The world is failing to move towards a more sustainable path for energy, as it continues its addiction to fossil fuels in the wake of undeniable climate change and growing water scarcity, according to an analysis from the International Energy Agency (IEA).

The most recent World Energy Outlook from the IEA released Monday shows the continued domination of fossil fuels to support the world's growing energy demands.  This continued reliance on fossil fuels is supported by increasing subsidies.

The Outlook states that the U.S., which has also expanded its use of fracking, will surpass Saudi Arabia as the world's largest oil producer by 2020, bringing a change to the direction of international oil exports.

The report admits that limiting global warming to 2 °C is becoming increasingly unlikely. "If action to reduce CO2 emissions is not taken before 2017, all the allowable CO2 emissions would be locked-in by energy infrastructure existing at that time," the group's summary states. And despite growing awareness of climate change, the demand for coal has grown faster than that of renewables.  The Guardian's Fiona Harvey adds that "[i]f governments and companies opt for cheaper fossil fuels in place of environmentally sustainable sources of energy such as wind and sun, then hope of cutting greenhouse gas emissions will be lost."

And the implications of continuing fossil fuel business as usual -- no matter who the biggest producer is -- Damian Carrington writes, toss the notion of "peak oil" on its head. 

the truly global implications of the International Energy Agency's flagship report for 2012 lie elsewhere, in the quietly devastating statement that no more than one-third of already proven reserves of fossil fuels can be burned by 2050 if the world is to prevent global warming exceeding the danger point of 2C. This means nothing less than leaving most of the world's coal, oil and gas in the ground or facing a destabilised climate, with its supercharged heatwaves, floods and storms.

What follows from this is that the idea of peak oil has gone up in flames. We do not have too little fossil fuel, we have far too much. It also follows directly that the world's stock markets are sitting on toxic levels of subprime coal and gas, a giant carbon bubble ready to explode.

The world's energy demands also rely on dwindling water supplies. "Water needs for energy production are set to grow at twice the rate of energy demand," the IEA says. The growing water scarcity will affect energy production including that of fracking and tar sands production.  In addition, the need for irrigation of biofuels will suck up scarce water resources.

World Wildlife Fund (WWF)’s head of climate change, Lou Leonard, stated that

The IEA report confirms that the next several years will be critical for fighting climate change and building a clean energy economy in the US and globally. On the heels of the 2012 US election, this means President Obama must make climate and clean energy a priority in his second term – or risk losing a critical window of opportunity clearly outlined by the IEA.

How the president takes on the climate and clean energy challenge will determine one of the primary legacies he leaves to this and all future generations. It’s not a legacy just about the environment but also about a prosperous economy and strong, safe communities.