World Energy Outlook 2007

economy to foreign investment. China still has a huge labour surplus in the
agricultural sector, with relatively low productivity. The movement of labour
from the agricultural sector to the industrial and services sectors, and the
concomitant urbanisation, could further raise productivity. This would lift
millions of people out of poverty, narrow the urban-rural income gap and
create a middle class comparable in both size and income to that of the
European Union and the United States. Rapidly expanding tertiary education
would continue to upgrade China’s human capital and contribute to more
research and development.
In the High Growth Scenario, we assume that China’s GDP grows at an annual
average rate of 7.5% in 2005-2030 – 1.5 percentage points higher than in the
Reference Scenario. In effect, the slow-down in the rate of growth of the
economy is assumed to occur more gradually than in the Reference Scenario.
The difference in the growth rate between the two scenarios widens from
1.3 percentage points in 2005-2015 to 1.6 percentage points in 2015-2030. By
2015, China’s GDP is 10% higher than in the Reference Scenario. By 2030, it
is 42% higher. For the sake of simplicity, the overall economic structure is
assumed to be the same as in the Reference Scenario. However, energy prices
are higher in the High Growth Scenario, because of higher energy demand
from China and India and supply-side constraints. More detail about the
methodology used to generate the High Growth Scenario projections can be
found in the Introduction and Chapter 3.
Energy Demand
In the High Growth Scenario, stronger economic growth raises industrial output,
building construction, vehicle and electrical appliance ownership and demand for
space and water heating and cooling. All these factors drive up energy demand.
Total primary energy demand is projected to grow from 1 742 Mtoe in 2005 to
4 691 Mtoe in 2030, 872 Mtoe or 23% higher than the Reference Scenario in
2030 (Table 12.1). The difference is comparable to energy demand today in Japan
and Germany combined. Total primary energy demand grows on average by 4%
per annum, 0.8 percentage points higher than in the Reference Scenario.
As in the Reference Scenario, coal remains the dominant energy source in
China’s primary energy mix in the High Growth Scenario (Figure 12.1). Its
share reaches 62% in 2030 – almost the same as in the Reference Scenario.
Two-thirds of the additional coal is required for power generation, as electricity
demand grows fast and coal remains the cheapest option for power
generation. Demand for oil grows faster than for any other fuel in the High
Growth Scenario, as demand in the transport sector surges in response to
higher incomes. Oil demand grows on average by 4.8% per year, reaching
21.4 mb/d in 2030 – 30% more than in the Reference Scenario. Almost
12
Chapter 12 – High Growth Scenario Projections 391