WORLD ENERGY OUTLOOK 2007: FACT SHEET CHINA HOW WILL CHINA MEET ITS RAPIDLY GROWING ENERGY DEMAND? WILL IT BECOME A MAJOR COAL IMPORTER? It is scarcely in doubt that China s energy needs will continue to grow and fuel its economic development. Less certain, however, is the rate of increase and how those needs are going to be met, as they depend on just how quickly the economy expands and on the economic and energy policy landscape worldwide. Rising incomes will surely underpin strong growth for transport and housing, the use of electric appliances and space heating and cooling. China s primary energy demand is projected to more than double from 2005 to 2030. With four times as many people as the United States, the country will overtake the US to become the world s largest energy consumer soon after 2010. Coal consumption in China is expected to grow rapidly, and its share of total primary energy demand stays high, at 63% in 2030. The power sector remains the main coal user throughout the projection period, accounting for more than two thirds of the incremental demand. Increased fossil fuel use pushes up Chinese CO 2 emissions from 5.1 gigatonnes today to 11.4 Gt in 2030. China s energy resources especially coal are extensive, but will not meet all the growth in its energy needs. More than 90% of Chinese coal resources are located in inland provinces, but the biggest increase in demand is expected to occur in the coastal region. China became a net coal importer in the first half of 2007, and imports are expected to grow in the future. In the Reference Scenario, net imports reach 3% of its demand and 7% of global coal trade in 2030. China s net oil imports jump from 3.5 mb/d in 2006 to 13.1 mb/d in 2030, as conventional oil production in China is set to peak in the next decade and then start to decline. Oil demand for transport almost quadruples between 2005 and 2030, contributing more than two thirds of the overall increase in Chinese oil demand. The vehicle fleet expands seven fold, reaching almost 270 million. New vehicle sales in China exceed those of the United States by around 2015. Fuel economy regulations, adopted in 2006, nonetheless temper the growth in oil demand. To match demand, China needs to add more than 1 300 GW to its electricity generating capacity, more than the total current installed capacity in the United States. Projected cumulative investment in China s energy supply infrastructure amounts to $3.7 trillion (in year 2006 dollars) over the period 2006 2030, three quarters of which goes to the power sector.
China is already making major efforts to address the causes and consequences of burgeoning energy use, but even stronger measures will be needed. In the Alternative Policy Scenario, a set of policies the government is currently considering would cut China s primary energy use in 2030 by about 15% relative to the Reference Scenario. Policies that lead to more fuel efficient vehicles produce big savings in consumption of oilbased fuels. In 2030, oil imports are 3.4 mb/d lower than in the Reference Scenario, reducing China s oil import bill by $760 billion over the Outlook period. More stringent efficiency standards for refrigerators and air conditioners alone cut electricity use by 83 TWh in 2020, compared with the Reference Scenario. This is almost equivalent to annual electricity generation by the Three Gorges Dam. More efficient use of energy has positive environmental benefits. In 2030, SO 2 emissions are 20% lower, compared with the Reference Scenario. NOx emissions are stabilised after 2010. An associated benefit is the dramatic reduction in CO 2 emissions, by an impressive 2.6 gigatonnes. In fact, in the Alternative Policy Scenario, CO 2 emissions stabilise soon after 2020. The majority of the measures have a very short payback period. In addition, one dollar invested in more efficient electrical appliances saves $3.50 on the supply side. As China is a net exporter of vehicles and electrical appliances, efforts to improve the efficiency of these products would contribute to improved efficiency in the rest of the world. The policies described in the Alternative Policy Scenario would be all the more critical were China s economy to grow more quickly than assumed in both the Reference and Alternative Policy Scenarios. In the High Growth Scenario, China s primary energy demand in 2030 would be 23% higher, and coal use alone 21% higher than in the Reference Scenario.
