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Two major policy issues are addressed: (1) the outlook of the European Union gas market
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The rigorous analysis of long-term scenarios, with particular attention to the European
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World energy, technology and climate policy outlook 2030 — WETO

The reference scenario encompasses international energy prices, primary fuel supply (oil,gas and coal), energy demand (global, regional and sectoral), power generation technologies
and carbon dioxide emissions trends. To face uncertainties, WETO presents alternative
scenarios corresponding to different assumptions on availability of oil and gas resources(low/high cases) and on technological progress (gas, coal, nuclear and renewable cases).

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Using the POLES energy model and starting from a set of clear key assumptions on
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2/2002EUROPEAN COMMISSION

W orld e nergy, t echnology andclimate policy o utlook 2030
- WETO -Directorate-General for Research
Energy2003

EUR 20366

A great deal of additional information on the European Union is available on the Internet.
It can be accessed through the Europa server (http://europa.eu.int).
Cataloguing data can be found at the end of this publication.
Luxembourg: Office for Official Publications of the European Communities, 2003
ISBN 92-894-4186-0© European Communities, 2003
Reproduction is authorised provided the source is acknowledged.
Printed in Belgium
PRINTED ON WHITE CHLORINE-FREE PAPER

TABLE OF CONTENTSFOREWORD .......................................................................................................1
KEY MESSAGES................................................................................................3
CHAPTER 1 : CONTEXT AND METHODOLOGY ....................................7
1.1 THE REFERENCE SCENARIO....................................................................................7
1.2 UNCERTAINTIES.........................................................................................................8
1.3 POLICY ISSUES............................................................................................................9CHAPTER 2 : ENERGY AND TECHNOLOGY TRENDS TO 2030........13
2.1 KEY ASSUMPTIONS .................................................................................................13
2.2 INTERNATIONAL ENERGY PRICES.......................................................................20
2.3. GLOBAL OUTLOOK FOR ENERGY AND CO2 EMISSIONS.................................24
2.3.1 World energy consumption...............................................................................24
2.3.2 Energy related CO2 emissions ..........................................................................32
2.4 PRIMARY FUEL SUPPLY..........................................................................................38
2.4.1 Simulation of oil and gas discovery..................................................................38
2.4.2 World oil supply ...............................................................................................38
2.4.3 World gas supply ..............................................................................................422.4.4 World coal supply.............................................................................................44

CHAPTER 3 : SECTORAL OUTLOOK ......................................................47
3.1 ENERGY DEMAND....................................................................................................47
3.1.1 Global trends .....................................................................................................47
3.1.2 Regional trends .................................................................................................48
3.1.3 Industry .............................................................................................................50
3.1.4 Transport sector.................................................................................................51
3.1.5 Household sector...............................................................................................52
3.1.6 Services and agriculture ....................................................................................53
3.2 POWER GENERATION AND RENEWABLE TECHNOLOGIES ...........................54
3.2.1 Global trends .....................................................................................................54
3.2.2 Renewables .......................................................................................................57

CHAPTER 4 : ASSESSMENT OF UNCERTAINTIES...............................63
4.1. OIL AND GAS RESOURCES .....................................................................................63
4.1.1 Low oil and gas resources .................................................................................64
4.1.2 High gas resources ............................................................................................67
4.2. TECHNOLOGY DEVELOPMENT FOR POWER GENERATION ..........................70
4.2.1 Gas ....................................................................................................................72
4.2.2 Coal ...................................................................................................................73
4.2.3 Nuclear ..............................................................................................................76
4.2.4 Renewables .......................................................................................................78
4.2.5 Impact on CO2 emissions..................................................................................80

III

CHAPTER 5 : EU GAS MARKET IN A WORLD PERSPECTIVE .........83
5.1 GAS DEMAND............................................................................................................83
5.2 GAS SUPPLY ..............................................................................................................88
5.3 SECURITY OF EU GAS SUPPLY .............................................................................96

CHAPTER 6 : IMPACTS OF CLIMATE CHANGE POLICIES ..............99
6.1 INTERNATIONAL AGREEMENTS ..........................................................................99
6.2 A CO 2 EMISSION ABATEMENT CASE FOR 2030 ...............................................102
6.3 CONSEQUENCES OF ACCELERATED TECHNOLOGY DEVELOPMENT ......108

