U.S. ENERGY INFORMATION ADMINISTRATION
Strong Growth in World Energy Demand Projected
Worldwide energy consumption is projected to grow by 59 percent over the next two decades, according to International Energy Outlook 2001 (IEO2001), released today by the Energy Information Administration (EIA). One-half of the projected growth is expected to occur in the developing nations of Asia (including China, India, and South Korea) and in Central and South America, where strong economic growth spurs robust demand for energy over the forecast period.
Many developments in 2000 influenced this year's Outlook. Persistently high world oil prices, stronger than anticipated economic recovery in southeast Asia, and robust economic growth in the former Soviet Union (FSU) that has been sustained for two consecutive years - the first time this has occurred since the collapse of the Soviet regime - have all impacted the mid-term outlook for world energy use.
In 2000, world oil prices rebounded strongly, reaching a daily peak of $37 per barrel, rates not seen since the Persian Gulf War of 1990-1991. The high prices can be traced to a tightening of production by the Organization of Petroleum Exporting Countries (OPEC) and several key non- OPEC countries (Russia, Mexico, Oman, and Norway) and even a full year of robust prices did not significantly relax the industry's tight profitability standards, especially for riskier offshore, deepwater projects. Oil demand in the recovering economies of southeast Asia rebounded more rapidly than anticipated after their 1997-1999 recession. In the IEO2001 Reference Case, oil prices remain at current levels of $25 to $28 per barrel until 2003 when they return to the price trajectory anticipated in last year's outlook for the mid-term.
High world oil prices and improved domestic industrial production helped Russia - the largest economy in the FSU - to record its second year of positive economic growth. In 1999, the FSU experienced its first regional increase in energy use since the break up of the Soviet Union, and the improved economic outlook for Russia and the rest of the FSU leads to a 42 percent increase in energy consumption in the region between 1999 and 2020.
Despite a projected 4.7 percent per year growth in energy use, the IEO2001 Reference Case forecast for China has been lowered by nearly 14 percent in 2020 relative to last year's outlook. This is largely explained by a recorded decline in energy consumption in China between 1997 and 1999. Apparent coal use decreased during this time period in part because of the closing of many inefficient and unprofitable small coal mines. Even though every other form of energy gained, the increase was not enough to make up for coal's decline. Nevertheless, coal remains the main fuel in China's rapidly growing industrial sector, reflecting the country's abundant reserves and limited access to alternative sources of energy, and coal use is projected to advance by 4.3 percent per year over the next two decades.
The rate of worldwide energy and carbon emissions growth would be considerably higher, except for continued improvements in energy intensity. In the IEO2001 forecast, energy intensity (defined as energy consumption per dollar of gross domestic product) in the industrialized world is expected to improve (decrease) by 1.3 percent per year between 1999 and 2020, about the same rate of improvement observed between 1970 and 1999. Energy intensity is also projected to improve in the developing countries - by 1.4 percent per year - as their economies begin to behave more like those of the industrialized countries as a result of improving standards of living that accompany the projected expansion (Figure 1). Intensity in Eastern Europe and the FSU is also projected to improve in concert with expected recovery from the economic and social declines of the early 1990s, though they still remain high relative to the industrialized and developing regions through 2020.
Other report highlights include:
* Natural gas remains the fastest growing component of primary world energy consumption. Over the IEO2001 forecast period, gas use is projected to nearly double in the reference case, reaching 162 trillion cubic feet in 2020. Gas use surpassed coal use (on a Btu basis) for the first time in 1999, and by 2020 it is expected to exceed coal use by 44 percent (Figure 2). Natural gas is expected to account for the largest increment in electricity generation (accounting for 41 percent of the total increment in energy used for electricity generation). Combined-cycle gas turbine power plants offer some of the highest commercially available plant efficiencies, and natural gas is environmentally attractive because it emits less pollutants than does oil or coal.
* Oil currently provides a larger share of world energy consumption than any other energy source and is expected to remain in that position throughout the forecast period. The share of total world energy consumption attributed to oil is projected to remain unchanged over the 1999-2020 time period at 40 percent. Oil's market share does not increase in the forecast because countries in many parts of the world are expected to switch to natural gas and other fuels, particularly for electricity generation. World oil use is projected to increase from 75 million barrels per day in 1999 to 120 million barrels per day in 2020.
* Worldwide consumption of electricity generated from nuclear power is expected to increase from 2,396 billion kilowatthours in 1999 to 2,636 billion kilowatthours in 2015 before declining to 2,582 billion kilowatthours at the end of the forecast period. Most of the growth in nuclear capacity in the reference case is expected to occur in the developing world (particularly developing Asia), where consumption of electricity from nuclear power is projected to increase by 4.9 percent per year between 1999 and 2020. In contrast, some older reactors are expected to be retired in the industrialized world and in Eastern Europe and the FSU, and few new reactors are planned to replace them. Exceptions include France and Japan, where several new reactors are expected to begin operating in the next decade or so.
* Renewable energy use is expected to increase by 53 percent between 1999 and 2020, but its current 9-percent share of total energy consumption is projected to drop to 8 percent by 2020. Despite the high price environment that defined 2000, the IEO2001 reference case projection expects energy prices over the long-term to remain relatively low, constraining the expansion of hydroelectricity and other renewable resources. Much of the growth in renewable energy over the next two decades is attributed to large-scale hydroelectric projects in the developing world, particularly developing Asia, where China, India and other developing nations (Malaysia, Nepal, and Vietnam, among others) are already building or planning to build hydro projects that each exceed 1,000 megawatts.
* Carbon dioxide emissions are projected to grow from 5.8 billion metric tons carbon equivalent in 1990 to 7.8 billion metric tons in 2010 and 9.8 billion metric tons by 2020. Much of the increase in carbon emissions is expected to occur in the developing world, where emerging economies are expected to produce the largest increases in energy consumption. Developing countries alone account for 81 percent of the projected increment in carbon dioxide emissions between 1990 and 2010 and 76 percent between 1990 and 2020. Continued heavy reliance on coal and other fossil fuels, as projected for the developing countries, would ensure that even if the industrialized world undertook efforts to reduce carbon dioxide emissions, worldwide emissions would still grow substantially over the forecast horizon.
International Energy Outlook 2001 is available on EIA's Web site at: ftp://ftp.eia.doe.gov/pub/pdf/international/0484(2001).pdf.
Printed copies of the report will be available in April from the U.S. Government Printing Office, 202/512-1800, or through EIA's National Energy Information Center, 202/586-8800. The World Energy Projection System, the model used to generate the projections that appear in IEO2001, will be available in May 2001, on EIA's Web site: http://www.eia.gov.
EIA Program Contacts: Mary J. Hutzler, 202/586-2222