WORLD ENERGY OUTLOOK 2007: FACT SHEET CO 2 EMISSIONS WHAT WILL IT TAKE TO ARREST THE RAPID GROWTH IN GLOBAL CO 2 EMISSIONS? HOW CAN CHINA AND INDIA CONTRIBUTE? Rising CO 2 and other greenhouse gas concentrations in the atmosphere, resulting largely from fossil fuel combustion, are contributing to higher global temperatures and to changes in climate. Urgent action is needed if greenhouse gas concentrations are to be stabilised at a level that would prevent dangerous interference with the climate system. Government action must focus on curbing the rapid growth in CO 2 emissions from coal fired power stations the primary cause of the surge in global emissions in the last few years. In the Reference Scenario, energy related CO 2 emissions jump from 27 gigatonnes in 2005 to 42 Gt in 2030. The United States, China, Russia and India contribute two thirds of this increase. Emissions in 2030 are 1.5 Gt higher than in last year s Outlook, mainly because of higher coal use in China and India. China and India alone account for 56% of the increase in emissions between 2005 and 2030. China will overtake the United States as the world s biggest CO 2 emitter this year. India becomes the third largest emitter around 2015. China s and India s contributions to cumulative global emissions since 1900, however, tell a difference story. From 1900 to 2005, the United States and the EU countries combined accounted for just over half of cumulative global emissions. China accounted for only 8% and India 2%. China s share of emissions from 1900 to 2030 rises to 16%, approaching that of the United States (25%) and the European Union (18%). India s cumulative emissions (4%) are about the same as those of Japan (4%). Measured on a per capita basis, CO 2 emissions in China were only 3.9 tonnes in 2005, 35% of those of the OECD (11 tonnes). China s percapita emissions reach current European levels by 2030. India s percapita emissions are very low, at just over 1 tonne. By 2030, they are projected to double but will still be only about one fifth of those of the OECD. In the Alternative Policy Scenario, global CO 2 emissions stabilise in the mid 2020s, reaching 34 gigatonnes in 2030. Emissions peak and begin to decline in the OECD in 2015. Efficiency improvements, structural change in the economy and fuel switching reduce CO 2 emissions in China by 2.6 gigatonnes in 2030 and in India by 0.9 Gt. In
addition, local pollution is reduced dramatically. SO 2 emissions in China fall by 20% in 2030, compared with the Reference Scenario, and NOx emissions are stabilised after 2010. In India, lower energy demand in the power and transport sectors reduces SO 2 emissions by 27% and NOx emissions by 23% in 2030. In the High Growth Scenario, global CO 2 emissions are 7% higher in 2030 than in the Reference Scenario. Emissions are 23% higher in China in 2030 and 19% higher in India. Emission trajectories in the Reference and High Growth Scenarios are in line with a long term temperature increase of up to 6 C, based on IPCC calculations. In the Alternative Policy Scenario, the projections are consistent with long term stabilisation of atmospheric CO 2 concentration at about 550 parts per million, which corresponds to a temperature increase of 3 C above pre industrial levels. In a 450 Stabilisation Case, which describes a notional pathway of energy use that is consistent with an increase in temperature to a maximum of 2.4 C (the smallest increase in any of the IPCC scenarios), energy related CO 2 emissions peak in 2012 at around 30 Gt and then fall sharply below today s levels to 23 Gt in 2030 19 Gt less than in the Reference Scenario and 11 Gt less than in the Alternative Policy Scenario. Emissions savings come from improved efficiency in fossil fuel use in industry, buildings and transport, switching to nuclear power and renewables, and the widespread deployment of CO 2 capture and storage in power generation and industry. Exceptionally strong and immediate policy action, on an unprecedented scale, would be essential for this to happen. The associated costs would be very high.
WORLD ENERGY OUTLOOK 2007: FACT SHEET GLOBAL ENERGY DEMAND WE ARE FACING AN UNSUSTAINABLE ENERGY FUTURE CAN WE AVOID IT? Global energy needs are expected to grow, with fossil fuels remaining the dominant source, sharply pushing up CO2 emissions with dramatic implications for all countries. China and India are the emerging energy giants in this unsustainable future. Their unprecedented pace of economic development will require ever more energy and will transform the global energy system by dint of their sheer size in their growing weight in international fossil fuel trade. Yet it will transform living standards for billions. The problems of energy security and climate change are global and require global solutions. 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. Vigorous and immediate policy responses are needed to set us on a more sustainable energy path. If governments stick with current policies, the underlying premise of our Reference Scenario, the world s primary energy needs are projected to grow by 55% between 2005 and 2030. Demand reaches 17.7 billion tonnes of oil equivalent, compared with 11.4 billion toe today. About half of the increase in global demand goes to power generation and one fifth to meeting transport needs mostly in the form of petroleum based fuels. Coal sees the biggest increase in demand in absolute terms, in line with the spectacular growth of the past few years. Its share in world final energy consumption increases from 25% in 2005 to 28% in 2030. Over 80% of the increase in coal use arises in China and India. The share of natural gas increases modestly. Electricity use doubles, its share of final energy consumption rising from 17% to 22%. Some $22 trillion of investment in energy supply infrastructure is needed to meet projected global demand. Mobilising all this investment will be challenging. The power sector requires $11.6 trillion of capital expenditure worldwide over the Outlook period, accounting for more than half of total energy supply investments. More than half of the investment in the electricity industry is needed for transmission and distribution networks. China alone needs to invest about $3.7 trillion 17% of the world total and more than all other developing Asian