DEFINITION OF REGIONS.........................................................................111
LIST OF ACRONYMS AND ABBREVIATIONS ......................................113
AKNOWLEDGMENT....................................................................................115
ANNEX 1 : COMPARISON OF WORLD ENERGY STUDIES ..............117
ANNEX 2 : WETO PROJECTIONS BY REGIONS .................................129______________________________________________

LIST OF BOXES
Box 1:
Box 2:
Box 3:
Box 4:
Box 5:
Box 6:
Box 7:
Box 8:
Box 9:The POLES Model .....................................................................................................11
GDP forecasts.............................................................................................................16
Oil, gas and coal prices modelling .............................................................................20
The simulation of oil and gas reserves .......................................................................39
Modelling of final energy demand .............................................................................50
Modeling of power generation ...................................................................................55
Modelling the diffusion of new and renewable energy technologies .........................60
The simulation of gas trade and production ...............................................................91
Kyoto Protocol emissions targets and EU burden sharing .......................................101IV

LIST OF FIGURES
Figure 2.1: World population, per capita GDP and GDP growth ..........................................15
Figure 2.2: World population, by region ................................................................................16
Figure 2.3: Per capita GDP by region as a percentage of North America ..............................17
Figure 2.4: World GDP ..........................................................................................................18
Figure 2.5: Oil and gas prices.................................................................................................21
Figure 2.6: Oil and gas reserve on production ratios..............................................................23
Figure 2.7: World energy consumption..................................................................................24
Figure 2.8: EU energy consumption.......................................................................................26
Figure 2.9: Energy consumption in the other world regions ..................................................28
Figure 2.10: Total and final energy intensity (1990, 2000, 2010, 2030) ..................................29
Figure 2.11: Energy consumption per capita............................................................................30
Figure 2.12: Electricity use and GDP per capita, 1980-2030 ...................................................31
Figure 2.13: Transport energy use and GDP per capita, 1980-2030 ........................................31
Figure 2.14: Thermal uses and GDP per capita, 1980-2030 ....................................................32
Figure 2.15: Energy-related CO2 emissions .............................................................................33
Figure 2.16: Carbon intensity of GDP......................................................................................36
Figure 2.17: CO2 emissions per capita .....................................................................................36
Figure 2.18: World conventional oil resources ........................................................................40
Figure 2.19: OPEC and non-OPEC conventional oil resources ...............................................41
Figure 2.20: World oil production............................................................................................42
Figure 2.21: World gas resources .............................................................................................42
Figure 2.22: Gas resources in the CIS and the Gulf .................................................................43
Figure 2.23: World gas production...........................................................................................44
Figure 2.24: World coal production .........................................................................................44
Figure 3.1: World final energy consumption..........................................................................47
Figure 3.2: EU final energy consumption ..............................................................................48
Figure 3.3: Final energy consumption in the other world regions..........................................49
Figure 3.4: Energy intensity of the industry sector.................................................................51
Figure 3.5: Number of cars per 1000 inhabitants ...................................................................52
Figure 3.6: World power generation ......................................................................................54
Figure 3.7: EU power generation ...........................................................................................55
Figure 3.8: Power generation in the other world regions .......................................................57
Figure 3.9: World electricity production from renewables ....................................................58
Figure 3.10: EU electricity production from renewables .........................................................58
Figure 3.11: Electricity production from renewables in other world regions...........................59
Figure 4.1: Ultimate Recoverable Resources in the Reference and Resource cases ..............64
Figure 4.2: Learning curves for power generation technologies; 1990-2030.........................71
Figure 4.3: Cost of electricity: gas combined cycle versus supercritical coal technology .....74
Figure 4.4: Learning curves for advanced coal technologies .................................................76
Figure 4.5: Impact of the nuclear case on the electricity generation by technology...............78
Figure 5.1: World gas demand ...............................................................................................84
Figure 5.2: Gas consumption increase from 2000 to 2030.....................................................85
Figure 5.3: Gas reserves .........................................................................................................88
Figure 5.4: Share of gas production .......................................................................................89V

Figure 5.5:
Figure 5.6:
Figure 6.1.
Figure 6.2:

Gas consumption and production in 2030 ...........................................................90
Inter-regional gas trade by region of destination..................................................95
World electricity generation in 2030 .................................................................108
The role of technology to reduce marginal abatement costs..............................110__________________________________________

