The 2010 edition of the World Energy Outlook was released today (9 November), providing the International Energy Agency’s updated projections of energy demand, production, trade and investment, fuel by fuel and region by region to 2035.

The report, in a new approach, considers three scenarios: current policies; new policies (which assumes commitments on climate change action are honored);  and 450 (this last scenario assumes aggressive action to limit global warming to 2° C  – but not enough to get back to the 350 ppm necessary to minimize the risk of climate catastrophe).

The assumptions underlying the “new policies” scenario are far from realistic. Gail the Actuary has posted this chart from the report at The Oil Drum revealing the questionable assumptions regarding future crude oil production.

Conventional crude oil is shown as holding steady to 2035 at a level slightly below peak levels reached in the period 2005-2008, reflecting some cutback in demand as a result of changes in governmental policies from the “current policies” scenario. In the “new policies” scenario, the IEA projects that oil will not peak until at least 2035 (production does peak, at 86 mb/d, just before 2020 in the 450 scenario – but not due to resource constraints). But notice where the bulk of the world’s oil is projected to come from by then: from “fields yet to be developed or found.” Are we willing to bet our future on the come?

Also, Saudi Arabia is expected to provide the major portion of increased production.

Unfortunately for the EIA, greatly increasing production is something the Saudis have said they won’t be doing. Rather, Saudi Arabia’s King Abdullah has said the kingdom will be saving the country’s hydrocarbon wealth for future generations. Saudi production, at least so far, peaked in 2005 at 9.6 million barrels/day. The Saudis themselves are saying that their production will never exceed ~12 million b/d, under the best of circumstances. And when Ghawar peaks, all bets on future Saudi production are off. Bottom line: even if Saudi Arabia is capable of increasing production and maintaining those increased levels of production over time – which is doubtful – the kingdom has said it won’t do so.

The agency forecasts that China’s demand will soar by 75% between 2008 and 2035, compared to an overall surge of 36% in international energy use. While Americans would still lead the world in per capita energy use, China will overtake the United States as the world’s largest energy user. China’s increased energy use is bad news for Earth’s climate.

The most troubling thing about the EIA’s approach is that it’s demand-driven: the EIA first figures out what the demand for energy would be under its various scenarios, and then deduces where the energy will come from.For example, here’s their scenario of oil demand through 2035 should nations take aggressive action to limit atmospheric CO2 to 450 ppm.

What’s missing is any realization that geological constraints rule, that economic constraints are a consequence of underlying geological realities, and that demand is just a poor stepchild. The current economic crisis should have driven that lesson home.