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Energy : the Next Fifty Years Energy: The Next Fifty Years ow long will conventional H fossil fuels remain the predominant source of energy? Does nuclear power have a future? What new energy technologies are emerging on the horizon? What are the implications of the growing role played by developing countries as producers and users of energy? What can be done to avoid international energy crises in the future? How will the information society affect the production and use of energy? And what will be the long-term implications of international ENERGY environmental agreements for a sustainable energy future? Endeavours to set world energy on a sustainable footing are entering a critical phase. By 2050 the energy landscape could The be completely transformed. A highly diversified mix of conventional and new fuels will be in use; unprecedented levels of energy efficiency in transport systems, housing and other infrastructures will likely have been attained; and people could at last be reaping the rewards of environmentally responsible Next lifestyles. But such a shift towards sustainable use of energy will take decades to achieve. This book reviews the options likely to shape the Fifty Years energy picture over the next half-century, and assesses some of the key issues – economic, social, technological, environmental – that decision-makers in government and corporations will need to address in the very near future. OECD (03 1999 01 1 P) FF 160 ISBN 92-64-17016-2 9:HSTCQE=V\UV[W: -99 ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT FOR ECONOMIC CO-OPERATION ORGANISATION OECD, 1999. Software: 1987-1996, Acrobat is a trademark of ADOBE. All rights reserved. OECD grants you the right to use one copy of this Program for your personal use only. Unauthorised reproduction, lending, hiring, transmission or distribution of any data or software is prohibited. You must treat the Program and associated materials and any elements thereof like any other copyrighted material. All requests should be made to: Head of Publications Service, OECD Publications Service, 2, rue André-Pascal, 75775 Paris Cedex 16, France. Energy: The Next Fifty Years ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came into force on 30th September 1961, the Organisation for Economic Co-operation and Development (OECD) shall promote policies designed: – to achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries, while maintaining financial stability, and thus to contribute to the development of the world economy; – to contribute to sound economic expansion in Member as well as non-member countries in the process of economic development; and – to contribute to the expansion of world trade on a multilateral, non-discriminatory basis in accordance with international obligations. The original Member countries of the OECD are Austria, Belgium, Canada, Den- mark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The following countries became Members subsequently through accession at the dates indicated hereafter: Japan (28th April 1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973), Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996), Poland (22nd Novem- ber 1996) and Korea (12th December 1996). The Commission of the European Communi- ties takes part in the work of the OECD (Article 13 of the OECD Convention). Publié en français sous le titre : ÉNERGIE : LES PROCHAINES CINQUANTE ANNÉES © OECD 1999 Permission to reproduce a portion of this work for non-commercial purposes or class- room use should be obtained through the Centre français d’exploitation du droit de copie (CFC), 20, rue des Grands-Augustins, 75006 Paris, France, Tel. (33-1) 44 07 47 70, Fax (33-1) 46 34 67 19, for every country except the United States. In the United States permission should be obtained through the Copyright Clearance Center, Customer Service, (508)750-8400, 222 Rosewood Drive, Danvers, MA 01923 USA, or CCC Online: http://www.copyright.com/. All other applications for permission to reproduce or translate all or part of this book should be made to OECD Publications, 2, rue André-Pascal, 75775 Paris Cedex 16, France. Foreword In the coming decades, the energy sector will face an increasingly complex array of interlocking challenges – economic, geopolitical, technological, envi- ronmental – and not just in the OECD countries. As the developing world’s popula- tion continues to expand, the energy needs of billions of additional people in rural and especially urban areas will have to be met. Meanwhile, supplies of conven- tional oil and conventional natural gas are expected to decline in the not-too- distant future, becoming increasingly concentrated in the Middle East (oil) and in such countries as Russia and Iran (gas). A further constraint on the use of conven- tional energy resources, including coal, will almost certainly come into play as increasingly tight limits are placed on the total amount of greenhouse gases that can be released into the atmosphere – and that constraint will in turn lead to greater interest in alternative energy sources and technologies. The responses to this varied range of developments will play a crucial role in shaping trade and investment flows, competitive positions, and the structure of economies across the globe, while simultaneously determining mankind’s capacity to construct a sustainable future. Meeting these challenges will require very long lead times. Indeed, renewing the existing patterns of energy production and consumption – transport and other technical infrastructures, the layout of cities, the nature of the industrial capital stock, current technologies, values and attitudes, etc. – could take as long as fifty years. To examine these issues, an OECD Forum for the Future conference was held in co-operation with the International Energy Agency (IEA) in July 1998, in Paris. The event brought together leading players from government, business and research, to explore the challenges and likely trends and developments in world energy through 2050; to examine the opportunities and constraints posed by the likely evolution of key factors such as the geopolitical landscape, new modes of transport and energy technologies, and climate conditions; and to consider, from a multidisciplinary perspective, the range of possible strategic responses. 3 Energy: The Next Fifty Years The conference was organised into four sessions. The first aimed at providing an overview of the energy outlook – first to 2020, then to 2050 – with a view to iden- tifying some of the key uncertainties and challenges. The geopolitical dimension and environmental issues formed the focus of the second session, while the third assessed the likely evolution of energy demand patterns and the potential for energy technologies, old and new. The fourth session was devoted to discussion of strategic options for policy-makers and corporate decision-makers. This publication brings together the papers presented at the meeting, as well as an introduction to the main issues prepared by the Secretariat. The book is published on the responsibility of the Secretary-General of the OECD. 4 Table of Contents Chapter 1:The Long-term Future for Energy: An Assessment of Key Trends and Challenges by Reza Lahidji, Wolfgang Michalski and Barrie Stevens........................................... 7 Chapter 2:World Energy Prospects to 2020: Issues and Uncertainties by Jean-Marie Bourdaire........................................................................................... 29 Chapter 3:Global Energy Perspectives: 2050 and Beyond by Arnulf Grübler..................................................................................................... 41 Chapter 4:Towards a Sustainable Energy Future by Dieter M. Imboden and Carlo C. Jaeger............................................................... 63 Chapter 5:Energy Demand Patterns Towards 2050 by Martin Bekkeheien, Øystein Håland, Reidulf Klovening and Roar Stokholm................................................................................................... 95 Chapter 6:Systems Options for Sustainable Development by Chihiro Watanabe................................................................................................121 Annex:List of Participants.........................................................................................157 5 1 1The Long-term Future for Energy: An Assessment of Key Trends and Challenges 1by 2Reza Lahidji, Wolfgang Michalski and Barrie Stevens OECD Secretariat, Advisory Unit to the Secretary-General Although the uncertainties are considerable, there is a fair degree of consensus on the energy outlook for the next twenty years; possibly the main rea- son is that long-term energy trends are not expected to be subject to radical changes over this time scale. Capital turnover is low, and in power generation, housing and to a lesser extent transportation, most of the capital stock of the com- ing twenty years will use current (or past) technologies. Moreover, the dynamics of energy demand have been quite stable since 1982, and are generally expected to continue along their long-term trajectory. Around 2010/2020, however, the picture might well
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