LIST OF TABLES
Table 4.1: Oil supply: Low case versus Reference ...............................................................65
Table 4.2: Gas supply: Low case versus Reference ..............................................................66
Table 4.3: World energy consumption and CO2 emissions: Low case versus Reference.....67
Table 4.4: Gas supply: High case versus Reference .............................................................68
Table 4.5: World energy consumption and CO2 emissions: High case versus Reference ....69
Table 4.6: Assumptions and results of the Gas case .............................................................73
Table 4.7: Assumptions and results of the Coal case............................................................75
Table 4.8: Assumptions and results of the Nuclear case.......................................................77
Table 4.9: Assumptions and results of the Renewable case..................................................79
Table 4.10: Summary of the impact of the technology cases..................................................80
Table 5.1: Share of electricity generated from natural gas....................................................87
Table 5.2: Gas trade matrix...................................................................................................93
Table 5.3: Overview of EU and Acc. Countries position regarding gas security .................97
Table 6.1: World energy demand and CO2 emissions.........................................................103
Table 6.2: Energy demand and CO2 emissions in EU and Accession countries .................104
Table 6.3: Energy demand and CO2 emissions in the Japan and Pacific region.................104
Table 6.4: Energy demand and CO2 emissions in Asia.......................................................105
Table 6.5: Energy demand and CO2 emissions in North America......................................105
Table 6.6: Energy demand and CO2 emissions in the CIS..................................................106
Table 6.7: Energy demand and CO2 emissions in Africa and the Middle East region .......106
Table 6.8: Energy demand and CO2 emissions in Latin America.......................................106
Table 6.9: Sectoral energy demand .....................................................................................107
Table 6.10: Electricity generation .........................................................................................107

VI

FOREWORD
With the launch of the European Research Area, I haveunderlined the need to provide the EU with a common system
of scientific and technical reference for policy implementation
particularly for aspects related to sustainable development.
This World Energy, Technology and climate policy Outlook(WETO) is a clear example of a fruitful collaboration
between European researchers (ENERDATA and IEPE in
France, BFP in Belgium and IPTS) helping decision-makers
to define their long-term policies.
Starting from a set of clear key assumptions on economic
activity, population and hydrocarbon resources, WETO
describes in detail scenarios for the evolution of World and European energy systems, power
generation technologies and impacts of climate change policy in the main world regions orcountries. It presents a coherent framework to analyse the energy, technology and environment
trends and issues over the period to 2030, focusing on Europe in a world context.
I would like to highlight three of the key results of this work:
First, in a Reference scenario, i.e. if no strong specific policy initiatives and measures aretaken, world CO2 emissions are expected to double in 2030 and, with a share of 90%, fossil
fuels will continue to dominate the energy system;
Secondly, the great majority of the increase in oil production will come from OPEC countries
and the EU will rely predominantly on natural gas imported from the CIS.
Lastly, as the largest growing energy demand and CO2 emissions originate from developing
countries (mainly China and India), Europe will have to intensify its co-operation, particularly
in terms of transfer of technologies.
The analysis of long-term scenarios and a particular attention to the energy world context, is
an important element for efficient energy, technology and environment policies towards asustainable world.

Philippe Busquin
Member of the European Commission
Responsible for Research

KEY MESSAGES
Reference scenario·

The WETO study describes a Reference scenario that provides a description of the
future world energy system, under a continuation of the on-going trends and structuralchanges in the world economy (a “business and technical change as usual” context).
The scenario results should be seen as a benchmark for the assessment of alternatives,
particularly with respect to resources, technologies and environmental policy. A soundunderstanding of the long-term issues is a key element in establishing future researchand technological development priorities in the field of energy and environment. The
Reference scenario does represent a baseline performance which can be bettered if
appropriate policies are put in place.

·

World energy demand is projected to increase at about 1.8%/year between 2000 and
2030. The impact of economic and population growth (respectively 3.1% and 1%/year
on average), is moderated by a decrease in the energy intensity of 1.2%/year, due to the
combined effects of structural changes in the economy, of technological progress andof energy price increases. Industrialised countries experience a slowdown in thegrowth of their energy demand to a level of e.g. 0.4%/year in the EU. Conversely, theenergy demand of developing countries growths rapidly. In 2030, more than half of theworld energy demand is expected to come from developing countries, compared to
40% today.

·

The world energy system will continue to be dominated by fossil fuels with almost
90% of total energy supply in 2030. Oil will remain the main source of energy (34%)
followed by coal (28%). Almost two-thirds of the increase in coal supply between
2000 and 2030 will come from Asia. Natural gas is projected to represent one quarterof world energy supply by 2030; power generation provides the bulk of the increase. In
the EU, natural gas is expected to be the second largest energy source, behind oil but
ahead of coal and lignite. Nuclear and renewable energies would altogether representslightly less than 20% of EU energy supply.

