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The future of hydrocarbons

9.1.1 The global outlook • Global GDP (Gross Domestic Product – the
for oil and gas primary driver of energy demand) growth is
assumed to average 3.2% per year over the
For all the talk about the imminent end of the period 2003-2030, slightly less than in the
petroleum age, oil and gas will continue to play the previous three decades. The rate will drop
leading role in meeting the world’s growing hunger for from 3.8% in 2003-2010 to 2.7% in the last
energy for at least the next quarter of a century, and decade of the projection period, as economies
probably well beyond. If governments maintain current mature and population growth slows in
policies (the underlying premise of the World energy developing countries. The economies of
outlook’s reference scenario: IEA, 2005), the world’s China, India and other developing Asian
energy needs would be more than 50% higher in 2030 countries are expected to continue to grow
than today, amounting to an average annual growth most rapidly.
rate of 1.6%. Oil and gas are expected to account for • The world’s population is assumed to expand
more than 60% of that increase. In the medium term, from 6.2 billion in 2002 to over 8 billion in
uncertainty regarding the prospects for hydrocarbons 2030 (an increase of 1% per year on
concern the rate of investment in new capacity more average). Population growth will slow
than the adequacy of reserves. progressively over the projection period,
mainly due to falling fertility rates in
Methodology and key assumptions developing countries. Nonetheless, the share
of the World energy outlook of the world population living in developing
The IEA’s (International Energy Agency) World regions will increase from 76% today to 80%
energy outlook adopts a scenario approach to in 2030.
analyse the possible evolution of energy markets to • In the reference scenario, the average price for IEA
2030. The central projections derive from a crude oil imports is assumed to fall back from
reference scenario and are based on a set of recent highs of over $60 a barrel to around $35 in
assumptions concerning government policies, 2010 (in year-2004 dollars), and then climb to $39
macroeconomic conditions, population growth, in 2030 ($65 in nominal terms). Gas and coal
energy prices and technology. The reference prices are assumed to move broadly in line with oil
scenario takes into account only those government prices.
polices and measures that have already been An alternative policy scenario takes into account a
enacted, though not necessarily implemented. range of new policies to address environmental
These projections should not be interpreted as a problems and enhance energy security that are
forecast of how energy markets are likely to currently under consideration by countries around the
develop, but rather as a baseline vision of how the world. The 2005 edition of the World energy outlook
global energy system will evolve if governments also presents a deferred investment scenario, which
take no further action to affect its evolution. analyses the impact of significantly lower upstream oil
Other key assumptions in the reference scenario investment in the Middle East and North Africa on
include: global energy markets.



