AND POVERTY THE WORLD NEEDS FAR MORE ELECTRICITY TO POWER DEVELOPMENT, LATEST GLOBAL ENERGY STUDY FINDS

he latest edition of the the security of international sea World Energy Outlook, lanes and pipelines. And they Tpublished in September will look anew at ways of diver- 2002 by the International sifying their fuels, as well as the Energy Agency (IEA) of the geographic sources of those Organization for Economic fuels. The OECD Alternative Cooperation and Development Policy Scenario demonstrates (OECD), depicts a future in the strong impact that new which energy use continues to policies to curb energy demand grow inexorably, fossil fuels growth and encourage switch- continue to dominate the ener- ing away from fossil fuels could gy mix and developing coun- have on import dependence. tries fast approach OECD Governments and consumers countries as the largest con- are, nonetheless, likely to con- sumers of commercial energy. tinue accepting a degree of risk The ’s energy are in return for competitively undoubtedly adequate to meet ployment of new energy tech- priced energy supplies. 24 rising demand for at least the nologies. Both scenarios con- Necessary expansion of pro- next three decades. But the pro- firm the extent of the policy duction and supply capacity jections in this Outlook raise se- challenges facing governments will call for massive investment rious concerns about the securi- around the world. at every link in the energy sup- ty of energy supplies, invest- A key result of the Outlook is ply chain. Investment of almost ment in energy infrastructure, that energy trade will expand $4.2 trillion will be needed for the threat of environmental rapidly. In particular, the major new power generation capacity damage caused by energy pro- oil- and gas-consuming regions alone between now and 2030. duction and use and the un- will see their imports grow sub- Mobilizing this investment in a equal access of the world’s pop- stantially. This trade will in- timely fashion will require the ulation to modern energy. crease mutual dependence lowering of regulatory and mar- Governments will have to among nations. But it will also ket barriers and the creation of take strenuous action in many intensify concerns about the an attractive investment cli- areas of energy use and supply world’s vulnerability to energy mate – a daunting task in many if these concerns are to be met. supply disruptions, as produc- countries in the developing The Outlook’s core projections tion is increasingly concentrat- world and the former Soviet are derived from a Reference ed in a small number of pro- Union. Most investment will Scenario that takes into ac- ducing countries. Supply secu- be needed in developing coun- count only those government rity has moved to the top of the tries, and it is unlikely to mate- polices and measures that had energy policy agenda. The gov- been adopted by mid-2002. A ernments of oil- and gas-im- The article is based on the separate Alternative Policy porting countries will need to Executive Summary of the World Scenario assesses the impact of take a more proactive role in Energy Outlook, published by the a range of new energy and envi- dealing with the energy security International Energy Agency in ronmental policies that OECD risks inherent in fossil-fuel Paris, France, in September countries are considering trade. They will need to pay 2002. Visit the IEA web site for IAEA BULLETIN, 44/2/2002 adopting as well as of faster de- more attention to maintaining more information at www.iea.org rialise without a huge increase year from 2000 to 2030, reach- Consumption of coal will in capital inflows from indus- ing an annual level of 15.3 bil- also grow, but more slowly than trialised countries. lion tonnes of oil equivalent. that of oil and gas. and Energy-related emissions of The increase will be equal to India together will account for carbon dioxide (CO2)are set to two-thirds of current demand. two-thirds of the increase in grow slightly faster than energy The projected growth is, never- world coal demand over the consumption in the Reference theless, slower than growth over projection period. In all re- Scenario, despite the policies the past three decades, which gions, coal use will become in- and measures taken so far. In ran at 2.1% per year. creasingly concentrated in the Alternative Policy Scenario, Fossil fuels will remain the power generation, where it will however, new policies that primary sources of energy, remain the dominant fuel. many OECD countries are cur- meeting more than 90% of the Power-sector coal demand will rently considering, together increase in demand. Global oil grow with the expected increase with faster deployment of more demand will rise by about 1.6% in gas prices. The deployment efficient and cleaner technolo- per year, from 75 mb/d in 2000 of advanced technologies will gies, would achieve energy sav- to 120 mb/d in 2030. Almost also increase coal’s