World Energy Outlook 2007

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The results presented here should be treated with caution. They are very sensitive to a range of modelling assumptions, especially those concerning capital flows and the speed with which trade and capital imbalances are corrected. The sensitivity of energy prices to supply-side constraints and to assumed rigidities in productive sectors is also important. Economic policies will also play a critical role in sustaining the pace of global economic growth: rising protectionism could radically change the global impact of economic growth in China and India. With respect to energy, faster implementation of policies to use energy more efficiently and reduce emissions, as described in the Alternative Policies Scenario, would increase the net benefits to China and India, as well as to the rest of the world, by reducing pressures on international commodity markets and lowering fuel-import costs. 158 World Energy Outlook 2007 - GLOBAL ENERGY PROSPECTS: IMPACT OF DEVELOPMENTS IN CHINA & INDIA
CHAPTER 4 THE WORLD’S ENERGY SECURITY HIGHLIGHTS Rising global energy demand, to which China and India contribute, has important implications for the world’s energy security. The reliance of all consuming countries on oil and gas imports will grow markedly in the absence of new policies in major countries to curb demand. Ensuring reliable and affordable supply will be a formidable challenge. Increased trade could bring mutual economic benefits to all concerned, but it carries heightened risks, for consuming countries generally, of short-term supply interruptions, as geographic supply diversity is reduced and reliance grows on a few supply routes. Much of the additional oil imports required by China, India and other countries will come from the Middle East, the scene of most past supply disruptions, and will transit vulnerable maritime routes to both eastern and western markets. Supply disruptions drive up prices to all consuming countries, regardless of where they obtain their oil. The increasing concentration of the world’s remaining oil reserves in a small group of countries – notably a few Middle Eastern producers and Russia – will increase their market dominance and their ability to impose higher prices in the longer term. Their share of gas supply is also likely to rise. In the Reference Scenario, almost three-quarters of the growth in world oil production and 43% of gas production come from the Middle East and Russia. With stronger global energy demand, all regions would be faced with higher energy prices in the medium to long term in the absence of concomitant increases in supply-side investment or stronger policy action to curb demand growth in consuming countries. The faster the increase in the call on oil and gas from the leading exporters, the more likely it will be that they will seek to extract a higher rent from their exports in the future. China’s and India’s growing participation in international trade amplifies the importance of their contribution to collective efforts to enhance global energy security. The more effective are their policies to avoid or handle a supply emergency, the more other consuming countries stand to benefit. Equally, efforts by other consuming countries bring important benefits to China and India. Most energy-security policies also bring environmental benefits. Chapter 4 - The World’s Energy Security 159
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INTERNATIONAL ENERGY AGENCY WORLD E
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INTERNATIONAL ENERGY AGENCY WORLD E
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FOREWORD World leaders have pledged
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ACKNOWLEDGEMENTS This study was pre
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Helen Dickinson Carmen Difiglio Sim
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Tarhan Feyzioğlu John Fu Hu Gao We
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Comments and questions are welcome
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GLOBAL ENERGY TRENDS ENERGY TRENDS
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Explaining China’s and India’s
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Oil Resources and Reserves 318 Oil
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16 17 Reference Scenario Demand Pro
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List of Figures Introduction 1. Sha
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3.9 Share of Energy in World Intern
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9.7 International Comparison of Fle
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13.5 Contribution of the Coastal Re
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18.4 India’s CO 2 Emissions in th
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2.2 Sectoral Shares in Final Energy
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11.6 Key Policy Assumptions in Chin
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List of Boxes Introduction 1. Model
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16.5 Kerosene Use in Rural Areas of
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World Energy Outlook Series World E