9.1.2 Demand remain a marginal fuel in power generation, with its

share declining in every region.
By 2030, the world will be consuming 16.3 billion toe, Industrial, commercial and residential demand for
up from 10.7 billion toe today. More than two-thirds of oil is projected to increase moderately, with all of the
the growth in world energy use will come from the growth coming from non-OECD (Organization for
developing countries, where economic and population Economic Cooperation and Development) countries.
growth is highest. Fossil fuels continue to dominate Oil products will remain the main source of modern
energy supplies, meeting more than 80% of the commercial energy for cooking and heating in
projected increase in primary energy demand in this developing countries, especially in rural areas. The use
scenario. of oil in non-transport sectors in OECD countries will
Oil remains the single largest fuel (Fig. 1), with decline markedly.
two-thirds of the increase in oil use coming from After registering a strong growth of 2% in 2003,
the transport sector. Demand will reach 92 Mbbl/d world oil consumption in 2004 increased even more
(million barrels per day) in 2010 and 115 Mbbl/d quickly, by 3.6%. This marks the fastest rate of growth
in 2030. Natural gas demand grows faster, driven since 1978 (Table 1). China, which saw a jump of 16%
mainly by power generation. It will overtake coal or nearly 0.9 Mbbl/d in its oil use in 2004, accounted
as the world’s second-largest primary energy for 30% of the global demand increase.
source before 2015. The share of coal in world This surge came despite record oil prices. The
primary demand will fall slightly, with demand average IEA crude oil import price averaged over $36
growth concentrated in China and India. Nuclear a barrel in 2004, a jump of almost 30% from 2003.
power’s market share will decline marginally, while The price of first-month WTI (West Texas
that of hydropower will remain largely constant. Intermediate) averaged $41.49 and that of Dated Brent
The share of biomass will decline slightly, as it is $38.27 in 2004. In 2005, prices continued to rise,
replaced with modern commercial fuels. The share reaching over $70 for WTI in late summer (a record in
of other renewables, including geothermal, solar, nominal terms). Adjusted for inflation, prices are still
wind, tidal and wave energy, will grow more than below the levels of the 1970s. The surge in prices has
that of any other energy source, but still reach only so far not cooled demand much, though there are signs
2% in 2030. that high oil prices are starting to dampen economic
Oil will remain the single largest fuel in the global growth and energy demand, especially in Asia.
primary energy mix in the reference scenario. Its share Assuming that prices fall back in the next few years,
will nonetheless fall marginally, from 35% in 2003 to oil demand is projected to continue to grow steadily
34% in 2030. Oil demand is projected to grow by over the projection period, with developing countries
1.4% per year, from 81 Mbbl/d in 2003 to 92 Mbbl/d (particularly China and Africa as a whole) registering
in 2010, and to 115 Mbbl/d in 2030. Two-thirds of the the fastest rates of growth.
total increase in oil use will come from the transport Some 95% of the increase in demand over the
sector, where oil will remain the main fuel. Oil will projection period will be for middle distillates and
light fuels. The slight increase in heavy fuel demand in
developing countries, mainly in industry and for
bunkers, will be almost entirely offset by a fall in
5,000 demand for these fuels in OECD countries. Global
demand for middle distillates (diesel for road transport
and jet kerosene for aviation) will reach almost

3,000 49 Mbbl/d, an increase over 2003 of 18 Mbbl/d. The

increase in demand for light and middle distillates will
2,000 be about ten times greater than the increase in heavy
1,000 fuels in developing countries. Transport fuels will
account for the bulk of the increase in oil demand over
0 the World energy outlook period. In the five years to
1970 1980 1990 2000 2010 2020 2030
2004, the entire increase in oil demand in the OECD
oil other renewables
came from the transport sector.
coal nuclear
Primary demand for natural gas will grow by 2.1%,
gas hydro
meaning that gas will overtake coal by around 2020 as
the world’s second-largest primary energy source. Gas
Fig. 1. World primary energy consumption will increase by three-quarters between
demand by fuel (IEA, 2005). 2003 and 2030, reaching 4,789 billion cubic metres



Table 1. World oil demand, Mbbl/d (IEA, 2005)

2003 2004 2010 2020 2030 2004-2030*

OECD 47.0 47.6 50.5 53.2 55.1 0.6%

OECD North America 24.1 24.9 26.9 291.0 30.6 0.8%
OECD Europe 14.5 14.5 15.0 15.4 15.7 0.3%
OECD Pacific 8.4 8.3 8.6 8.7 8.8 0.3%

Transition economies 4.2 4.4 4.9 5.6 6.2 1.3%

Russia 2.5 2.6 2.9 3.3 3.5 1.2%
Developing countries 25.0 27.0 33.9 42.9 50.9 2.5%
China 5.4 6.2 8.7 11.2 13.1 2.9%
India 2.5 2.6 3.3 4.3 5.2 2.8%
Other Asia 5.1 5.4 6.6 8.3 9.9 2.3%
Latin America 4.5 4.7 5.4 6.5 7.5 1.9%
Africa 2.6 2.6 3.3 4.5 5.7 3.0%
Middle East 5.1 5.4 6.5 8.1 9.4 2.2%
Miscellaneous** 3.0 3.0 3.1 3.2 3.3 0.3%
World 79.2 82.1 92.5 104.9 115.4 1.3%

* Average annual growth rate.

