The changing landscape of the global energy economy

calwest

GOTHENBERG, SWEDEN—In the morning session, the person at the International Energy Agency who produces its World Energy Outlook reports, Fatih Birol, gave an overview of the global energy economy. If there were any theme to the discussion, it was that the things you thought you knew simply aren’t true anymore. Or, as Birol put it, former importing countries are becoming major energy exporters.

There’s no clearer example of this than the US, where shale gas is completely reshaping the energy landscape. It has displaced coal for domestic electricity production, with the suddenly surplus coal largely going to Europe at the moment. (In a later discussion, it became clear that the EU was experiencing the mirror image of the US’ coal trends, with coal use rising there.) Birol predicted that, once the infrastructure was in place to export liquified natural gas, that would also find its way to Europe.

This has sent ripples through the energy economy. Canada, which has largely been sending its excess energy south, is now looking to export more to Asia. If the projected natural gas exports to Europe do take off, Russia will see one of its largest buyers start cutting back on the natural gas it produces (a trend that already started during the EU’s economic downturn).