World Energy Outlook 2007

of the two giants in international trade and economic growth, the impact of
their rising energy use on the world’s energy security and the environmental
repercussions. A final section in Part A looks at what this means for policy
makers. Parts B and C contain a detailed analysis of the prospects for energy
demand and supply in China and India under different scenarios. Detailed
tables showing the results of the projections can be found in the annexes.
Methodology and Assumptions
As in previous Outlooks, a scenario approach has been adopted to examine
future energy developments. The projection period runs to 2030. The core
projections are derived from a Reference Scenario, which assumes that there are
no new energy-policy interventions by governments. This scenario is intended
to provide a baseline vision of how global energy markets are likely to evolve if
governments do nothing more to affect underlying trends in energy demand
and supply, thereby allowing us to test alternative assumptions about future
government policies.
An Alternative Policy Scenario analyses the impact on global energy markets of
a package of additional measures to address energy-security and climate-change
concerns. The goal is to offer practical guidance to policy makers about the
potential impact and cost of the many options they are currently considering.
On the basis of this scenario, we assess the implications for energy use
of achieving long-term stabilisation of atmospheric greenhouse-gas
concentrations at a level that would result in an increase in global temperatures
no higher than that which is widely considered to be acceptable: what we call
a 450 Stabilisation Case. These analyses form part of the IEA’s response to a
request from the G8 leaders at the Gleneagles Summit in 2005 for advice on
“alternative energy scenarios and strategies aimed at a clean, clever and
competitive energy future”.
For this WEO, we have also developed a High Growth Scenario, which
incorporates significantly higher rates of economic growth in China and India
than those in the Reference Scenario (though still below current rates).
Prospects for economic growth have been systematically underestimated in
recent years in both countries, and future rates of growth are extremely
uncertain, especially towards the end of the projection period. Were their
economies to grow significantly faster than assumed in the Reference Scenario,
their energy demand – and that of the world as a whole – could turn out to be
much higher by the end of the projection period. This scenario allows us to test
the sensitivity of their energy demand to economic growth rates and the
implications for global energy trade and energy-related greenhouse-gas
emissions.
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World Energy Outlook 2007