** Includes bunkers and stock changes.

(Table 2). The share of gas in world energy demand 9.1.3 Production and trade
will rise from 21% in 2003 to 24% in 2030. Power
generation will account for most of the increase in gas The world’s economically exploitable energy resources
demand over the projection period because, in many are adequate to meet the projected growth in energy
parts of the world, gas will be the preferred fuel in new demand in the reference scenario. Proven global oil
power stations for economic and environmental reserves today exceed the cumulative projected
reasons. A small but increasing share of gas demand production between 2003 and 2030. However,
will come from gas-to-liquid plants, which convert additional reserves will need to be moved from the
natural gas into distillate and other oil products, and possible and probable categories into the proven
from hydrogen plants to supply fuel cells. category in order to avoid a peak in production before

Table 2. World natural gas demand by region, Gm3 (IEA, 2005)

2003 2010 2020 2030 2003-2030*

OECD 1,436 1,617 1,872 2,061 1.3%

OECD North America 775 848 964 1,039 1.1%
OECD Pacific 141 176 217 244 2.1%
OECD Europe 520 593 691 778 1.5%

Transition economies 637 705 815 925 1.4%

Russia 417 460 525 591 1.3%

Developing countries 636 893 1,374 1,803 3.9%

China 39 60 106 152 5.1%
India 28 42 71 98 4.7%
Other Asia 162 215 305 387 3.3%
Latin America 107 145 220 318 4.1%
Africa 74 107 165 232 4.3%
Middle East 226 324 507 615 3.8%

World 2,709 3,215 4,061 4,789 2.1%

* Average annual growth rate.



the end of the projection period. Exploration will increase more rapidly than in other regions
undoubtedly be stepped up to ensure that this happens. (particularly in the second half of the projection
Global natural gas reserves are even larger relative to period) because their resources are much larger and
projected rates of production. Nonetheless, there will their production costs are generally lower. In the near
be a pronounced shift in the geographical breakdown term, the OPEC cartel’s share, which currently stands
of sources of oil and gas production over the at 36%, will remain roughly stable due to rapid
projection period, in response to a combination of cost, production increases in several non-OPEC regions,
geopolitical and technical factors. Almost all the net notably Russia and other transition economies. As
increase in production will occur in non-OECD prices return to a level closer to the average of the last
countries, mainly in the developing world. two decades, incentives to raise output in non-OPEC
World oil supply in the reference scenario is regions will diminish, increasing the call on oil from
projected to grow from 82.1 Mbbl/d in 2004 to 115.4 OPEC producers. The second and third decades of the
Mbbl/d in 2030 (Table 3). Non-OPEC countries projection period will see a more rapid growth in
contribute most of the increase in global production OPEC’s market share. OPEC’s market share is
throughout the rest of the current decade. In recent projected to reach 50% in 2030, slightly above its
years, high oil prices have started to stimulate an historical peak in 1973. Global oil production is not
increased development of reserves in those countries. expected to peak before 2030, although output in most
Production is expected to continue to grow quite regions will already be in decline by then. OPEC’s
strongly in transition economies, West Africa and market share would be lower if the effect of its
Latin America. The output of the transition economies, members’ policies limit production and increase
which has soared in recent years thanks to rapid prices, thereby stimulating non-OPEC production of
growth in Russia, will continue to rise with a greater conventional and non-conventional oil, and
contribution from Caspian countries. It will reach 14.5 encouraging alternative energy technologies.
Mbbl/d in 2010, compared to 11.4 Mbbl/d in 2004. Natural gas resources can easily meet the projected
In the longer term, oil production in OPEC increase in global demand through the projection
countries, especially in the Middle East, is expected to period, as proven reserves are now equal to about 67