attractive- ings and promote switching to three-quarters of the increase in ness as a generating fuel in the less carbon-intensive fuels. demand will come from the long term. These developments would transport sector. Oil will re- Role of . The eventually stabilise CO2 emis- main the fuel of choice in road, role of nuclear power will de- sions in OECD countries, but sea and air transportation. As a cline markedly, because few only towards the end of the result, there will be a shift in all new reactors will be built and Outlook period. regions towards light and mid- some will be retired. Nuclear More than a quarter of the dle distillate products, such as production will peak at the end world’s has no ac- gasoline and diesel, and away of this decade, then decline cess to electricity, and two- from heavier oil products, used gradually. Its share of world pri- fifths still rely mainly on tradi- mainly in industry. This shift mary demand will hold steady 25 tional for their basic will be more pronounced in de- at about 7% through 2010, energy needs. Although the veloping countries, which cur- then fall to 5% by 2030. Its number of people without rently have a lower proportion share of total electricity genera- power supplies will fall in the of transportation fuels in their tion will fall even faster, from coming decades, a projected product mix. 17% in 2000 to 9% in 2030. 1.4 billion people will still be Demand for will Nuclear output will increase in without electricity in 2030. rise more strongly than for any only a few countries, mostly in (See box, page 29.) And the other . Primary gas Asia. The biggest declines in number of people using , consumption will double be- nuclear production are expect- crop residues and animal tween now and 2030, and the ed to occur in North America as their main cooking and heat- share of gas in world energy de- and . The prospects for ing fuels will actually grow. To mand will increase from 23% nuclear power are particularly extend electricity supplies to to 28%. New power stations uncertain. Some governments the energy poor and give them will take over 60% of the in- have expressed renewed interest better access to other forms of crease in gas supplies over the in the nuclear option as a modern energy, stronger gov- next three decades. Most of means to reduce emissions and ernment policies and co-ordi- these stations will use com- to improve security of supply. nated international action will bined-cycle gas turbine tech- Renewables. Renewable ener- be essential. nology, a form of generation gy will play a growing role in Fossil Fuels Will Continue favoured for its high energy- the world’s primary energy mix. to Dominate Global Energy conversion efficiency and low has long been a Use. World energy use will in- capital costs. Gas is also often major source of electricity pro- crease steadily through 2030 in preferred to coal and oil for its duction. Its share in global pri- the Reference Scenario. Global relatively benign environmental mary energy will hold steady, primary energy demand is pro- effects, especially its lower car- but its share of electricity gen- jected to increase by 1.7% per bon content. eration will fall. Non-hydro re- IAEA BULLETIN, 44/2/2002 newables, taken as a group, will imports. The Chinese economy of coal will drop from 9% to grow faster than any other pri- will remain exceptionally 7%. Coal use will expand in in- mary energy source, at an aver- dependent on coal, but the dustry, but only in non-OECD age rate of 3.3% per year over shares of oil, natural gas and countries. It will stagnate in the the projection period. Wind nuclear will grow in China’s residential and services sectors. power and biomass will grow energy mix. Increasing oil- and Fossil Energy Resources Are most rapidly, especially in gas import needs will make Ample, But Technologies and OECD countries. But non- China a strategic buyer on world Supply Patterns Will Change. hydro renewables will still markets. The world’s energy resources make only a small dent in glob- Transport Uses Will Outstrip are adequate to meet the pro- al energy demand in 2030, be- All Others. Transport demand, jected growth in energy de- cause they start from a very low almost entirely for oil, will grow mand. Oil resources are ample, base. OECD countries, many the most rapidly of all end-use but more reserves will need to of which have adopted strong sectors, at 2.1% per annum. It be identified in order to meet measures to promote renew- will overtake industry in the rising oil demand to 2030. ables-based power projects, will 2020s as the largest final-use sec- Reserves of natural gas and coal account for most of the growth tor. Transport demand will in- are particularly abundant, in renewables. crease everywhere, but most while there is no lack of urani- Demand Will Rise Fastest in rapidly in the developing coun- um for nuclear power produc- Developing Countries. More tries. OECD transport demand