World Energy Outlook 2007

Reference Scenario. More than two-thirds of the oil savings over the whole
projections period arise in the transport sector, notably through the increased
fuel efficiency of new vehicles and faster introduction of alternative fuels and
vehicles (see the section below on Transport). Most of the rest comes from
savings in oil use in industry and building.
Contrary to coal and oil, demand for natural gas is higher than in the Reference
Scenario, because of policies that encourage its use in the residential sector and
in power generation in provinces without abundant coal reserves. By 2015, gas
demand is 20 bcm, or 15%, higher than in the Reference Scenario and
30 bcm, or 13%, higher by 2030. The rate of growth over the entire projection
period is 0.5 percentage points higher than in the Reference Scenario.
A number of Alternative Policy Scenario policies promote the use of renewables
and nuclear power. In all, primary demand for energy from non-fossil fuel
primary sources is 30% higher under the Alternative Policy Scenario. Nuclear
power accounts for 43% of this increase, reaching levels 36% higher than in
the Reference Scenario in 2015 and 79% higher in 2030. Hydropower grows
more quickly in the Alternative Policy Scenario: by 4.8% per year to 2030,
compared to 3.8% in the Reference Scenario. Biomass accounts for 8% of
primary energy demand in the Alternative Policy Scenario, compared to 6% in
the Reference Scenario. There are two opposing forces at work here: the use of
biomass increases in combined heat and power (CHP) plants and for the
production of biofuels for transport – in both cases reaching levels in 2030
more than twice as high compared with the Reference Scenario – while
households’ use of non commercial biomass for cooking and heating drops.
Other renewables – wind, geothermal and solar energy – are 57% higher than
in the Reference Scenario.
Final energy demand in total is 4.3% lower in 2015 and 17.2% lower in 2030
in the Alternative Policy Scenario than in the Reference Scenario. Electricity
demand is 2% lower in 2015, with a gap between the two scenarios projected
to grow to 14.5% by 2030, as energy efficiency measures take effect and more
capital equipment is replaced. Heat demand is 5% lower in 2015 and 18%
lower in 2030, mainly thanks to stricter building codes.
Implications for Energy Markets and Supply Security
In the Alternative Policy Scenario, conventional oil production from Chinese
fields is assumed to remain at the same levels as in the Reference Scenario,
decreasing to around 2.7 mb/d in 2030. 3 There is, however, an increase in
production of oil from non-conventional sources – mainly CTL – and in the
output of biofuels, spurred by government policies aimed at limiting oil import
3. This is because international oil and gas prices are assumed to be the same in the Alternative Policy
Scenario as in the Reference Scenario.
366 World Energy Outlook 2007 - CHINA’S ENERGY PROSPECTS