Table 3. World oil production, Mbbl/d (IEA, 2005)

2004 2010 2020 2030 2004-2030*

Non-OPEC crude and NGLs 46.7 51.4 49.4 46.1 0.0

OECD total 20.2 19.2 16.1 13.5 – 1.5
North America 13.6 14.4 12.6 10.8 ⫺0.9
Europe 6.0 4.4 3.1 2.3 ⫺3.7
Pacific 0.6 0.5 0.4 0.4 ⫺1.4

Transition economies 11.4 14.5 15.6 16.4 1.4

Russia 9.2 10.7 10.9 11.1 0.7

Developing countries 15.2 17.7 17.6 16.3 0.3

China 3.5 3.5 3.0 2.4 ⫺1.5
India 0.8 0.9 0.8 0.6 ⫺1.2
Other Asia 1.9 2.1 1.7 1.3 ⫺1.7
Latin America 3.8 4.7 5.5 6.1 1.8
Non-OPEC Africa 3.3 4.9 5.2 4.7 1.4
Non-OPEC Middle East 1.9 1.7 1.5 1.4 ⫺1.3

OPEC crude and NGLs 32.3 36.9 47.4 57.2 2.2

OPEC Middle East 22.8 26.6 35.3 44.0 2.6
Other OPEC 9.6 10.3 12.1 13.2 1.3

Non-conventional oil 2.2 3.1 6.5 10.2 6.1

Miscellaneous 0.9 1.1 1.6 1.9 2.9

World 82.1 92.5 104.9 115.4 1.3

* Average annual growth rate.

** Includes oil sands, biofuels and gas-to-liquids production.



years of production at current rates. The regional 38% higher than in 1990. Power generation is expected
outlook for production stems largely from the proximity to contribute around half the increase in global
of reserves to markets and from the production costs. emissions from 2003-2030 and transport will
Despite substantial unit cost reductions in recent contribute one-quarter. Developing countries will be
years, gas transportation remains very expensive and responsible for almost three-quarters of the increase in
usually represents most of the overall cost of gas global CO2 emissions in the same period. They will
delivered to consumers. Production is projected to overtake the OECD as the leading contributor to
grow strongest in terms of volume in the Middle East, global emissions in the early 2020s. The increase in
Russia and the other transition economies, which emissions from China alone will exceed the increase
together have most of the world’s proven reserves. in all OECD countries and Russia combined. OECD
The growing regional mismatch between demand countries accounted for 52% of total emissions in
and production will result in a major expansion of 2003, developing countries for 36%, and transition
international trade in oil and gas, both in absolute economies for 10%. By 2030, the developing countries
terms and as a share of supply. Trade between will account for 49%, the OECD countries for 42%,
countries within each grouping will also expand. Oil and the transition economies for 9%.
will remain the most traded fuel. Oil will account for 37% of the increase in energy-
The volume of oil traded between World energy related CO2 emissions over the projection period, coal
outlook regions will reach 64 Mbbl/d in 2030 (well for 33% and natural gas for 30%. Emissions from
over half of global oil production and over two-thirds natural gas will increase most rapidly, doubling
more than at present). As a result, 51% of all the oil between 2002 and 2030. However, they will still make
consumed worldwide will be traded between the main up only 24% of total emissions in 2030, up from 21%
World energy outlook regions in 2030, compared with now, because gas is the least carbon-intensive fuel. The
only 39% in 2003. This trend results from the steady share of coal (the most carbon-intensive fuel) will fall
growth in demand in all regions and the increasing by three percentage points to 36%. Oil’s share will
concentration of production in a small number of drop by two points to 39%.
countries. The Middle East, already the biggest
exporting region, will see the biggest jump in oil
exports, from 19 Mbbl/d in 2004 to 39 Mbbl/d in 9.1.5 Investment needs
2030. Exports from Africa, Russia and other transition and financing
economies will also continue to expand steadily in the
short to medium term, but all of them will have started The global energy-supply projections described above
to decline by 2020. The OECD and developing Asian will call for a cumulative infrastructure investment of
countries will become increasingly dependent on $17,000 billion (in year-2004 dollars) over 2004-2030.
imports. Increased trade will strengthen the mutual This investment will be needed to expand supply
dependence among exporting and importing countries. capacity and to replace existing and future supply
However, it will also intensify worries about the facilities that will be retired during the projection
world’s vulnerability to oil-supply disruptions, as period. More than half of the investment will go
much of the additional trade will involve transport simply to maintain the present level of supply. Most of
along routes that are at risk of sudden closure. The the world’s current production capacity for oil, gas and
share of total gas supply that is traded between regions coal will need to be replaced by 2030. Indeed, much of
will also grow strongly, from 13% at present to 19% in the new production capacity brought on stream in the
2030. The largest volume increases in net gas imports early years of the projection period will itself need to
are expected to arise in Europe and North America, be replaced before 2030. Some power plants and
where Canadian exports to the United States will not transmission and distribution infrastructure will also
be able to keep pace with rising US import needs. need to be replaced or refurbished, particularly in
OECD countries. It will be necessary for capital
spending to increase steadily through the period as
9.1.4 Environmental implications existing infrastructure becomes obsolete and demand
The projected trends in energy use in the reference Total investment will amount to $3,200 billion
scenario imply that global energy-related ($118 billion per year) in the oil sector and around
carbon-dioxide emissions will increase by 1.6% per $3,000 billion ($108 billion per year) in the gas sector.
year over 2003-2030. Emissions will exceed 37 Gt in Power generation, transmission and distribution will
2030, an increase of 13 Gt, or 52%, over the 2003 require more than $10,000 billion ($380 billion per
level. By 2010, energy-related CO2 emissions will be year, equal to over 60% of total energy-supply