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above current levels in 2030. To ac
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Reference Scenario. In the High Gro
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Reference Scenario, primary energy
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By contrast, faster implementation
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of this increase. China is by far t
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There are large potential gains to
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India are now so big that they are
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of the two giants in international
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second trading period (2008-2012) o
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Table 1: World Population Growth (a
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high (see below). In the longer ter
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Table 3: Fossil-Fuel Price Assumpti
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$41 per tonne to $63 in 2006 (in ye
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In line with last year’s Outlook,
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equilibrium for international trade
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CHAPTER 1 GLOBAL ENERGY TRENDS
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standards for vehicles and new meas
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Figure 1.2: Increase in World Prima
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Global primary energy intensity, me
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Figure 1.6: Share of Transport in P
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Russia, Central Asia, Latin America
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It is certainly possible that decli
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Table 1.5: World Primary Natural Ga
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developments in clean coal technolo
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in the form of coking coal, grow st
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(Table 1.8). India and China experi
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Table 1.9: Cumulative Investment in
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policy implementation is critical:
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transition economies, because there
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15.1% in 2030, compared with 11.7%
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Table 1.12: World Primary Natural G
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Figure 1.19: Incremental Non-Fossil
Page 109 and 110: Figure 1.20: Fuel Mix in World Powe
Page 111 and 112: Table 1.14: World Primary Energy De
Page 113 and 114: The regional effect on oil imports
Page 115 and 116: in the Reference Scenario to 1 481
Page 117: The High Growth Scenario projection
Page 120 and 121: Reference Scenario Energy Demand Th
Page 122 and 123: having rebounded in the early part
Page 124 and 125: 80% Figure 2.3: Fuel Mix in Power G
Page 126 and 127: SPOTLIGHT Are China and India Follo
Page 128 and 129: For both China and India, the story
Page 130 and 131: imports are projected to rise furth
Page 132 and 133: equires $956 billion of capital spe
Page 134 and 135: Table 2.4: Primary Energy Demand in
Page 136 and 137: Figure 2.9: Primary Energy Demand i
Page 138 and 139: China and India in the Global Econo
Page 140 and 141: production and exports of manufactu
Page 142 and 143: International Trade and Financial F
Page 144 and 145: total coal use in 2005, and the sec
Page 146 and 147: total stock of Chinese ODI amounted
Page 148 and 149: fear that Chinese and Indian export
Page 150 and 151: SPOTLIGHT (continued) In general, e
Page 152 and 153: Box 3.2: Modelling Economic and Ene
Page 154 and 155: Table 3.2: Fossil-Fuel Prices in th
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Page 158 and 159: Table 3.3: World Real GDP Growth in
Page 162 and 163: Energy Security in a Global Market
Page 164 and 165: ■ Adequate investment in producti
Page 166 and 167: efined products are global commodit
Page 168 and 169: Figure 4.1: Share of China and Indi
Page 170 and 171: Figure 4.3: Share of China and Indi
Page 172 and 173: Figure 4.4: Oil Export Flows from t
Page 174 and 175: Table 4.3: Net Natural Gas Imports
Page 176 and 177: Coal Coal dominates energy use in C
Page 178 and 179: Energy savings Diversification of f
Page 180 and 181: In China, oil security has emerged
Page 182 and 183: deprive the companies of profits an
Page 184 and 185: western markets. Any disruption to
Page 186 and 187: 2015 and 20% higher in 2030. The ri
Page 188 and 189: Figure 4.10: Major World Oil Supply
Page 190 and 191: imports is demonstrated by the Alte
Page 192 and 193: prices to all consuming countries m
Page 194 and 195: Energy-Related CO 2 Emissions Globa
Page 196 and 197: In the past two-and-a-half decades,
Page 198 and 199: Transport contributes roughly a fif
Page 200 and 201: Box 5.1: Regional Air Quality (Cont
Page 202 and 203: Box 5.2: Which Countries Emit the M
Page 204 and 205: egion (Table 5.3 and Figure 5.10).
