International Energy Outlook 2002

Highlights

Energy Consumption

• World energy consumption is projected to increase by 60% from 1999 to 2020.
• Much of the growth in world energy consumption is projected to occur in the developing world. Energy demand in developing Asia and Central and South America is projected to more than double between 1999 and 2020 - both regions sustaining energy demand growth of approx 4% pa , accounting for about half of the total projected increment in world energy consumption and approx 83% of the increment for the developing world.
• Energy consumption in the industrialized world is projected to grow by 1.3% pa from 1999 to 2020.

  Oil

• Oil is expected to remain the world's dominant source of primary energy consumption with a 40% share of total energy consumption over the period to 2020.
• World oil consumption is projected to increase by 59% by 2.2 % pa to 2020 from 75 million barrels per day in 1999 to 119 million barrels per day in 2020.
• In 1999, developing nations consumed 58% of the amount of oil consumed in the industrialized world, but by 2020 they are expected to consume almost 90% as much oil as the industrialized world.
• The increase in oil use in the industrialized world is expected to occur predominantly in the transportation sector, where there are presently few economically competitive alternatives to oil.
• In the developing world, oil demand is projected to grow in all end-use sectors.

  Natural Gas

• The fastest growing source of energy consumption in the IEO2002 reference case is projected to be natural gas. Over the 1999-2020 forecast period, gas use is projected to nearly double in the reference case, reaching 162 trillion cubic feet in 2020. Natural 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 38% The natural gas share of total energy consumption is projected to increase from 23% in 1999 to 28% in 2020, and natural gas is expected to account for the largest increment in electricity generation (increasing by 33 quadrillion Btu and accounting for 43% of the total increment in energy use for electricity generation). Much of the projected growth in natural gas consumption throughout the world is in response to rising demand for natural gas to fuel efficient new gas turbine power plants. Gas use is increasing for a number of additional reasons, including price, environmental concerns, fuel diversification and/or energy security issues, market deregulation (for both gas and electricity), and overall economic growth.
• There will be strong growth in natural gas use in the developing world, averaging 5.3% per year between 1999 and 2020, reflecting the growing popularity of the fuel, as well as the expectation that the relatively immature gas markets of emerging countries will develop quickly over the coming years.
• In 1999, coal provided 22% of world primary energy consumption, down from 27% in 1985. In the IEO2002 reference case, the coal share of total energy consumption is projected to fall to 20% by 2020. The expected decline in coal's share of energy use would be even greater were it not for large increases in energy use projected for developing Asia, where coal continues to dominate many fuel markets, especially in China and India. As very large countries in terms of both population and land mass, China and India are projected to account for 83% of the total expected increase in coal use worldwide. Both China and India are expected to continue their heavy dependence on fossil fuels, especially coal.

  Nuclear Power

• Extensions of operating licenses (or the equivalent) for nuclear power plants are expected to be requested and granted among the countries of the industrialized world. With more of the existing nuclear power plants expected to remain in operation, the projected decline in nuclear generation is slowed. In the IEO2002 reference case, world nuclear capacity is projected to rise from 350 GW in 2000 to 363GW in 2010 before falling to 359GW in 2020.

  The highest growth in nuclear generation is projected for the developing world, where consumption of electricity from nuclear power is projected to increase by 4.7% per year between 1999 and 2020. In particular, developing Asia is expected to see the greatest expansion in new nuclear generating capacity. The nations of developing Asia account for half the reactors currently under construction worldwide, including eight in China, four in South Korea, two in India, and two in Taiwan.

  Renewable Energy

• Renewable energy use is expected to increase by 53% between 1999 and 2020, but its current 9% share of total energy consumption is projected to drop slightly to 8% by 2020. Over the forecast horizon, growth in renewable energy resources is expected to continue to be constrained by relatively moderate fossil fuel prices. Renewable energy consumption is expected to be driven by new, large-scale hydroelectric projects, particularly in China, India, Malaysia, and other developing Asian countries. In 2001, construction on mega-hydro projects like China's 18,200MW Three Gorges Dam and Malaysia's 2,400MW Bakun continued amidst criticism of their environmental impacts and concerns about the welfare of the people being relocated to accommodate the projects.

  Electricity

• The world's use of electricity is projected to increase by 69% from 13 trillion kwhrs in 1999 to 22 trillion kwhrs in 2020. The strongest growth rates in electricity consumption are projected for developing Asia, where electricity consumption is expected to grow by 4.5% pa due to robust economic growth .
• There have been two important developments in the electricity sector in recent years that may affect the way the industry works in the future. The first is the increasing role of foreign direct investment in the developing regions of the world. Greater access to foreign investment in the electricity sector has allowed developing nations to construct the infrastructure needed for substantial increases in access to electricity, a particular problem for many developing nations. A second important component of the electric industry's evolution over the past several years is electricity reform. Many developing countries have implemented reforms to the rules governing electricity generation and distribution in an effort to secure the foreign direct investment they need to modernize and improve the electricity infrastructure. In industrialized countries, many nations have undertaken electricity reforms to introduce greater competition in domestic markets in an effort to reduce the cost of electricity to consumers.
• Energy use for transportation is projected to increase by 3.8% pa in the developing world, compared with average annual increases of 1.7% for the industrialized countries, where transportation systems are largely established and motorization levels (per capita vehicle ownership) are, in many nations, expected to reach saturation levels over the 21-year forecast horizon. Per capita motorization in much of the developing world is projected to more than double between 1999 and 2020, although population growth is expected to keep motorization levels low relative to those in the industrialized world. For example, the U.S. per capita motorization level in 2020 is projected at 797 vehicles per thousand persons, but in China where motorization is expected to grow five fold over the forecast horizon the projected motorization level in 2020 is only 52 vehicles per thousand persons.

  Carbon Dioxide Emissions

• World carbon dioxide emissions are projected to increase by 62% by 2020 from 6.1 billion metric tons carbon equivalent in 1999 to 7.9 billion metric tons per year in 2010 and to 9.9 billion metric tons in 2020. 72% of the projected increase in CO2 emissions between 1990 and 2020 is projected to come from the developing world because emerging economies are expected to produce the largest increases in energy consumption. 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 carbon dioxide emissions would still grow substantially over the forecast horizon.
• The IEO2002 projections, like all forecasts, are accompanied by a measure of uncertainty. One way to quantify the uncertainty is to consider the relationship between energy consumption and growth in gross domestic product (that is, energy intensity) over time. In the industrialized countries, history shows the link between energy consumption and economic growth to be a relatively weak one, with growth in energy demand lagging behind economic growth. In the developing countries, the two have been more closely correlated, with energy demand growing in parallel with economic expansion.