investments). If investment in the fuel chain to meet Globally, there is enough money to finance the
the fuel needs of power stations is included, projected energy investment. Domestic savings alone
electricity’s share rises to more than 70%. Coal are much larger than the capital required for energy
investment will amount to almost $400 billion ($14 projects. However, in some regions, those capital
billion per year), or 2%. To produce and transport a needs represent a very large share of total savings. In
given amount of energy, coal is about a sixth as Africa, for example, the share is about half.
capital-intensive as gas. Developing countries will Although sufficient capital will be available overall
require about half of global energy investments from domestic and international sources, it is far from
because their demand and supply will increase most certain that all the infrastructure needed in the future
rapidly. will be fully financed in all cases. Mobilizing the
Exploration and development will dominate investment required will depend on whether returns
global oil-sector investment, accounting for more are high enough to compensate for the risks involved.
than three-quarters of the total over the period 2004- More than in the past, capital needed for energy
2030. Only a quarter of upstream investment will go projects will have to come from private sources, as
to meet rising demand. The rest will be used to make governments continue to withdraw from the provision
up for the natural decline in production from wells of energy services. Foreign direct investment is
already in production and those that will start expected to become an increasingly important source
producing in the future. In fact, at a global level, of capital in non-OECD regions.
investment needs are far more sensitive to changes Oil and gas prices will play a key role in attracting
in decline rates than to the rate of growth of oil investment to the sector. In recent years, upstream
demand. Oil investment will be highest in North global oil and gas investment has tended to fluctuate
America, the transition economies and the Middle with changes in oil prices. The openness of countries
East. Although production in OECD countries is set with large oil resources to foreign direct investment
to decline in the coming 25 years, their oil- will be another important factor in determining how
investment needs will be high, since their unit costs much upstream investment occurs and where. Today,
and decline rates are higher than in other regions. three major oil-producing countries (Kuwait, Mexico
Upstream unit costs are lowest in the Middle East. and Saudi Arabia) remain totally closed to outside
Exploration and development of gas fields will investment. Access to many others, such as Russia and
absorb 62% of global gas investment. Building Iran, is restricted.
downstream infrastructure (high-pressure transmission Financing the required investments in
pipelines, local distribution networks, storage non-OECD countries will be a major challenge.
facilities, LNG – Liquefied Natural Gas – liquefaction The financial needs in the transition economies
and regasification plants, and LNG carriers) will and developing regions are much bigger, relative to
account for the rest. An increasing share of investment the size of their economies, than in OECD
will go to LNG supply. The OECD as a whole will countries. In general, investment risks are also
account for almost half of global gas investment. This greater in these regions, particularly for domestic
is close to the OECD’s share of the increase in global electricity and downstream gas projects. The
demand over the projection period. North America private sector will undoubtedly have to play a
alone will claim more than a quarter of new bigger role in financing new energy projects in the
investment. Unit capital costs and production-decline future. Few governments could fully fund the
rates are much higher in the industrialized countries necessary investment, even if they wanted to.
than in other parts of the world. Raising private finance will depend critically on
The main exporting regions (Russia, the Caspian the establishment by governments of an attractive
region, the Middle East and Africa) will attract most investment framework and climate.
investment outside of the OECD. Although a bigger
share of drilling will occur in lower-cost regions, a
doubling of global production and a shift in drilling to 9.1.6 Major uncertainties
offshore fields will cause an overall increase in
upstream investment. Gas-processing costs, included In common with all attempts to describe future market
in exploration and development, may also rise as the trends, the energy projections presented in the World
quality of reserves deteriorates. The Middle East will energy outlook are subject to a wide range of
have the largest requirement for LNG investment, uncertainties. Energy markets could evolve in ways
while the transition economies (including Russia) will that are much different from either the reference
account for the largest share of investment in scenario or the alternative policy scenario. The
transmission networks. reliability of projections depends both on how well the