tion. The physical potential for than 60% of the increase in will grow at a slower pace, as renewable energy production is world primary energy demand markets become more saturated. also very large. But the geo- between 2000 and 2030 will Consumption in the residential graphical sources of incremen- come from developing coun- and services sectors will grow at tal energy supplies will shift tries, especially in Asia. These an average annual rate of 1.7%, over the next three decades, in countries’ share of world de- slightly faster than in industry, response to cost, geological and 26 mand will increase from 30% where it will rise by 1.5% per technical factors. In aggregate, to 43%. The OECD’s share year. almost all the increase in energy will fall from 58% to 47%. The Electricity will grow faster production will occur in non- share of the former Soviet than any other end-use source OECD countries, compared to Union and Eastern and Central of energy, by 2.4% per year just 60% from 1971 to 2000. Europe (the transition over the Outlook period. World Increased production in the economies) will fall slightly, to electricity demand will double Middle East and the former 10%. through 2030, while its share of Soviet Union, which have mas- The surge in demand in the total final energy consumption sive hydrocarbon resources, will developing regions results from will rise from 18% in 2000 to meet much of the growth in their rapid economic and popu- 22% in 2030. The biggest in- world oil and gas demand. lation growth. Industrialization crease in demand will come Most of the projected 60% in- and urbanisation will also boost from developing countries. crease in global oil demand in demand. The replacement of tra- Electricity use increases most the next three decades will be ditional biomass by commercial- rapidly in the residential sector, met by OPEC producers, par- ly traded energy will increase especially in developing coun- ticularly those in the Middle recorded demand. Higher con- tries. But the huge difference in East. Output from mature re- sumer prices, as energy subsidies per capita electricity consump- gions such as North America are phased out and international tion between the OECD and and the North Sea will gradual- prices rise, are not expected to developing countries will hard- ly decline. More oil will be- curb energy demand growth. ly change over the projection come available from Russia and China, already the world’s period. The shares of oil and the Caspian region, and this second-largest energy consumer, gas in world final consumption will have major implications for will continue to grow in will also remain broadly un- the diversity of supply sources importance on world energy changed. Oil products will ac- for oil-importing countries. markets as strong economic count for roughly half of final Global crude oil refining ca- IAEA BULLETIN, 44/2/2002 growth drives up demand and energy use in 2030. The share pacity is projected to increase by an average 1.3% a year, become economically attractive contribute a quarter of the in- reaching 121 mb/d in 2030. only towards the end of the crease in CO2 emissions, or 3.6 The growth of capacity will be projection period. As a result, billion tonnes, bringing its total slightly less than that of de- they will power only a small emissions to 6.7 billion tonnes mand for refined products, be- fraction of the vehicle fleet in per year in 2030. Even then, cause of increased utilisation 2030. however, Chinese emissions re- rates and the elimination of International energy trade, main well below those of the some refinery bottlenecks. almost entirely in fossil fuels, . Over 80% of new refining ca- will expand dramatically. The steep rise in projected pacity will be built outside the Energy trade will more than emissions in the Reference OECD, much of it in Asia. double between now and 2030. Scenario illustrates the chal- Refineries will have to boost All oil-importing regions – in- lenge that most OECD coun- their yields of transportation cluding the three OECD re- tries face in meeting their com- fuels relative to heavier oil gions – will import more oil, mitments under the Kyoto products, as well as improve mostly from the Middle East. Protocol. Emissions in those product quality. The increase will be most strik- OECD countries that signed Production of natural gas, re- ing in Asia. The biggest growth the Protocol will reach 12.5 bil- sources of which are more markets for natural gas are lion tonnes in 2010, the middle widely dispersed than oil, will going to become much more of the Protocol’s target period increase in every region other dependent on imports. In ab- of 2008-2012. That is 2.8 bil- than Europe. The cost of gas solute terms, Europe will see lion tonnes, or 29%, above the production and transportation the biggest increase in gas im- target. Russia, like Central and is likely to rise in many places ports. Cross-border gas pipeline Eastern