countries together. India s investment needs are more than $1.2 trillion, most of it in the power sector. Developing countries, whose economies and populations are growing fastest, contribute 74% of the increase in global primary energy use. The emerging countries China and India alone account for 45% of the increase. In aggregate, developing countries make up more than half of the global energy market in 2030, compared with only 41% today. The resurgence of coal, driven primarily by booming power sector demand in China and India, is a marked departure from past WEOs. Higher oil and gas prices are making coal more competitive as a fuel for base load generation. China and India, which already account for 45% of world coal use, drive over four fifths of the increase to 2030 in the Reference Scenario. In the OECD, coal use grows only very slowly, with most of the increase coming from the United States. Rising global coal use will continue to drive up energy related CO 2 emissions over the projection period. In the Alternative Policy Scenario (that assumes that governments around the world implement policies they are currently considering), global primary energy demand grows by 1.3% per year over 2005 2030 0.5 percentage points less than in the Reference Scenario. Global oil demand in this Scenario is 14 mb/d lower in 2030 equal to the entire current output of the United States, Canada and Mexico combined. Coal use falls most in absolute and percentage terms. Energyrelated CO 2 emissions stabilise in the 2020s and, in 2030, are 19% lower than in the Reference Scenario. In the 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), the increase in primary energy demand worldwide amounts to 6% in 2030, compared with the Reference Scenario. Faster economic growth in China and India, absent any policy changes, boosts their energy demand. The stimulus to demand provided by stronger economic growth more than offsets the dampening effect of the higher international energy prices that accompany stronger demand in China, India and some other parts of the world. Global CO 2 emissions are 7% higher in 2030 than in the Reference Scenario, making it all the more urgent for governments around the world to act.
WORLD ENERGY OUTLOOK 2007: FACT SHEET INDIA WHAT ARE THE CONSEQUENCES OF INDIA SUSTAINING ITS RAPID ENERGY GROWTH OVER THE NEXT TWO AND A HALF DECADES? Rapid economic expansion will continue to drive up India s energy needs. Power generation accounts for much of the increase in primary energy demand, given surging electricity demand in industry and in residential and commercial buildings, with most new generating capacity fuelled by coal. Among end use sectors, transport energy demand sees the fastest rate of growth as the vehicle stock expands rapidly with rising economic activity and household incomes. In the absence of strong policy action, higher energy demand will drive up imports of oil, gas and coal, and greenhouse gas emissions. In the Reference Scenario, primary energy demand in India more than doubles by 2030. Power generation capacity, most of it coal fired, more than triples between now and 2030. Coal remains India s most important fuel, its use nearly tripling between 2005 and 2030. Much of India s coal needs from now to 2030 will have to be met by imports. India will continue to rely on imported coal for reasons of quality in the steel sector and for economic reasons at power plants located a long way from mines but close to ports. In the Reference Scenario, hard coal imports are projected to rise almost seven fold. Before 2025, India overtakes Japan to become the world s thirdlargest net importer of oil, after the United States and China. Net oil imports also grow steadily, to 6 mb/d in 2030, as proven reserves of indigenous oil are small. The share of imports in oil demand climbs to 90% in 2030. Yet India s importance as a major exporter of refined oil products will also grow, assuming the necessary investments are forthcoming. Gas production is projected to peak between 2020 and 2030, and then fall back. A growing share of India s gas needs is, therefore, met by imports, entirely in the form of liquefied natural gas. Further pricing reform will determine whether the requisite supply infrastructure is built in a timely manner. Between now and 2030, India needs to invest about $1.25 trillion (in year 2006 dollars) in energy infrastructure three quarters in the power sector. Gross power generation capacity additions exceed 400 GW
equal to today s combined capacity of Japan, Korea and Australia. Attracting electricity investment in a timely manner will be crucial for sustaining economic growth. India becomes the world s third largest emitter of carbon dioxide by 2015. It ranked fifth in 2005. Two thirds of India s emissions come from burning coal, mainly in power stations. This share will increase slightly by 2030. Per capita CO 2 emissions double over the Outlook period, but, in 2030, are still well below those in the OECD today. Stronger policies that the Indian government is now considering could yield large energy savings. In the Alternative Policy Scenario, coal savings mainly in power generation are the greatest in both absolute and percentage terms, thanks to lower electricity demand growth, higher power generation efficiency and fuel switching in the power sector and in industry. Coal imports in 2030 are little more than half their Reference Scenario level, while oil imports are 1.1 mb/d lower. In the Alternative Policy Scenario, lower overall energy consumption, combined with a larger share of less carbon intensive fuels in the primary energy mix, yields savings of 27% in CO 2 emissions by 2030. Emissions are reduced by 0.9 Gt in 2030. Lower energy demand in the power and transport sectors also reduces SO 2 emissions by 27% and NOx emissions by 23% in 2030, compared with the Reference Scenario. In the High Growth Scenario, primary demand is 16% higher than in the Reference Scenario, with coal and oil accounting for most of the difference. Faster economic growth accelerates the alleviation of energy poverty, but results in much higher energy imports, local pollution and CO 2 emissions, if no new policies, as described in the Alternative Policy Scenario, are introduced. In the Reference Scenario, the electrification rate in 2030 in India reaches 96% but nearly 60 million people in rural areas will still lack access. Today, there are some 412 million people without access to electricity in India. In all three WEO scenarios, the number of people without access declines, but it falls much faster in the High Growth Scenario. In that scenario, virtually all households in India have access to electricity in 2030.