model represents reality and on the validity of the of energy-market reforms, taxation and subsidy
assumptions it works under. policies, the possible introduction of carbon dioxide
Macroeconomic conditions have always been a emission-trading and the role of nuclear power.
critical source of uncertainty. Slower GDP growth than An alternative policy scenario, presented in the
assumed in both of our scenarios would cause demand World energy outlook analyses the global impact of
to grow less rapidly. Growth rates at the regional and environmental and energy-security policies that
national levels could be very different from those countries around the world are already considering, as
assumed here, especially over short periods. Political well as the effects of faster deployment of
upheavals in some countries could have major energy-efficient technologies. In this scenario, global
implications for economic growth. Sustained high oil energy demand and carbon-dioxide emissions are
prices (which are not assumed in either of our significantly lower than in the reference scenario.
scenarios) would curb economic growth in World global primary energy demand in 2030 reaches
oil-importing countries and globally in the near term. 14,658 Mtoe – 1,613 Mtoe, or almost 10%, less than
The impact of structural economic changes, including in the reference scenario (Table 4). Primary energy
the worldwide shift from manufacturing to service demand grows by 1.2% per year, 0.4 percentage points
activities, is also uncertain, especially late in the less than in the reference scenario.
projection period. Reduced oil and gas use account for most of the
Uncertainty about the outlook for economic overall fall in energy demand. Oil and gas demand
growth in China is particularly acute. With China’s each falls by 10%. The reduction in demand for coal is
emergence as a major energy importer, any faltering of even greater, both in absolute and percentage terms,
the country’s economic development would have thanks to the use of more efficient technology and
important implications for world energy markets. switching to less carbon-intensive fuels. The effect of
China has been responsible for a large share of the energy-saving and fuel diversification policies on
increase in world demand for raw materials (including energy demand grows throughout the projection
energy) in the last few years. It is also becoming an period, as the stock of energy capital is gradually
important consumer of final goods, thereby replaced and new measures are introduced. Global
contributing to economic growth in the rest of the energy savings achieved by 2010 are very modest, at
world. There are increasing signs of overheating in the only about 244 Mtoe, or 2%.
Chinese economy and the risk of a ‘hard landing’ (an Improvements in the efficiency of current energy
abrupt slowdown in economic activity) is growing as technologies and the adoption of new technologies
credit is tightened and investment drops. Such a along the energy-supply chain are a key source of
development could have a major impact on global uncertainty for the global energy outlook. It is possible
economic activity and, therefore, on energy that hydrogen-based energy systems and
consumption and import needs worldwide. carbon-sequestration technologies, which are now
The effects of resource availability and supply under development, could dramatically reduce carbon
costs on energy prices are very uncertain. Resources emissions associated with energy use. If they did so,
of every type of energy are sufficient to meet the they would radically alter the energy-supply picture in
projected demand through to 2030, but the future cost the long term. However, these technologies are still far
of extracting and transporting those resources is from ready to be commercialized on a large scale, and
uncertain (partly due to a lack of information about it is always difficult to predict when a technological
geophysical factors). Oil and gas producers, for breakthrough might occur.
example, do not usually appraise reserves in detail It is uncertain whether all the investment in
until they are close to actually exploiting them. The energy-supply infrastructure needed over the
amount of the world’s resources that can be produced projection period will be forthcoming. Ample
economically will depend partly on production financial resources exist at a global level to finance
conditions and technological progress. Geopolitical projected energy investments, but those investments
factors will also affect the development of energy have to compete with other sectors. More important
resources. than the absolute amount of finance available
Changes in government energy and environmental worldwide, or even locally, is the question of whether
policies and the adoption of new measures to address conditions in the energy sector are right to attract the
energy security and environmental concerns, necessary capital. This factor is particularly uncertain
especially climate change, could have profound in the transition economies and in developing nations,
consequences for energy markets. Leading whose financial needs for energy developments are
uncertainties in this area include: the production and much greater relative to the size of their economies
pricing policies of oil-producing countries, the future than is the case in OECD countries. In general, the