·

Given the continued dominance of fossil fuels, world CO2 emissions are expected toincrease more rapidly than the energy consumption (2.1%/year on average). In 2030,
world CO2 emissions are more than twice the level of 1990. In the EU, CO2 emissions
are projected to increase by 18% in 2030 compared to the 1990 level; in the USA the
increase is around 50%. While the emissions from developing countries represented
30% of the total in 1990, these countries are responsible for more than half the world
CO2 emissions in 2030.

·

Sufficient oil reserves exist worldwide to satisfy the projected demand during the next
three decades. However the decline in conventional oil reserves may constitute a
preoccupying signal beyond 2030. It is only partly compensated by an increase in thereserves of non-conventional oil. The reserves of natural gas are abundant andexpected to increase by around 10%. There is no constraint on coal reserves over thistime horizon.
3·World oil production is projected to increase by about 65% to reach some 120
million bl/day in 2030: as three quarters of this increase comes from OPEC countries,
OPEC accounts for 60% of total oil supply in 2030 (compared to 40% in 2000).

·

Gas production is projected to double between 2000 and 2030. However, regional
disparities in gas reserves and production costs are expected to modify the regional gas
supply pattern in 2030: about one third of the total production will originate from the
CIS, while the remaining production will be almost equally allocated among otherregions.

·

Coal production is also expected to double between 2000 and 2030,with most of thegrowth taking place in Asia and in Africa, where more than half the coal would be
extracted in 2030.

·

The oil and gas prices trend corresponds to a significant increase from current levels:
the oil price is projected to reach 35 €/bl in 2030 with gas prices at 28, 25 and 33 €/blin 2030 on the European/African, American and Asian markets respectively. The
regional gas price differentials are expected to diminish significantly, reflecting morecomparable gas supply mixes. The coal price is expected to remain relatively stable ataround 10 €/bl in 2030.

·

The final energy demand will grow at a similar pace to the gross inland consumption.
As all sectors are expected to experience similar growth, their share in final demand
will remain roughly constant at world level: around 35 % for industry, 25 % fortransport and 40 % for the residential and tertiary sectors. The energy demand bysector shows different patterns according to the regions: in developed countries,
energy demand in the services sector is the fastest growing segment; in developing
countries, all sectors experience sustained growth at 2 to 3 %/year.

·

Electricity continues its penetration in all regions, accounting for almost a quarter offinal energy demand; coal declines in industrialised countries; biomass is progressively
phased out in developing countries. Oil remains the dominant fuel, with a shareranging from 40 to 50 % in 2030 according to the region.

·

Electricity production increases steadily at an average rate of 3 %/year. More thanhalf of the production in 2030 will be provided by technologies that emerged in thenineties and afterwards like combined cycle gas turbines, advanced coal technologies
and renewables.

·

The share of gas in power generation increases steadily in the three major gasproducing regions (CIS, Middle East and Latin America) and the share of coaldecreases in all regions, except in North America where it stabilises and in Asia where
it increases significantly. The development of nuclear power does not keep pace withtotal electricity production: its market share comes down to 10 % in 2030.
Renewables covers 4 % of the production (from 2 % in 2000), mainly because of a
rapid progression in electricity production from wind.

4

Sensitivity to changes in hydrocarbons resources and technology
developments·

With lower hydrocarbons resources, oil and gas prices are projected to be muchhigher than in the Reference at around 40 €/bl for oil in 2030. This induces a lower
world energy demand (-3%), which particularly favours coal and non-fossil energies,
and curtails demand for natural gas (-13%) and oil (-6%). As a result, world CO2
emissions are 2% lower than in the Reference.

·

Conversely, increased gas resources would lead to a drop in gas prices to 16, 20 and
28 €/bl in 2030 on the American, European and Asian markets respectively. Oil pricedecreases only slightly reflecting the limited potential for substitution between oil andgas. Although the world energy demand is slightly affected (+1.5%), the fuel mix issubstantially modified in favour of natural gas (+21%, against -9% for coal, -3% foroil and -4% for primary electricity).

·

Accelerated technology developments for electricity generation lead to significant
changes in the structure of electricity production. Important though the power sector
may be, it only accounts for about one third of world CO2 emissions. Technologies
only addressing this sector thus have a limited impact on total CO2 emissions. The
availability of advanced technology, however, can have considerable impact on thecost to meet emission reduction targets.