Page 206 and 207: Figure 5.11: Change in Carbon Inten
Page 208 and 209: Table 5.4: CO 2 Concentrations and
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illustrate the magnitude and urgenc
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Energy Demand by Sector CO 2 emissi
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Figure 5.13: Electricity Generation
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The capital costs involved in stabi
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Focus on Prospects for Clean Coal T
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Technologies involving the absorpti
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There are a number of barriers to t
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scheduled to operate in the first h
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CHAPTER 6 ENERGY POLICY RAMIFICATIO
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■ Conserving energy: Conservation
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The results of our Alternative Poli
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increasing need for oil and gas. Th
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Co-operation is a two-way street; I
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Technology Co-operation and Collabo
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continue to make an important contr
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een registered, are being validated
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PART B CHINA’S ENERGY PROSPECTS
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The Political Context 1 Established
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percentage points over 2001. 3 In 2
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education. However, the government
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Capital accumulation was boosted by
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several times since the beginning o
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Yet pockets of extreme poverty rema
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year over the projection period, re
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infrastructure, housing and service
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CHAPTER 8 OVERVIEW OF THE ENERGY SE
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In the 1980s and 1990s, energy dema
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Industry has long been the largest
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Figure 8.3: China’s Energy Produc
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Figure 8.4: Organisation of Energy
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Box 8.2: Energy Goals in China’s
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Box 8.3: Coal-Based Alternative Fue
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projects are still the largest alte
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of these businesses. In its early s
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and retail competition, but much wo
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Access to Modern Energy China has a
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CHAPTER 9 REFERENCE SCENARIO DEMAND
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growth (Table 9.1). It is possible
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Table 9.3: China’s Primary Energy
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with an 89% share in 2005. By 2030,
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exported goods was only 197 Mtoe, o
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energy intensity of 9% in steel pro
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Non-Metallic Minerals The non-metal
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to 7.0% in 2005-2015 and 4.4% in 20
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Box 9.2: Prospects for Alternative
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develop their own-brand vehicles in
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standards are most stringent for he
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nearly one-fifth of the increase in
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in cities is assumed to grow steadi
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Appliance efficiency improvements w
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FGD units installed, along with the
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Table 9.8: Emissions of Major Pollu
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generate almost 1.2 billion CERs by
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CHAPTER 10 REFERENCE SCENARIO SUPPL
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Figure 10.1: China’s Oil and Gas
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Table 10.2: China’s Oil Productio
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Oil Refining China’s refining cap
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Saudi Aramco taking combined stakes
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Box 10.2: China’s Emergency Oil S
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which close to 90% are onshore (Tab
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Table 10.5: China’s Natural Gas P
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e built, because of concerns about
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coal resources lie in the provinces
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Table 10.7: China’s Coal Producti
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of 829 Mt of coal each year by the
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An outside-plan spot market has exi
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Figure 10.13: China’s Hard Coal T
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Figure 10.14: Electricity Generatio
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China is pursuing a dual objective
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Capacity Requirements In the past t
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to consumers approximately 70% of a
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8 Figure 10.17: Plant Generating Co
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undertaken because of its economic
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China designated biofuels as a prio
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could help China achieve its object
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Background and Assumptions China’
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and consumption technologies. By 20
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Reference Scenario. More than two-t
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The most striking difference concer
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The slow-down in the growth of CO 2
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power generation and improving the
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of nuclear power reaches 6% of tota
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educing industrial consumption, eit
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towards gas-based ammonia productio
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Summary of Results In the Alternati
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Table 11.8: Policy Assumptions in C
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improve and appliance ownership inc
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Box 11.2: Cost-Effectiveness of Imp
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Investment in fossil-fuel supply is
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On the other hand, higher economic
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two-thirds of incremental oil deman
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Of the main final sectors, the tran
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Higher international prices also bo
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128 bcm to 216 bcm in 2030. In orde
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generation reaches 7.4 MWh, close t
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Though higher economic growth would
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The magnitude of the region’s imp
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Table 13.1: Economic Indicators by
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Figure 13.2: Share of the Coastal R
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Figure 13.3: Provincial Energy Inte
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incremental final energy demand. Fo
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Industry Industry is today the main
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the population in Beijing having ac
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The coastal provinces, with a deman
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APPENDIX TO CHAPTER 13: CHINA COAST
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PART C INDIA’S ENERGY PROSPECTS
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The Political Context India is a fe
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up from 9% in 2005 and 8.3% in 2004
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Assam are on average poorer than ma
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in manufacturing productivity was t
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Economic Challenges Continuation of
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South Asia is the least integrated
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Box 14.2: Special Economic Zones in
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ecently extended into petrochemical
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CHAPTER 15 OVERVIEW OF THE ENERGY S
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after China and the United States.
