scenarios for a future energy supply
1. population development
One important underlying factor in energy scenario building is future population development. Population growth affects the size and composition of energy demand, directly and through its impact on economic growth and development. World Energy Outlook 2007 uses the United Nations Development Programme (UNDP) projections for population development. For this study the most recent population projections from UNDP up to 2050 are applied.
The world’s population is expected to grow by 0.77% on average over the period 2005 to 2050, from 6.5 billion people in 2005 to more than 9.1 billion in 2050. Population growth will slow over the projection period, from 1.2% during 2005-2010 to 0.4% during 2040-2050. However, the updated projections show an increase in population of almost 300 million compared to the previous edition. This will further increase the demand for energy. The population of the developing regions will continue to grow most rapidly. The Transition Economies will face a continuous decline, followed after a short while by the OECD Pacific countries. OECD Europe and OECD North America are expected to maintain their population, with a peak in around 2020/2030 and a slight decline afterwards. The share of the population living in today’s Non- OECD countries will increase from the current 82% to 86% in 2050. China’s contribution to world population will drop from 20% today to 15% in 2050. Africa will remain the region with the highest growth rate, leading to a share of 21% of world population in 2050.
Satisfying the energy needs of a growing population in the developing regions of the world in an environmentally friendly manner is a key challenge for achieving a global sustainable energy supply.
2. economic growth
Economic growth is a key driver for energy demand. Since 1971, each 1% increase in global Gross Domestic Product (GDP) has been accompanied by a 0.6% increase in primary energy consumption. The decoupling of energy demand and GDP growth is therefore a prerequisite for reducing demand in the future. Most global energy/economic/ environmental models constructed in the past have relied on market exchange rates to place countries in a common currency for estimation and calibration. This approach has been the subject of considerable discussion in recent years, and the alternative of purchasing power parity (PPP) exchange rates has been proposed. Purchasing power parities compare the costs in different currencies of a fixed basket of traded and non-traded goods and services and yield a widely-based measure of the standard of living. This is important in analysing the main drivers of energy demand or for comparing energy intensities among countries.
Although PPP assessments are still relatively imprecise compared to statistics based on national income and product trade and national price indexes, they are considered to provide a better basis for global scenario development25. Thus all data on economic development in WEO 2007 refers to purchasing power adjusted GDP. However, as WEO 2007 only covers the time period up to 2030, the projections for 2030-2050 are based on our own estimates.
Prospects for GDP growth have increased considerably compared to the previous study, whilst underlying growth trends continue much the same. GDP growth in all regions is expected to slow gradually over the coming decades. World GDP is assumed to grow on average by 3.6% per year over the period 2005-2030, compared to 3.3% from 1971 to 2002, and on average by 3.3% per year over the entire modelling period. China and India are expected to grow faster than other regions, followed by the Developing Asia countries, Africa and the Transition Economies. The Chinese economy will slow as it becomes more mature, but will nonetheless become the largest in the world in PPP terms early in the 2020s. GDP in OECD Europe and OECD Pacific is assumed to grow by around 2% per year over the projection period, while economic growth in OECD North America is expected to be slightly higher. The OECD share of global PPP-adjusted GDP will decrease from 55% in 2005 to 29% in 2050.