Monthly Archives: January 2012

I looked at projected energy consumption totals for 125 countries that are not part of the OECD (except for Turkey, which I included in a fit of absent-mindedness) and have populations of over 1 million. In 2010, these 125 countries had a combined population of 5.66 billion, and a combined GDP of $18.6 trillion. By 2030, they will account for 6.96 billion people and their combined GDP is projected to be $36.84 trillion.

In 2006, these countries consumed 230.3 quads. The EIA projected (in 2010) that in 2030 these countries will consume 405.6 quads, a CAGR of 2.29%. My methodology indicates that these countries may well consume 636.2 quads, a CAGR of 4.15%.

That would permit the inference that global energy consumption will be closer to 936 quads than the EIA’s 2011 projection of 721 quads in 2030. The difference between the EIA’s estimate and ours—215.9 quads—is more than the current energy consumption of the U.S. and China combined. (I get to that total by assuming that EIA projections are accurate for the OECD at 278.7 quads and developing countries not included in my analysis, at 22 quads.)

What drives the difference? For 106 of the 125 countries, I paired these countries with other, similar, countries that had preceded them along the development path, and used historical figures of per capita energy consumption and per capita GDP to provide new figures. For the other 19 countries I was unable to find suitable pairings and took the EIA estimates instead.

The EIA calculated a 2.2% CAGR for the developing world in their 2010 report (and increased that to 2.3% for their 2011 update). My calculations, when including the countries where we accepted the EIA estimates, showed a CAGR of 4.15%. For the countries where I was able to find a paired country as an analogue, the CAGR was higher, at 5.07%.

The countries where I was unable to find an adequate ‘paired’ country had a 2006 energy consumption total of 33.9 quads and are projected by the 2010 EIA report to consume 58.3 quads. They included major energy producers such as Saudi Arabia, Venezuela and the United Arab Emirates, countries that are already consuming very large amounts of energy per capita. They also included high income states such as Taiwan and Singapore. In both cases I felt that I was unable to determine if further development would result in higher per capita energy consumption.

Thirteen of the countries I paired with examples yielded CAGR figures lower than the EIA. Almost all of those countries were Eastern or Central European states, including Russia. Their energy consumption in 2006 was 41.9 quads, and the EIA projected (in 2010) that their 2030 consumption would be 56.2 quads. My estimate for 2030 energy consumption for these countries was 50 quads.

The BRIC countries (Brazil, Russia, India and China) explain much, but by no means all of the discrepancy between the EIA’s projections and my own. According to my  projections, those four countries will account for 405.36 of the 636.2 quads from this set of developing countries. The EIA had projected (I infer, from the CAGR percentages applied to non-OECD nations) 243.2 quads from the BRICs.

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.

A lot of useful material is available on the internet. However, sites get moved or abandoned, so I am uploading reports here so they’ll always be available.

After I post this I will push it down to the bottom of the blog. I will update it frequently, and am adding links to the reports on the rather longish list of links on the right-hand side of this blog.

Suggestions are welcome for reports to include. If those suggestions come with lengths or attached reports, they will be much easier for me to deal with (hint, hint.)

Energy_and_Environment_in_China, May 2011

International Energy Outlook 2011, DOE EIA

International Energy Outlook 2010, DOE EIA

The World in 2050, Price Waterhouse Coopers

BP Energy Outlook 2030

Caveats

Although I think this research is persuasive, the scope of the topic is wide enough for alternative assumptions, calculations and conclusions. Because the EIA’s reports are widely used and often cited as among the most credible forecasts, the topic is important enough to take seriously, and if this theory is correct, it would be of some use to find this out now, rather than later.

I should also note that although I call the figures here EIA projections, I did not find EIA projections at the country level. I used their global CAGR% for non-OECD countries. (I used the 2.2% CAGR from their 2010 report. The EIA raised that to 2.3% in September of 2011, when they also raised their forecast of global energy consumption to 721 quads in 2030.)

Perhaps most importantly, this study is comparing figures and projections from separate databases, something that should give readers pause. Although I think that one of the strengths of this study is that it actually uses fewer data sources and more historical figures than competing estimates, it remains true that differences in data collection procedures and analysis may have contributed to incorrect findings in this study.

As I mention elsewhere, I consider this the start of a conversation, not the conclusion. It is for this reason that I have tried to maintain a casual—conversational—tone while writing this, for which I ask the indulgence of academics more used to a different style of presentation.

Sources

Sources used throughout this are:

• Projected Population and Growth Rates in Population for Baseline Countries/Regions  2000-2030, Updated: July 20, 2010 based on June 2010 Census Bureau Update, Source: U.S. Census Bureau, International Data Base (http://www.census.gov/ipc/www/idb/)  organized into ERS/USDA Baseline countries and regions, curated by USDA ERS
• World Per Capita Energy Consumption 1980-2006, International Energy Annual, 2006, U.S. DOE EIA, Table E.1c found at http://www.eia.gov/iea/wecbtu.html
•  Real Projected Gross Domestic Product (GDP) and Growth Rates of GDP for Baseline Countries/Regions (in billions of 2005 dollars) 2000-2030, Updated: 12/22/10 Source: World Bank World Development Indicators, International Financial Statistics of the IMF, HIS Global Insight, and Oxford Economic Forecasting, as well as estimated and projected values  developed by the Economic Research Service all converted to a 2005 base year. Curated by USDA ERS
•  EIA Total Primary Energy Consumption, 2006, http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=44&pid=44&aid=2
• EIA projected growth rates for primary energy consumption calculated at 2.2% CAGR