World Energy Outlook 2007

equires $956 billion of capital spending, just over three-quarters of the total for
the energy industry. More than half of each country’s electricity investment goes
to reinforcing and extending networks. Achieving this rate of investment is most
uncertain in India, where the poor financial health of the public utilities has held
back the development of electricity infrastructure in the past. If the power sector
is not reformed as planned, electricity sector investments will continue to place
an unsustainable burden on the budgets of the central and state governments.
Price reform, better management and reduced losses will be crucial to improving
the propensity and ability of the public utilities to invest in the future and to
attract private investors (see Chapter 17 for more details).
The oil sector requires $547 billion of investment in China, equal to 15% of
total energy-investment needs, and $169 billion in India (14%). In China, the
upstream accounts for 47% of total oil investment. Of downstream
investment, CTL accounts for about $41 billion. At 77%, the downstream
share is higher in India, because of the more rapid expansion of refining
capacity relative to demand (to supply export markets). The gas-supply
projections call for cumulative investment of $168 billion in China and
$63 billion in India. Around 55% of this investment is needed upstream in
both countries. The rest goes to LNG terminals, transmission and distribution
networks, and storage facilities.
Investment in the coal-mining industry is relatively modest, at $251 billion
(less than 7% of total energy investment) in China and $57 billion (5%) in
India. 5 The share rises to 40% in China and 39% in India if coal-fired power
stations are included. Coal mining is much less capital-intensive than other
energy sectors. Together, the two countries account for the overwhelming bulk
of projected global coal investment: China for 42% and India 10%.
Alternative Policy Scenario
The results of the Alternative Policy Scenario demonstrate that China and
India can both move to a more economically and environmentally sustainable
development path by enforcing existing government policies more strictly and
introducing new policies that are now being discussed. 6 These actions result in
a significant reduction in energy demand and switching to less polluting, lowand
zero-carbon fuels and technologies. Importantly, these outcomes produce
a net financial benefit for energy consumers and lower costs to the economy as
a whole – even without putting a monetary value on the energy-security and
environmental benefits.
5. The coal-investment projections presented here do not include investment in coal-transportation
infrastructure.
6. See Introduction and Chapters 11 and 18 for details about the methodology used and assumptions
made.
130 World Energy Outlook 2007 - GLOBAL ENERGY PROSPECTS: IMPACT OF DEVELOPMENTS IN CHINA & INDIA