World Energy Outlook 2007

Some of these factors, such as political stability, are inherently difficult to
measure. Nonetheless, most discussions centre on the following variables, or
indicators:
■ Diversity of the primary fuel mix.
■ Import dependence and fuel substitutability.
■ Market concentration (the dominance of a small number of producing
countries in total trade of any one fuel).
■ Share of politically unstable regions in imports.
For a given consuming country, what matters is both its own situation with
respect to these indicators and that of all consuming countries. A given country
may have a geographically highly diversified mix of imports from what are
considered politically stable and reliable producing countries, but it still faces
the risk of a price shock from a disruption to supplies from less stable
producing countries to other consuming countries. For this reason, a reduction
in a given country’s imports does not necessarily enhance its own overall energy
security, if the world’s reliance on supplies from politically unstable countries is
increasing. Likewise, rising import dependence does not necessarily mean less
secure energy supplies: a flourishing international market can respond flexibly
to unexpected events. Increased fuel diversity can contribute to lower import
dependence for particular fuels. 2
4
The Role of China and India in International
Energy Trade
Oil
In all three scenarios described in this Outlook, the shares of China and India
in world oil demand grow significantly (Figure 4.1). This reflects rapid rates of
economic growth in the two countries, which drive up demand for mobility
and for stationary energy-related services. Oil-based fuels continue to dominate
transport energy demand – even in the Alternative Policy Scenario – and to
meet a significant share of rising energy needs for space and water heating and
cooking in the residential and commercial sectors, as well as process energy
needs in industry. The combined share of China and India in global oil use
increases markedly: from 12% in 2006 to 20% in 2030 in the Reference
Scenario and to 19% in the Alternative Policy Scenario. Their share rises even
more in the High Growth Scenario, to around 25%. In all three scenarios, both
countries account for a bigger share of the increase in world oil demand
between 2006 and 2030 than any other WEO country or region (Table 4.1).
2. The IEA has developed composite indicators that attempt to measure the degree of security for a
given country (IEA, 2007a).
Chapter 4 - The World’s Energy Security 165