World Energy Outlook 2007

SPOTLIGHT
Are China and India Following the Same Energy Development Path?
There are notable similarities in the current energy systems of China and
India, but some important differences too. Both countries’ economies
rely heavily on indigenous coal resources, especially for power
generation. But the share of coal in primary energy use is much higher in
China – at 63% in 2005, compared with only 39% in India. The main
reason is the much bigger share in China’s economy of the industrial
sector – which uses large amounts of coal in both countries. Biomass and
waste also play a much bigger role in India than in China. In India, they
are the second-largest source of primary energy, accounting for 29% of
the country’s needs. In China, the share is only 13%. A striking similarity
is the contribution of nuclear power to electricity generation – around
2% in both countries. China’s per-capita energy use is significantly
higher than that of India, mainly because China is at a later stage of
economic development. Climate and geography also affect energy use.
China and India certainly face similar energy challenges, some shared with
other major energy-consuming countries. Rising fossil-energy use is
causing air quality to worsen in most major cities and putting pressure on
the authorities to require the installation of pollution-control equipment
and to relocate power stations and industrial facilities. And rising energyrelated
emissions of greenhouse-gases will increase the threat of climate
change, which could prove very costly to both countries in the long term.
China is seeking to address these problems in large part by rebalancing the
economy away from energy-intensive heavy industry and towards lighter
manufacturing and services. India’s economy is already much more geared
towards services. India faces the additional challenge of raising finance for
much-needed investment in energy infrastructure, especially in the power
sector. Generating capacity and household access to electricity remain far
below Chinese levels. Market reforms, aimed at expanding the role of the
private sector, establishing cost-reflective prices and improving the financial
health of electricity companies, are the key to mobilising investment.
in China’s crude oil production is offset to a large degree by increased production
from CTL plants, such that overall oil output falls by just 0.2 mb/d between 2006
and 2030. Nonetheless, the rapid increase in oil demand means that net imports
rise sharply, from 3.5 mb/d in 2006 to 7.1 mb/d in 2015 and 13.1 mb/d in 2030
(Figure 2.5). Most of this oil is in the form of crude oil, as China’s refining capacity
is expected to grow broadly in line with domestic demand for oil products.
India is also facing the prospect of increasing dependence on oil imports. Despite
some major discoveries since the late 1990s, India is a mature oil-producing
124 World Energy Outlook 2007 - GLOBAL ENERGY PROSPECTS: IMPACT OF DEVELOPMENTS IN CHINA & INDIA