong debates between energy and climate and finance ministries round the world,” he said, “about whether investment should continue to support renewables when the situation on gas has so radically changed.”

He further pointed out that companies like Shell – which recently stated it would be producing more gas than oil by 2013 – saw no reason why they should not bid for the same carbon capture and storage subsidies for gas-fired power stations as those currently on offer to renewables projects. Birol also said that gas prices could fall even further if purchasing countries chose to separate gas price rises from oil prices as in the U.S. While Dr Birol noted that “this debate hasn’t started in earnest in the UK” as yet “it surely will”. In fact, all the signs are it may be under way.

Just last week two Lords peers expressed surprise that the government’s Revised Draft National Policy Statements, Britain’s national energy blueprint to 2050, didn’t even mention significant shale gas discoveries in the north of England. As Lord Reay pointed out, “There is the possibility that potentially abundant supplies of unconventional gas will result in considerably lower gas prices.” Another peer, Lord Kenkin, echoed the concern wanting to know why, since shale’s potential contribution was known to the Government last November, the report omitted any mention.

Last Autumn saw gas prices surge in Europe. Across the Atlantic, however, the shale gas glut responsible for flat-lining the US gas price meant that by the end of 2010 Americans were paying half as much for their heating fuel as their shivering British and northern European counterparts.

At the “Prospects for Shale Gas in Britain” gas shale forum in Berlin in mid-January, Professor Mike Stephenson, Head of Science (Energy) at the British Geological Survey, echoed his concern at the lack of interest of the British government in a potential domestic gas bonanza. Citing India, where they are already building huge power stations powered by gas, Stephenson said that he didn’t think the British government was “thinking enough about shale”. He went on to say, in typically British under-stated language, that Tony Blair’s commitment for 15 percent of the country’s energy to come from renewable sources in a desperate bid to meet EU carbon cutting targets was proving “a bit of a bind”.

It seems that Dr Birol is wrong then about one thing: shale gas has already shifted the CO2 debate off the back-burner in Britain.