EU gas market in a world perspective·

The EU gas market is rapidly expanding and growth is expected to continue in thenext two decades, driven by the "dash for gas" for power generation. Nevertheless, theEU contribution to world gas consumption is expected to decrease steadily.

·World gas reserves are abundant but concentrated in two world regions, the CIS andthe Middle East, where gas production is projected to grow considerably during thenext thirty years. In contrast, the European gas resources are limited and production is
expected to decline steadily beyond 2010, resulting in an increasing dependence on
external gas supplies.

·

Natural gas demand is also projected to increase in the other world regions: some ofthem with limited or declining gas reserves will become net importers leading toimportant changes in the world gas trade patterns. For instance, the rapid growth of gas
demand in Asia is expected to have some influence on the EU gas supply pattern in
2030: while Asia is projected to rely predominantly on gas supplies from the Middle
East, the EU and Accession countries may import more than half their natural gas
needs from the CIS.

·

This outcome may translate into higher supply risks for the EU. These risks could
however be limited through different actions as outlined in the EC Green Paper, likethe multiplication of gas transport routes, the further integration of the European gas
network, and a continuous dialogue with gas producing countries. Long-term

5contractual LNG supplies are projected to increase but more moderately and from
more diverse sources in Africa and the Middle East.
Impacts of climate change policies·

By attaching a carbon value to fossil fuel use, CO2 emissions in 2030 are 21 % lower
than in the Reference at world level and 26 % lower in the EU and Accession
Countries. At the world level and in most regions, this reduction is achieved by equal
reductions in energy demand and in the carbon intensity of energy consumption.

·

In the carbon abatement case, more than half of the world energy demand reductionis achieved in the industry sector. The decrease in carbon intensity comes mainly
from the substitution of gas and biomass for coal and lignite and to a lesser extent oil;gas demand remains roughly stable as fuel switching in favour of gas takes place. In
contrast, the consumption of biomass increases significantly and nuclear progresses
considerably while large hydro and geothermal remain stable; finally, wind, solar andsmall hydro jump up by a factor of 20.

6

CHAPTER 1
CONTEXT AND METHODOLOGY

1.1

THE REFERENCE SCENARIOThe Reference scenario of WETO provides a coherent picture of the evolution of energy
supply and demand by world regions, as only driven by the economic fundamentals, over the
next thirty years. The framework of hypotheses was chosen so as to reflect the state of theworld in a “business and technical change as usual” perspective, which can serve as abenchmark for the economic evaluation of the future EU policy options related to energy
supply and demand, and to carbon constraints. For this purpose, the Reference does not take
into account specific energy or environment policy objectives and measures beyond what is
actually (2000) embodied in "hard decisions" (investment actually made, regulation actually
enforced in law and voluntary agreements actually signed). This means in particular that the
reduction objectives in the Kyoto Protocol, the phase-out of nuclear planned or envisaged forthe future in some countries, the targeted share of renewables or the future modifications
planned or envisaged in the economic instruments (e.g. coal subsidies) are not part of theReference. The reference does neither aim at predicting what will happen or what is the mostprobable future, nor at illustrating the EU policy targets, but rather at identifying and sizing
the possible problems and constraints raised by a business as usual development, that EU andmember countries will have to face. For instance, with respect to CO2 emissions, thisreference shows the emissions gap that needs to be closed with further measures after thedecisions of the EU to ratify the Kyoto Protocol.
This outlook is based on the results of the POLES model. This simulation model, developed
and used under different EC programmes since 1994, allows to elaborate long-term energy
supply and demand projections for the different regions of the world under a set of consistentassumptions concerning, in particular, economic growth, population and hydrocarbon
resources (Box 1).
Projecting long-term energy profiles involves a large number of assumptions. The population
growth assumptions are derived from the United Nations demographic forecasts. The world
economic growth outlook results from CEPII projections (« Centre d’Etudes Prospectives etd’Informations Internationales”). The US Geological Survey is the source of information used
for oil and gas Ultimate Recoverable Resources. It provides a set of estimates and attachedprobabilities that are consistent on a world and region-by-region basis. Technologicaldevelopments regarding energy technology costs and performances are derived from analyses
elaborated in the framework of other projects within the European Commission’s Research
Directorate-General (TEEM1 project, 2000).

1

Capros P., guest Editor, Energy Technology Dynamics and Advanced Energy Systems Modeling (TEEM: aprogram funded by the European Commission, Directorate General Research), in International Journal of
Global Energy Issues, Special Issue, Vol. 14, Nos. 1-4, 2000.

