IEA: Developments in China and India Transforming the Global Energy System; Alarming Consequences for All Countries
|With primary energy demand by 2030 rising 55% in the reference scenario for WEO 2007, coal sees the biggest increase in demand followed by oil and natural gas. Click to enlarge.
Energy developments in China and India are transforming the global energy system as a result of their sheer size and their growing importance in international energy markets, according to the International Energy Agency’s (IEA) World Energy Outlook (WEO) 2007.
However, the consequences of unfettered growth in global energy demand are alarming for all countries, the report continues. If governments around the world stick with existing policies—the underlying premise of the WEO Reference Scenario—the world’s primary energy needs would be 55% higher in 2030 than today.
Developing countries contribute 74% of the increase in global primary energy use in this scenario. China and India together account for 45% of this increase. increase in global primary energy demand in this scenario. Both countries’ energy use is set to more than double between 2005 and 2030.
About half the increase in global demand goes to power generation and one-fifth to meeting transport needs—the latter mostly in the form of petroleum-based fuels.
The transport sector is the principal driver of oil demand in most regions. Globally, transport’s share of total primary oil rises from 45% in 2005 to 52% in 2030. Although biofuels take an increasing share of the market for road-transport fuels, oil-based fuels continue to dominate in the scenario, their share of transport demand falling from 94% to 92% over the projection period.
Worldwide, fossil fuels—oil, gas and coal—continue to dominate the fuel mix. Among them, coal is set to grow most rapidly, driven largely by power-sector demand in China and India. This resurgence of coal is a marked departure from past WEOs. These trends lead to continued growth in global energy-related emissions of carbon-dioxide (CO2), from 27 Gt in 2005 to 42 Gt in 2030—an increase of 57%.
China is expected to overtake the United States to become the world’s biggest emitter in 2007, while India becomes the third-biggest emitter by around 2015. China’s per-capita emissions almost reach those of OECD Europe by 2030.
Consuming countries will increasingly rely on imports of oil and gas—much of them from the Middle East and Russia. In the Reference Scenario, net oil imports in China and India combined jump from 5.4 mb/d in 2006 to 19.1 mb/d in 2030—this is more than the combined imports of the United States and Japan today.
World oil output is expected to become more concentrated in a few Middle Eastern countries—if necessary investment is forthcoming. Although production capacity at new fields is expected to increase over the next five years, it is very uncertain whether it will be sufficient to compensate for the decline in output at existing fields and meet the projected increase in demand. A supply-side crunch in the period to 2015, involving an abrupt escalation in oil prices, cannot be ruled out, WEO notes.
Government action can alter appreciably these trends, the IEA states. If governments around the world implement policies they are considering today, as assumed in an Alternative Policy Scenario, global energy-related CO2 emissions would level off in the 2020s and reach 34 Gt in 2030—almost a fifth less than in the Reference Scenario.
Global oil demand would be 14 mb/d lower—a saving equal to the entire current output of the United States, Canada and Mexico combined.
Measures to improve energy efficiency are the cheapest and fastest way to curb demand and emissions growth in the near term. The savings are particularly large in China and India. For example, tougher efficiency standards for air conditioners and refrigerators alone would, by 2020, save the amount of power produced by the Three Gorges dam. Emissions of local pollutants in both countries, including sulphur-dioxide and nitrous oxides, would also be reduced sharply.
|Even in the alternative policy scenario, CO2 emissions are 27% above current levels. Click to enlarge.
But even in the Alternative Policy Scenario, global CO2 emissions are 27% above current levels in 2030.
In a “450 Stabilization Case”, which describes a notional pathway to long-term stabilization of the concentration of greenhouse gases in the atmosphere at around 450 parts per million, global emissions peak in 2012 and then fall sharply below 2005 levels by 2030. Emissions savings come from improved efficiency in industry, buildings and transport, switching to nuclear power and renewables, and the widespread deployment of CO2 capture and storage (CCS). Exceptionally quick and vigorous policy action by all countries, and unprecedented technological advances, entailing substantial costs, would be needed to make this case a reality.
Economic growth in China and India could turn out to be significantly faster than assumed in the Reference and Alternative Policy Scenarios, resulting in more rapid growth in energy demand, oil and gas imports and CO2 emissions. In a High Growth Scenario, which assumes that China’s and India’s economies grow on average 1.5 percentage points per year faster than in the Reference Scenario, energy demand is 21% higher in 2030 in China and India combined. Globally, energy demand rises by 6% and CO2 emissions by 7%.
The challenge for all countries is to put in motion a transition to a more secure, lower-carbon energy system, without undermining economic and social development. Nowhere will this challenge be tougher, or of greater importance to the rest of the world, than in China and India. Vigorous, immediate and collective policy action by all governments is essential to move the world onto a more sustainable energy path. There has so far been more talk than action in most countries.—WEO 2007