Projections of Future Energy Consumption

Both the U.S. Energy Information Administration and the International Energy Agency project robust growth for energy consumption over the next 20 years. However, their definition of ‘robust’ pales alongside the real-world growth experienced by developing countries in the wake of globalization. The EIA projects energy consumption in the developing world to grow at 2.2% annually (a figure they raised to 2.3% in September of 2011). What I hope to show is that, although that may be true for parts of the non-OECD world (Central and Eastern Europe, parts of Latin America and some oil-rich countries that are already consuming as much as they ever will), the parts of the developing world that are also growing rapidly will see their energy consumption rise by 5% per year. At which point the conversation transcends energy and even economics. Energy growth at that pace in Asia and Africa then becomes a political issue. Several political issues, actually.

It’s unfair, of course. The vast energy consumption by the rich world is now taken for granted in this discussion, simply because it has stabilized. Both the EIA and the IEA believe that energy consumption by rich countries will grow by between 0.3% and 0.5% annually over the next 20 years. But that flat line is at the top of a vast quantity of coal, oil, natural gas, nuclear power, hydroelectric power and trace amounts of wind and solar that combine to bring us a life we take for granted, and which we will go to great lengths to protect. We don’t want your territory and we’re willing to pay for your oil and natural gas—but don’t even think about pulling the plug on it. The principal policy question then becomes: now that we’ve got ours, can the world permit the have-nots to get theirs?

The EIA periodically projects future energy consumption for the world, and splits out OECD and non-OECD countries for detailed reporting. In their report, International Energy Outlook 2010, the section World Energy Demand and Economic Outlook uses a compound annual growth rate (CAGR) of 1.4% per year for increased consumption of energy worldwide (Remember that in 2011 they increased their projected totals by 5%). Using a variety of different methods and other reported figures for GDP growth and energy consumption, I will try to show that this figure is too low and offer a range of possible values that may be more useful for planners, politicians and other stakeholders making decisions based on future energy consumption.

At the heart of my higher projection of energy use in the developing world is a very simple observation: Development is a path travelled by many countries, and different countries are at different stages of that journey. By comparing future energy consumption for one country in the developing world to energy consumption in countries that have been at a similar stage in the recent past, I hope to offer a new perspective that may serve to anchor estimates to realistic boundaries.

At this point I should point out that others have remarked on the discrepancy between projections and performance as far as energy use is concerned. However, most of the discussion has been about China. This is natural, as China has outperformed everybody’s expectations and is very hard to ignore. But the fact is that what is happening in China is also happening in Indonesia, the Philippines, Brazil and India, and many other places as well. China is not the only country using energy faster than expected.

One response to “Projections of Future Energy Consumption

  1. Pingback: Welcome to 3000Quads | Cranky Old Crow

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