EIA: Asian oil use to rebound soon, spurring demand growth to 2020

The U.S. Energy Information Administration predicts worldwide energy consumption will grow 75% during 1995-2020. EIA's latest international energy outlook concluded that Asia will enjoy robust long-term growth, despite the region's currency crisis, which started in mid-1997 and continues into 1998. EIA said the Asian economic recession will not be protracted, and the outlook for long-term energy use is virtually the same as projected in last year's report.

May 4, 1998

5 min read

The U.S. Energy Information Administration predicts worldwide energy consumption will grow 75% during 1995-2020.

EIA's latest international energy outlook concluded that Asia will enjoy robust long-term growth, despite the region's currency crisis, which started in mid-1997 and continues into 1998.

EIA said the Asian economic recession will not be protracted, and the outlook for long-term energy use is virtually the same as projected in last year's report.

By 2020, energy use in developing Asia (including China and India, but excluding Japan, Australia, and New Zealand), will surpass that of all North America by more than 36%. Total energy use in developing Asia is presently 33% below that of North America.

Although the economic downturn in Southeast Asia has lowered expectations for near-term growth in the region, EIA still projects that almost half of the world's future incremental increase in energy demand will be in developing Asia.

The report said, "Strong economic growth in Asia results in improved standards of living which, in turn, will mean increased use of energy for a variety of residential and commercial purposes and for personal transportation."

It said the countries most affected by the crisis include South Korea, Indonesia, Thailand, and Malaysia, which currently account for just under 20% of the energy use in developing Asia.

In the developing countries, per capita income is expected to more than double from 1995 to 2020.

"While this increase is impressive, the developing world will still-on a per capita basis-consume less than a fifth the energy of the industrialized world. As personal income levels have risen, the demand for personal automobiles has become an important component of consumer demand resulting in higher use of petroleum products for transportation.

"The potential market for developing Asia is enormous. At the end of 1997, there were an estimated 6.6 motor vehicles/1,000 persons in China, compared with 720 in the U.S., 520 in Japan, and 130 in South Korea."

Kyoto effect

EIA said that the Kyoto climate change protocol could profoundly affect energy growth in the industrialized world.

It said, to achieve the pact's emissions targets, industrialized countries may need to scale back energy demand projected for 2010 by as much as 40 to 60 quadrillion BTU, or 20-30 million b/d of oil equivalent.

"The expectation is that fuel-switching opportunities, emissions trading, and other offsets would moderate actual patterns of adjustment. However, many countries will need to initiate innovative energy policies to attain the protocol objectives.

"In any case, even if the Annex I countries that are parties to the Kyoto protocol were able to achieve the proposed target reductions, worldwide emissions levels would continue to rise by 32% between 1990 and 2010."

EIA said that, if world energy consumption reaches the levels projected in its reference case, carbon emissions will exceed 1990 levels by 44% in 2010, and by 81% in 2020.

"By 2010, carbon emissions in the developing world are nearly equal to those in the industrialized world; and, by 2020, emissions in the developing world would exceed those of the industrialized world by 27%.

"Developing countries account for more than three quarters of the world increment in emissions between 1990 and 2020. The sizable rise in emissions from developing countries is partially a result of their continued heavy reliance on coal."

Natural gas

EIA said that, in addition to the potential effects of the Kyoto protocol and the economic recession in Southeast Asia, several other recent developments in the world oil market have made forecasting more difficult than usual.

"Recent world oil prices have been especially weak, with prices currently running at a 10-year low; the Organization of Petroleum Exporting Countries (OPEC) has increased oil production quotas for its members; and the United Nations has increased the amount of oil Iraq is allowed to export."

EIA said political, economic, and environmental circumstances will be the most influential factors affecting the development of world oil markets by 2020.

"Uncertainties with regard to the final settlement of sanctions in Iraq, development of suitable transportation infrastructure for marketing oil from the Caspian Sea region, and the future behavior of OPEC all will influence oil markets in the long-term."

EIA added, "Over the projection period, OPEC increases its share of the world oil production market from 39% in 1996 to 52% in 2020."

The study predicted natural gas use would more than double over the projection period, reaching 172 tcf in 2020.

On a BTU basis, worldwide gas consumption surpasses coal consumption by 2005. By 2020, gas demand is 11% higher than coal demand.

"Much of the increment in natural gas usage will fuel electricity generation, particularly in the industrialized world, where natural gas can replace the other, relatively more carbon-intense fossil fuels.

"Natural gas demand is expected to grow most quickly in the world's developing countries. In Central and South America, for example, gas use grows by 7%/year between 1995 and 2020, where fast-paced development of the infrastructure needed to deliver natural gas to industrial consumers and electric power generators is currently under way."