In a dramatic reversal, the United States is set to become the world’s largest producer of oil by 2017, according to a new report from the International Energy Agency (IEA).

The report predicts that the U.S. will be self-sufficient in energy by 2035, while North America as a whole will be a net oil exporter by 2030.

“North America is at the forefront of a sweeping transformation in oil and gas production that will affect all regions of the world, yet the potential also exists for a similarly transformative shift in global energy efficiency,” said IEA Executive Director Maria van der Hoeven in a statement. “This year’s World Energy Outlook shows that by 2035, we can achieve energy savings equivalent to nearly a fifth of global demand in 2010. In other words, energy efficiency is just as important as unconstrained energy supply, and increased action on efficiency can serve as a unifying energy policy that brings multiple benefits.”

The report sites technological developments that allow drillers to exploit previously inaccessible oil and gas deposits.

EIA’s analysis includes some other surprising facts and forecasts. Subsidies for fossil fuels climbed 30 percent to $523 billion in 2011, nearly six times global subsidies for renewable energy. Meanwhile in the aftermath of the Fukushima disaster, plans for nuclear energy development have been scaled back, although capacity is still expected to rise by 2035.

The report hints that environmental degradation could impact some energy production, noting that the sector already consumes 15 percent of total water use.

“[The energy sector’s] needs are set to grow, making water an increasingly important criterion for assessing the viability of energy projects,” IEA said. “In some regions, water constraints are already affecting the reliability of existing operations and they will introduce additional costs. Expanding power generation and biofuels output underpin an 85% increase in the amount consumed (the volume of water that is not returned to its source after use) through to 2035.”

The report looks at the potential of energy efficiency to reduce consumption and slow the rise in greenhouse gases. Under one scenario where “economically viable” investments are made in efficiency, IEA forecasts oil demand to peak “before 2020″ and be 13 million barrels per day lower by 2035. However these gains are far from guaranteed, according to the report.

“Our analysis shows that in the absence of a concerted policy push, two-thirds of the economically viable potential to improve energy efficiency will remain unrealized through to 2035. Action to improve energy efficiency could delay the complete ‘lock-in’ of the allowable emissions of carbon dioxide under a 2°C trajectory – which is currently set to happen in 2017 – until 2022, buying time to secure a much-needed global climate agreement,” said Fatih Birol, IEA Chief Economist and the WEO’s lead author. “It would also bring substantial energy security and economic benefits, including cutting fuel bills by 20% on average.”

World Energy Outlook 2012 IEA.

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