Table 4. World primary energy demand in the reference and alternative policy scenarios, Mtoe
(IEA, 2005)

Reference scenario Alternative policy scenario

with the
2003 2030 2003-2030* 2030 2003-2030* reference
in 2030

Coal 2,582 3,724 1.4% 2,866 0.4% ⫺23%

Oil 3,785 5,546 1.4% 4,967 1.0% ⫺10%
Gas 2,244 3,942 2.1% 3,528 1.7% ⫺10%
Nuclear 687 767 0.4% 878 0.9% 14%
Hydro 227 368 1.8% 370 1.8% 0.4%
Biomass and waste 1,143 1,653 1.4% 1,705 1.5% 3%
Other renewables 54 272 6.2% 344 7.1% 27%
Total 10,723 16,271 1.6% 14,658 1.2% ⫺10%

* Average annual rate of growth.

risks involved in investing in energy in non-OECD production compared to the reference scenario.
countries are also greater, particularly for domestic Natural gas production in Middle East and North
electricity and downstream gas projects. Creating an Africa countries also falls significantly, due to lower
attractive investment framework and climate will be global demand and lower output of associated gas.
critical in order to mobilize the necessary capital. Gas exports fall by 46% in 2030, with those of Qatar
The rate of investment in developing crude oil falling furthest in absolute terms.
production capacity in the Middle East and North In the deferred investment scenario, the
Africa region is a rather critical uncertainty for international crude oil price is significantly higher
world energy markets. A deferred investment than in the reference scenario over the projection
scenario, also presented in the World energy outlook, period. In the reference scenario, the average IEA
analyses how energy markets might evolve if import price is assumed to fall back from recent highs
upstream investment in each Middle East and North to around $35 per barrel (in year-2004 dollars) in
Africa country were to remain constant as a share of 2010, and then to rise slowly to $39 in 2030. In the
GDP at the average level of the past decade. This deferred investment scenario, the price increases
would result in a $110 billion, or 23%, drop in gradually over time, relative to the reference scenario.
cumulative upstream Middle East and North Africa By 2030, it is about $13 higher ($21 in nominal terms)
oil investment over 2004-2030. – an increase of almost one-third.
Lower investment on this scale causes Middle Natural gas prices rise broadly in line with oil
East and North Africa oil production to drop by prices. The coal price also increases slightly. As a
almost a third by 2030 compared with the reference result of higher prices and lower world GDP, global
scenario. Production falls further than investment by energy demand is reduced by about 6% in 2030,
the end of the projection period due to the compared with the reference scenario. World GDP
cumulative effect over this period. In 2030, total growth, the main driver of energy demand, is on
Middle East and North Africa output reaches 35 average 0.23 percentage points lower per year.
Mbbl/d, compared with 50 Mbbl/d in the Reference Lower oil and gas revenues and higher prices cause
Scenario. Saudi Arabia’s production, at 14 Mbbl/d in primary energy-demand growth in Middle East and
2030, is more than 4 Mbbl/d lower than in the North Africa countries to slow, but less markedly
reference scenario. Middle East and North Africa’s than in non-Middle East and North Africa regions.
