/

Energy turmoil threatens Japanese, EU industry, IEA warns

AFP-JIJI

Energy markets are in upheaval, and new price differences will impact industry in Europe and Japan, endangering their shares of global trade in energy-intensive goods, the IEA forecast Tuesday.

Their shares of global exports of goods made with heavy consumption of energy could fall by a third, the International Energy Agency said.

The agency also argued for fuel subsidies to be phased out, and warned that carbon emissions would go on rising, pushing up temperatures around the world.

Developing countries are set to become the drivers of energy demand in the next three decades, the IEA said in its annual look at long-term trends in the energy market.

The shale gas and oil boom in the United States has already shaken up energy markets and along with increased demand in China, India and the Middle East region, is likely to reshape them in the coming years, the Paris-based IEA said in its World Energy Outlook 2013 report.

One of the effects of the shale gas boom has been a drop in energy costs for U.S. companies, raising concerns elsewhere that they are gaining a competitive advantage.

Brazil is set to become increasingly significant as a producer of conventional hydrocarbon energies and also of renewable energy.

“Many of the long-held tenets of the energy sector are being rewritten,” the IEA said.

“Energy price variations are set to affect industrial competitiveness, influencing investment decisions and company strategies,” it said in the report.

It noted that U.S. natural gas prices were one-third of EU import prices and a fifth of those in Japan.

While the IEA expects gas prices to converge as markets become interlinked thanks to the expansion of trade in liquefied natural gas, it expects differences in electricity costs to persist.