Europe, is in a very dif- as low-cost resources close to projects will multiply, and trade ferent situation, with projected markets are depleted and sup- in liquefied natural gas will emissions considerably lower ply chains lengthen. surge. than their commitments. There are abundant coal re- Rising Demand Will Drive Under the Protocol, lower 27 serves in most regions. Up CO2 Emissions. Global emissions in Russia, Ukraine Increases in coal production, energy-related emissions of car- and Eastern Europe, known as however, are likely to be con- bon dioxide will grow slightly “hot air”, can be sold to coun- centrated where extraction, more quickly than primary en- tries with emissions over their processing and transportation ergy demand. They are project- target. But even “hot air” will costs are lowest — in South ed to increase by 1.8% per year not suffice to compensate for Africa, Australia, China, India, from 2000 to 2030 in the over-target emissions in other Indonesia, North America and Reference Scenario, reaching countries. The overall gap will Latin America. 38 billion tonnes in 2030. This be about 15% of projected New sources of energy and is 16 billion tonnes, or 70% emissions in 2010. If the advanced technologies will more than today. Two-thirds of United States, which does not emerge during the Outlook pe- the increase will come in devel- intend to ratify the Kyoto riod. Non-conventional sources oping countries. Power genera- Protocol, is excluded, the gap of oil, such as and gas- tion and transport will account falls to 2%. to-liquids, are set to expand, as for about three-quarters of new Carbon sequestration and their production costs decline. emissions. storage technologies hold out Fuel cells are also projected to The geographical sources of the long-term prospect of en- make a modest contribution to new emissions will shift drasti- abling fossil fuels to be burned global energy supply after cally, from the industrialised without emitting carbon into 2020, mostly in small decen- countries to the developing the atmosphere. These tech- tralised power plants. The fuel world. The developing coun- nologies, however, are unlikely cells that are expected to tries’ share of global emissions to be deployed on a large scale achieve commercial viability will jump from 34% now to before 2030. They are at an first will involve the steam re- 47% in 2030, while the early stage of development and forming of natural gas. Fuel OECD’s share will drop from are very costly. If their costs cells in vehicles are expected to 55% to 43%. China alone will could be lowered more quickly IAEA BULLETIN, 44/2/2002 than assumed here, this would The Alternative Scenario next three decades will occur in have a major impact on the projections show a marked urban areas. long-term prospects for energy reduction in import dependence Poor people in developing supply. in the major energy-importing countries rely heavily on Policies Under OECD regions. In 2030, OECD gas traditional biomass –wood, Consideration Would Curb demand would be 260 bcm, or agricultural residues and dung Energy Demand and Emissions. 13%, below the Reference –for their basic energy needs. In the Alternative Policy Scenario. The percentage fall in According to information Scenario, implementation of imports would be even greater. specifically collected for this policies that are already under The reduction in EU gas study, 2.4 billion people in consideration in OECD coun- imports by 2030 would be developing countries use only tries would reduce CO2 emis- greater than total current such fuels for cooking and sions by some 2,150 Mt in 2030, imports from Russia and heating. Many of them suffer or 16% below the Reference Norway. The savings in oil from ill-health effects associated Scenario projections described demand would reach 10%, or with the inefficient use of above. This is roughly equal to 4.6 mb/d. traditional biomass fuels. Over the total emissions of Germany, Providing Modern Energy To half of all people relying heavily the United Kingdom, France and The World’s Poor Will Be An on biomass live in India and Italy today. Unfinished Task. Some 1.6 China, but the proportion of the Energy savings achieved by billion people have no access to population depending on the new policies and measures electricity, according to data biomass is heaviest in sub- and by faster deployment of compiled specially for this study. Saharan Africa. more efficient technologies More than 80% of the people The share of the world’s would be 9% of projected de- who currently lack electricity population relying on biomass mand in the Reference Scenario access live in South Asia and for cooking and heating is in 2030. CO2 savings would be sub-Saharan Africa. The projected to decline in most 28 even bigger, because of the ad- majority of them live on less developing regions, but the total ditional impact of fuel switch- than $2 per day, but income is number of people will rise. Most ing to less carbon-intensive not the only determinant of of the increase will occur in fuels. Because of the slow pace electricity access. China, with South Asia and sub-Saharan at which energy capital stock is 56% of its people still “poor” by Africa. Over 2.6 billion people in replaced, CO2 savings in the international definition, has developing countries will early years would be relatively managed to supply electricity to continue to rely on biomass for small – only 3% by 2010 and the vast majority of its cooking and heating in 2030. 