share of world oil production drops from 35% in Among the primary fuels, global demand for oil
2004 to 33% in 2030 (against a rise to 44% in the falls most. Global oil demand, at 105 Mbbl/d in
reference scenario). As a result, Middle East and 2030, is 10 Mbbl/d lower than in the reference
North Africa oil exports are almost 40% lower in scenario. Demand for both gas and coal also
2030. By contrast, higher prices stimulate an 8% decreases, mainly as a result of lower demand for
increase in non-Middle East and North Africa oil fuel inputs to power generation.



9.1.7 Towards a sustainable Nonetheless, it is clear from this analysis that

energy future achieving a truly sustainable energy system will
depend on technological breakthroughs that radically
The projections presented here paint a sobering alter energy production and use. The government
picture of how the global energy system could actions envisioned in the alternative policy scenario
evolve from now to 2030. If governments stick with could eventually stabilize carbon-dioxide emissions,
the policies in force as of mid-2004, the world’s but they could not reduce them significantly using
energy needs will be more than 50% higher in 2030 existing technology. Carbon capture and storage
than they are now. Fossil fuels (especially oil and technologies, which are not taken into account in
gas) will continue to dominate the global energy either the reference or the alternative scenario, hold
mix, meeting most of the increase in overall out the tantalizing prospect of using fossil fuels in a
energy use. The shares of nuclear power and carbon-free way. Advanced nuclear-reactor designs or
renewable energy sources will remain limited. breakthrough renewable technologies could one day
Climate-destabilizing carbon-dioxide emissions help free us from our dependence on fossil fuels.
would continue to rise. Also, the sharply increased These technologies, however, will have to become
dependence of consuming regions on imports from a much cheaper if they are to be widely applied. This is
small number of countries, mainly in the Middle unlikely to happen within the timeframe of the
East, would exacerbate worries about the security of analysis presented here. Developing and deploying
energy supply. new clean technologies in these and other areas are the
In no way can this vision of the energy future be key to making the global energy system more
considered sustainable. G8 leaders, meeting with the economically, socially and environmentally sustainable
leaders of several major developing states at in the long term. Governments have a critical role to
Gleneagles in July 2005, acknowledged this when they play in accelerating this process as a matter of urgency.
called for stronger action to combat rising
consumption of fossil fuels and related greenhouse-gas
emissions. Current energy trends are not set in stone. References
Although the reference scenario projections above
presented the effects of policies already adopted (for IEA (International Energy Agency) (2005) World energy outlook,
example, to combat climate change), governments Paris, Organization for Economic Cooperation and
have declared their intention to do more. As the
alternative policy scenario shows, more vigorous Fatih Birol
government action could steer the world onto a International Energy Agency
markedly different energy path. Paris, France