World Energy Outlook 2007

The High Growth Scenario
Global Energy Prospects
The High Growth Scenario assumes higher rates of GDP growth in China and
India. These higher rates – which bring major benefits in quality of life – result
in faster growth in energy demand in both countries. But it also boosts
international trade between each of the two countries and the rest of the world.
Higher growth in energy demand, in turn, coupled with supply constraints,
drives up international energy prices (see Chapter 4 for details). The impact of
faster growth in China and India on global economic activity and international
energy (and other commodity) prices was modelled using a general
equilibrium model. The results were fed into the World Energy Model to
analyse their overall impact on energy demand and supply for each WEO
region, including China and India. A more detailed description of the
methodological approach can be found in the Introduction to this Outlook. 12
Higher GDP growth in China and India boosts energy demand in those
countries vis-à-vis the Reference Scenario (Table 1.14). In effect, the stimulus to
demand provided by stronger economic growth more than offsets the depressive
effect of higher prices. In 2030, total primary energy demand is 23% higher in
China and 16% higher in India. Worldwide, the increase in demand amounts to
6% in 2030. The impact on energy demand in other regions varies, depending
on the extent to which trade and GDP are affected by faster growth in China and
India and on the sensitivity of demand to higher prices. Demand increases in
some regions and falls in others. The Middle East sees the biggest increases in
demand, reaching 11% in 2030, because their economies grow more strongly –
thanks to stronger demand for its oil and gas exports (mainly from China and
India) and to higher prices. Demand in all three OECD regions, other
developing Asian countries and Latin America falls slightly, due to slower GDP
growth resulting from higher commodity-import costs. Global energy-related
CO 2
emissions are 7% higher in 2030 than in the Reference Scenario and 32%
higher than in the Alternative Policy Scenario (see Chapter 5).
Globally, coal sees the biggest increase in demand in volume terms
(Table 1.15). This is mainly because incremental coal use is concentrated in
China and India. The share of coal in global primary energy demand reaches
30% in 2030, compared with 28% in the Reference Scenario. Oil and gas
demand also increases in China and India, as well as in energy-exporting
regions, though this growth is partially offset by lower demand in the rest of the
world. Excluding biomass, renewables grow most rapidly in percentage terms,
though much less than in the Alternative Policy Scenario.
12. The global economic effects of this scenario are described in Chapter 3 while the impact on
energy security and the environment is described in Chapters 4 and 5. The results for China and
India are summarised in the next chapter and are described in more detail in Chapters 12 and 19.
108 World Energy Outlook 2007 - GLOBAL ENERGY PROSPECTS: IMPACT OF DEVELOPMENTS IN CHINA & INDIA