

If there are any lingering doubts as to whether the age of oil is nearing its end, the International Energy Agency has put them to rest and made it clear that only a massive and immediate investment in sustainable energy will prevent a global crisis.

The agency states in no uncertain terms in its annual World Energy Outlook that "alarming" growth in worldwide energy needs will within a generation threaten energy security, accelerate global climate change and possibly bring worldwide shortages and conflicts.

It’s an unusually pessimistic view from an agency that has long said oil production, with trillions of dollars of investment, could meet rising energy needs. But the explosive growth of China and India has caused a seismic change in thinking at the IEA, which says we must move swiftly, boldly and decisively beyond fossil fuels if we are to avert a crisis.

"All countries must take vigorous, immediate and collective action to curb runaway energy demand," Nobuo Tanaka, head of the IEA, said. "The next ten years will be crucial for all countries… We need to act now to bring about a radical shift in investment in favor of cleaner, more efficient and more secure energy technologies."

Find out why after the jump…

The burgeoning economies of China, which will within three years surpass the U.S. to become the world’s leading energy user, and India have inalterably changed the global energy landscape, making them the focus of the 675-page report released today.

Its projections are staggering. To cite a few: China’s energy needs will grow 5.1 percent annually through 2015. Fuel needs will quadruple as its vehicle fleet approaches 270 million in 2030 – at which point China also will need an additional 1,300 gigawatts of electricity, an amount equal to what the United States currently produces.

The projections for India are no less daunting. The IEA makes a point of saying the two nations’ growth has improved the quality of life for two billion people and therefore "must be accommodated and supported." But it also says "the consequences of unfettered growth in global energy demand are alarming for all countries."

That demand is expected to increase 55 percent by 2030, with China and India accounting for almost half the growth, the IEA says. Fossil fuels will remain the leading source of energy, providing 84 percent of the world’s needs, and oil will continue to dominate the picture as daily demand rises from 85 million barrels today to 116 million in 2030.

The IEA says we’ve got enough oil to make it to 2030 even if we don’t do anything to change course, but you’ve got to wonder how, and at what cost? The CEO of the French oil firm Total recently told the Financial Times the industry is going to have a hard time producing even 100 million barrels a day, and IEA officials told the Guardian that crude oil could hit $159 a barrel by 2030.

More and more of the energy we need will come from the Middle East, as oilfields in the North Sea and Mexico peter out and Canada’s oil sands generate just 3 million barrels a day, the IEA says. That will leave the industrialized world ever more dependent on an increasingly volatile region for its energy.

As an overall piece of the global energy pie, oil will shrink as demand for coal skyrockets 73 percent and the use of natural gas and electricty climb too, the IEA says. Meeting the demand for all that fossil fuel will require investing $22 trillion in the supply infrastructure.

But of perhaps greater concern is the environmental impact of such growth. Without sweeping changes, the report states, carbon dioxide emissions will rise 57 percent to 42 gigatons by 2030. Even under the best case-scenario, which assumes the various proposals by industrialized nations to reduce emissions come to pass, emissions will climb 25 percent.

China and India will account for two-thirds of the increase, and even under the best circumstances any meaningful effort to cut emissions below current levels will require "exceptionally quick and vigorous policy actions by all countires, and unprecedented technological advances, entailing substantial costs," the report states.

So what can we do? The IEA doesn’t offer a whole lot of solutions beyond saying improving energy efficiency – of everything, from automobiles to refrigerators – will be the quickest and cheapest way to begin curbing energy demand and carbon emissions. Clearly that won’t be enough, and the IEA makes that point clear when it says we must explore every option and "a substantial increase is called for in public and private funding for energy technology research, development and demonstration."

How much funding? As we reported in "How Hydrogen Can Save America," the U.S. could shift much of its economy from oil to hydrogen within a decade for $100 billion – about what we spent in today’s dollars to put a man on the moon.

Hydrogen is not without significant hurdles, but they are engineering issues, not scientific ones, which means they can be overcome with enough money. Wind, solar and geothermal power and cellulosic ethanol, to name a few, also hold promise, and nuclear power can serve as a stopgap while they mature. As we noted in "Why $5 Gas is Good For America," all of these options grow more attractive – and viable – as the price of oil moves ever closer to $100 a barrel, and all of them should be pursued. Market forces and other factors will sort out what’s feasible and what’s not.

The IEA says "we do not have the luxury of ruling out any of the options for moving the global energy system onto a more sustainable path," and it’s right. It’s time to move beyond oil.