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Box 15.1: India's Energy Statistics
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which was created in 1984 to reduce
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■ Electricity Regulatory Commissi
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and production, and in liquefied na
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(because of the captive restriction
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Table 15.3: India's Integrated Ener
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of Finance's Economic Survey 2006-2
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Box 15.3: Public-Private Partnershi
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CHAPTER 16 REFERENCE SCENARIO DEMAN
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Most energy prices in India are con
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Energy demand in the residential se
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Iron and Steel Industry India’s i
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80%. Past subsidies eliminated ince
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The transport sector currently cons
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Box 16.3: Upside Potential of Trans
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Figure 16.6: Residential Fuel Mix i
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Biomass use in urban households 14
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Kerosene and LPG supply 83% of the
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Other Sectors The services sector a
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from other sources - mainly industr
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Despite improvements in thermal eff
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Oil Supply Resources and Reserves I
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and decline to just under 400 kb/d
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expansions of cracking units. Betwe
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For crude oil alone, India's import
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Figure 17.5: Main Oil and Gas Infra
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come from offshore non-associated g
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Figure 17.7: India's Natural Gas Ba
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98 billion tonnes, principally in J
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Table 17.8: Coal Production in Indi
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15 000 Figure 17.9: Coal-Mining Pro
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Figure 17.10: India's Coal Producti
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India's coal-fired power plants are
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Box 17.4: CO 2 Capture and Storage
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Box 17.5: India's Nuclear Power Gen
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8 Figure 17.13: Electricity Generat
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India receives abundant solar radia
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in power generation alone is estima
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In 2005, revenues from electricity
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Figure 17.17: Electricity Losses by
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were shut down. Despite past proble
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CHAPTER 18 ALTERNATIVE POLICY SCENA
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Key Results Energy Demand Primary e
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energy demand in the Alternative Po
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18 Figure 18.3: Local Air Pollutant
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Box 18.1: The Impacts of Climate Ch
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Summary of Results Total electricit
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Box 18.2: Performance of India's Co
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1970s hydropower accounted for arou
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35 Figure 18.8: India's Energy Savi
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to compressed natural gas (CNG), wh
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Delhi has encountered problems rela
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Policy Scenario, it is assumed that
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Figure 18.11: Change in Investment
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tariffs in the services and industr
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Background and Assumptions There ar
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period by passenger cars, is the ma
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Box 19.1: The Vehicle Stock in the
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Oil and Gas The production profile
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Electricity Electricity generation
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in 2030 will still be low, at 2.7 t
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and rising emissions of CO 2 , NO x
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Outlook for Clean Cooking Fuel and
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focus of government policy is to ex
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The government has focused many pro
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Expanding Access to Electricity in
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stoves. According to the World Heal
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Subsidies on Kerosene and LPG, and
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Uttar Pradesh (4.4 million) and Wes
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ANNEXES
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Reference Scenario: World Energy de
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Alternative Policy Scenario: World
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Reference Scenario: China Energy de
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Alternative Policy Scenario: China
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Reference Scenario: India Energy de
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Alternative Policy Scenario: India
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Reference Scenario: OECD Energy dem
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Reference Scenario: OECD North Amer
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Reference Scenario: United States E
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Reference Scenario: OECD Pacific En
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Reference Scenario: Japan Energy de
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Reference Scenario: OECD Europe Ene
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Reference Scenario: European Union
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Reference Scenario: Transition econ
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Reference Scenario: Russia Energy d
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Reference Scenario: Developing coun
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Reference Scenario: Developing Asia
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Reference Scenario: Latin America E
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Reference Scenario: Middle East Ene
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Reference Scenario: Africa Energy d
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ANNEX B ABBREVIATIONS, DEFINITIONS
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Coal-bed Methane Methane found in c
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Other Renewables Includes geotherma
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international marine bunkers, excep
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Rest of Developing Asia Developing
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IAEA IEA IGCC IMF IOC IPCC IPP LDV
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ANNEX D REFERENCES Introduction Int
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Stevens, C. and J. Kennan (2006), H
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— (2004), World Energy Outlook 20
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International Energy Agency (IEA, 2
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Chew Chong Siang (2006), Current St
Page 659 and 660:
Williams, R. O., A. McKane et al. (
Page 661 and 662:
Garg, A. et al. (2006), “The sect
Page 663 and 664:
Malti, G. (2007), Carbon Capture an
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Pachauri, S. (2007), An Energy Anal
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