LONDON The Fukushima disaster could lead to a 15 percent fall in world nuclear power generation by 2035, while power demand at the same time could rise by 3.1 percent a year, according to a draft copy of the International Energy Agency's 2011 World Energy Outlook.
Following the Japanese crisis, many countries put their nuclear power plans on hold or under review, and some, including Germany and Switzerland, opted out of the technology entirely.
The draft, obtained by Reuters ahead of its release next week, said the IEA had developed a "Low Nuclear Case" that assesses possible implications for global energy balances of a much smaller role for nuclear power.
The draft was dated July 2011, and the IEA is scheduled to release the report in London next Wednesday.
"In the Low Nuclear Case, the total amount of nuclear power capacity falls from 393 gigawatt (GW) at the start of 2011 to 339 GW in 2035, compared with an increase to 638 GW in the New Policies Scenario," the report said, a drop of around 15 percent.
The report's main scenario is the "New Policies" scenario.
The Low Nuclear Case is not a forecast but "is intended to illustrate what a pessimistic view of the prospects for the nuclear power industry might entail," the report said.
"The share of nuclear power in total generation drops from 13 percent today to just 7 percent in 2035, with implications for energy security, fuel-mix diversity, spending on energy imports and energy-related CO2 emissions."
The report said "the prospects for nuclear power are now much more uncertain than before the Fukushima nuclear accident" and that it had "greatly increased the uncertainty about the future role of nuclear power in meeting the world's energy needs."
The IEA report said the drop in nuclear generation caused a rise in oil- and gas-fired power generation equivalent to about 0.2 percent of global oil supplies and 0.4 percent of natural gas supplies.
In its New Policies Scenario, the report said it expected world electricity demand to rise from 17,200 terawatt-hours (TWh) in 2009 to almost 31,500 TWh in 2035, an annual growth rate of 3.1 percent.
It estimated total investment in the power sector between 2011 and 2035 at $16.8 trillion.
"Renewable energy technologies, led by hydropower and wind, account for half of this additional capacity and 60 percent of the investment in power generation," the report said.
The report said it expected non-hydro renewables to generate 16 percent of global electricity in 2035, up from 3 percent in 2009.
"The IEA has adjusted the World Energy Outlook over the past decade in 'mini steps' toward more and more renewable energy deployment," said Sven Teske, a senior energy expert at Greenpeace International.
"We are still missing a real change away from false solutions such as nuclear power and carbon capture and storage toward a mix of renewable energy and energy efficiency," he added.
OIL FORECAST UP, GAS DOWN
The draft also said the jump in oil prices in the past year was adding to doubts about near-term economic prospects. Brent crude has risen to around $111 a barrel from around $82 at end-September 2010.
The draft assumed nominal oil prices of $114 a barrel in 2015 and $212 in 2035. Last year's report assumed prices of $104 and $204 by those dates.
As for natural gas, the report the IEA expected prices to drop in the long term.
"Our natural gas price assumptions have been revised downwards because of improved prospects for the commercial production of unconventional gas resources," the IEA said.
In its New Policies Scenario, the report said it expected natural gas prices to reach $12 per million British thermal units (MBtu) in Europe, $14 per MBtu in the Pacific and $9 per MBtu in North America by 2035.
This compares with 13.3 MBtu, 15.3 MBtu and $10.4 MBtu, respectively, in the IEA's previous price outlook for 2035.
Financial analysts shared the IEA's view that new unconventional gas resources would cause gas prices to fall.
"The recent acceleration of discoveries and evaluation of large existing reserves of unconventional gas in countries like China is changing the cost outlook," said Emmanuel Fages, an analyst at Societe Generale.
But he added, "The real question is at what price this gas will be marketed, as contractual frameworks lead to a high price for producers on international markets."
Most gas is supplied via oil-indexed, long-term contracts, and the strength of oil prices is preventing gas prices from dropping despite rising resources.
"In this respect coal remains a cheaper alternative and might actually surprise by keeping a much larger share of generation than what was expected some years ago," Fages said.
MODEST COAL, CO2 RISES
The report said that while coal's share in global power generation could drop by 8 percent to 33 percent, it would remain the largest source of electricity.
The share of natural gas power generation was expected to remain constant around 22 percent.
International steam coal prices could rise modestly to $110 a tonne by 2035 from $99 in 2010, according to the report's key scenario.
That forecast increase is less in percentage terms than for oil or gas because coal production costs are expected to remain low, and demand is seen flattening out by 2020, the IEA said.
Prices for carbon allowances within the European Union were expected to rise to $31 a tonne by 2020, to $41 in 2030, and to $46 per tonne by 2035, the report said.
"CO2 emissions in the power sector increase by over one-fifth between 2009 and 2035, growing more slowly than demand as a result of increased use of low-carbon energy sources and improved plant efficiency."
Under the New Policies Scenario, Australian and New Zealand carbon prices would rise from $30 a tonne in 2020 to $42 in 2030 and to $48 a tonne in 2035.
Korean carbon prices would rise from $18 a tonne in 2020 to $36 in 2030 and $45 in 2035, while Chinese prices would rise from $10 to $23 to $30 a tonne.
The IEA's full WEO 2011 outlook report is due to be published on Wednesday, November 9.
(additional reporting by Alex Lawler and Jacqueline Cowhig, editing by Jane Baird)