9% by 2020. population. That is an increase of more than The biggest reduction in In the absence of major new 240 million, or 9%. In CO2 emissions in the government initiatives, 1.4 developing countries, biomass Alternative Policy Scenario billion people, or 18% of the use will still represent over half of would come from power-gener- world’s population, will still lack residential energy consumption ation, because of the rapid electricity in 2030, despite more at the end of the Outlook period. growth of renewables and sav- widespread prosperity and more Lack of electricity exacerbates ings in electricity demand. advanced technology. The poverty and contributes to its OECD governments are cur- number without electricity in perpetuation, as it precludes rently emphasising renewables 2030 will be 200 million less most industrial activities and the and electricity in their long- than today, even though world jobs they create. Experience in term plans to curb CO2 emis- population is assumed to rise China and elsewhere sions and enhance energy secu- from 6.1 billion in 2000 to 8.3 demonstrates how governments rity. Although the three OECD billion. Four out of five people can help expand access to regions would still not individ- without electricity live in rural modern sources of energy. But ually reach the targets under areas. But the pattern of electrification and access to the , “hot air” electricity-deprivation is set to modern energy services do not could allow the targets to be change, because 95% of the per se guarantee poverty IAEA BULLETIN, 44/2/2002 met. increase in population in the alleviation. ENERGY & POVERTY: DISTURBING LINKS • Some 1.6 billion people – one-quarter of the – have no access to electricity. Over the next three decades, the investment needed for new power generation capacity in developing countries will amount to $2.1 trillion. Even if this investment is secured, in the absence of vigor- ous new policies, 1.4 billion people will still lack electricity in 2030. • Four out of five people without electricity live in rural areas of the developing world, mainly in South Asia and sub-Saharan Africa. But the pattern of electricity deprivation is set to change, be- cause 95% of the increase in population in the next three decades will occur in urban areas. • Some 2.4 billion people rely on traditional biomass – wood, agricultural residues and dung – for cooking and heating. That number will increase to 2.6 billion by 2030. In developing countries, biomass use will still represent over half of residential energy consumption by 2030. • Lack of electricity and heavy reliance on traditional biomass are hallmarks of poverty in develop- ing countries. Lack of electricity exacerbates poverty and contributes to its perpetuation, as it pre- cludes most industrial activities and the jobs they create. • In rural sub-Saharan Africa, many women carry 20 kilogrammes of fuel wood an average of five kilometres every day. The effort uses up a large share of the calories from their daily meal, which is cooked over an open fire with the collected wood. • Poor people in the developing world are constantly exposed to indoor particulate and carbon monoxide concentrations many times higher than World Health Organisation standards. Traditional stoves using dung and charcoal emit large amounts of carbon monoxide and other nox- ious gases. Women and children suffer most, because they are exposed for the longest periods of time. Acute respiratory illnesses affect as much as 6% of the world population. The WHO estimates that 2.5million women and young children in developing countries die prematurely each year from breathing the fumes from indoor biomass stoves. 29 Electrification Rates By Region, 2000

A variety of energy sources energy demand in these coun- and biomass may be cost-effec- for thermal and mechanical ap- tries in the foreseeable future, tive options for specific off-grid plications are needed to bring the development of more effi- applications, but conventional productive, income-generating cient biomass technologies is fuels and established technolo- activities to developing coun- vital for alleviating poverty in gies are more likely to be pre- tries. Nonetheless, because bio- rural areas. Renewable energy ferred for on-grid capacity ex- mass will continue to dominate technologies such as solar, wind pansion. ❑ IAEA BULLETIN, 44/2/2002