WORLD ENERGY OUTLOOK 2007: FACT SHEET OIL IS THERE ENOUGH OIL TO GO AROUND? WHAT ARE THE IMPLICATIONS OF RISING OIL DEMAND IN CHINA AND INDIA FOR GLOBAL ENERGY MARKETS? The world s remaining oil resources are expected to be sufficient to meet rising demand over the next two and a half decades. Much of the increase in demand will come from China and India, driven largely by the rapid growth in demand for mobility. As much of their incremental oil needs will have to be imported, the reliance on a small number of major oil exporters notably in the Middle East is set to grow, raising concerns about energy security. Global oil demand is projected to reach 116 million barrels per day in 2030 in the Reference Scenario 32 mb/d up on 2006. Fastgrowing energy demand for transport is the main driver. Today, there are about 900 million cars and trucks on the world s roads; by 2030, the number is expected to pass 2.1 billion. Some 42% of the increase in global oil demand by 2030 comes from China and India. China accounts for the biggest increase in oil demand in absolute terms of any country or region. World oil resources are estimated to be sufficient to meet the projected growth in demand to 2030, but output becomes more concentrated in OPEC countries provided the necessary investment is forthcoming. OPEC s share of world oil supply jumps from 42% now to 52% by 2030. Although new oil production capacity additions are expected to increase over the next five years, it is very uncertain whether they will be sufficient to compensate for the decline in output at existing fields and keep pace with 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. To maintain growth in production capacity, the oil industry needs to invest a total of $5.4 trillion over the period 2006 2030, mostly for upstream developments and mainly to replace capacity that will become obsolete over the projection period. Underinvestment in the exporting countries could drive up prices in the longer term. China s and India s combined oil consumption increases from 9.3 mb/d in 2005 to 23.1 mb/d in 2030. Almost two thirds of this increase come from the transport sector. The total number of light duty vehicles on the road is projected to jump from about 22 million in 2005 to Copyright 2007 OECD/IEA
more than 200 million in 2030 in China, and from 11 million to 115 million in India. As a result of rising demand and limited indigenous resources, both countries need to import more oil. China s and India s combined oil imports surge, from 5.4 mb/d in 2006 to 19.1 mb/d in 2030 this is more than today s imports of Japan and the United States together. Imports in all other consuming regions also rise. Much of the additional oil imports required by China, India and other countries will come from the Middle East, the scene of most past supply disruptions, and will transit vulnerable maritime routes to both eastern and western markets. Supply disruptions drive up prices to all consuming countries, regardless of where they obtain their oil. Ensuring reliable and affordable supply will be a formidable challenge. The assumed oil prices underlying these projections are slightly higher than in WEO 2006, mainly because of the continuing tightness of crude oil and product markets and supply side constraints (including growing barriers to upstream investment in several resource rich countries and refinery bottlenecks). In this Outlook, the IEA crude oil import price a proxy for international oil prices is assumed to be around $60 in year 2006 dollars in 2015 and to rise slightly to $62 by 2030 (or $108 in nominal terms). Prices of the major benchmark crude oils, West Texas Intermediate (WTI) and Brent, will correspondingly be higher. In 2006, WTI was up $4.40 per barrel compared to the average IEA crude oil import price, and Brent was up $4.53. Future price trends hinge on the investment and production policies of a small number of countries mainly Middle Eastern members of OPEC that hold the bulk of the world s remaining oil reserves, as well as on demand prospects. Oil demand reaches 120 mb/d in 2030 in the High Growth Scenario 3.6 mb/d more than in the Reference Scenario. This scenario assumes higher rates of GDP growth in China and India. These higher rates result in faster growth in energy demand in both countries. But it also boosts international trade between each of the two countries and the rest of the world. Higher growth in energy demand, in turn, coupled with supply constraints, drives up international energy prices. Copyright 2007 OECD/IEA