7

WETO
All projections in WETO refer to seven world regions and seven countries or group ofcountries. The world regions are the North America, Japan/Pacific, CIS/CEECs (Communityof Independent States / Countries of Central and Eastern Europe), Latin America,
Africa/Middle East and Asia. The countries or group of countries under focus are theEuropean Union, either in its existing size with 15 countries or including the Accession
Countries, USA, Japan, Brazil, China and India. The composition of each world region isprovided after Chapter 6.
The detailed description of the results of the Reference scenario for the world energy system
to 2030 are presented in Chapters 2 and 3.

1.2

UNCERTAINTIESThe Reference scenario, as any other baseline projection involves many uncertainties that may
considerably change the world energy development pattern in the next three decades. Two ofthese uncertainties will be considered in this report: the resource estimates for oil and gas andthe development for new electricity production technologies.
Resource availability
The uncertainty on oil and gas resources is taken into account through two variants:-

The low oil and gas resource case is designed to test the sensitivity of the projections
to more pessimistic assumptions on hydrocarbon resources, and to assess theconsequences of higher oil and gas prices on energy demand and supply to 2030.

-

The high gas reserves case is designed to simulate a situation where gas prices are
structurally lower than oil prices. For that purpose, the assumptions of the Reference
are used for oil resources, while higher estimates are considered for gas resources.

Both cases are examined and analysed against the Reference Scenario, so as to provide
insights on their main impacts on the world energy system in general and on the energy
system of the EU in particular (Chapter 4).
Technology development
Beside the uncertainties on hydrocarbon resources, Chapter 4 also explores the uncertainty on
the future development of power generation technologies. More precisely, it provides anassessment of the potential impacts of accelerated technological changes through different
technology cases. Each case combines consistent sets of alternative hypotheses regarding thefuture costs and performance parameters (e.g. conversion efficiency, availability factor, safety
requirement) of selected power generation technologies, based either on fossil fuels, nuclear
energy or renewable energy forms.
The methodology used to develop and analyse the technology cases consists in three steps:
first, the identification of possible technological breakthroughs affecting clusters oftechnologies, then the use of expert judgment to translate these breakthroughs into more
8

CONTEXT AND METHODOLOGY
optimistic performance trajectories, and third the assessment of the impacts of thesealternative cases against the Reference. The assessment encompasses changes in fuel supply,in the competitive position of power generation technologies, and in global and power
generation CO2 emissions at the world and regional level.
This report presents four technology cases:-

The “gas” case, which assumes enhanced availability of natural gas and introduces
further improvements for combined cycle gas turbines and fuel cells.

-

The “coal” case, which involves major improvements in advance coal technologies,
namely supercritical coal plants, integrated coal gasification combined cycle plants anddirect coal firing plants.

-

The “nuclear” case, which assumes a breakthrough in nuclear technology in terms of
cost and safety. It has an influence on standard large light water reactors but especiallyon new evolutionary nuclear reactors.

-

The “renewable” case, which supposes a major improvement in renewable energies
notably wind power, biomass gasification, solar thermal power plants, small hydro andphotovoltaic cells.

1.3

POLICY ISSUES

Finally, this report analyses in more detail two important issues regarding the long-term
energy, technology and climate policy developments of the European Union. The first one
relates to the future of natural gas in the EU in a context of growing demand in the otherworld regions and of uncertainty on resources and investments in transport infrastructure. The
second one deals with the impacts to 2030 of the introduction of a carbon constraint at worldlevel on EU and other world regions’ energy balances and technology developments.
The EU gas market in a world perspective
Over the last ten years, the world demand for gas has grown rapidly. Gas demand increased
the most rapidly for several reasons, including price competitiveness, environmental
advantages over other fossil fuels and abundant resources. The rise in gas consumption has
been particularly remarkable in the power generation sector. As the Reference projects thecontinuation of this trend through 2030 – although at a lower pace by the end of the projection
period – it is worth asking how the projected growing market for gas, combined with the
decline of gas production in Europe, will affect the outlook of gas supplies to 2030 and what
the impacts will be on the security of supply in the EU.
The POLES model provides a valuable tool for addressing the above issue. Its world
dimension makes explicit not only the linkages between the gas demand growth and thedecrease in gas production in the EU, but also the demand for gas in the other world regions
and the characteristics of the regional gas markets (e.g. prices, pipeline and Liquefied Natural
9

WETO
Gas transport routes between the producing and consuming regions). The latter are key
elements in the determination of the allocation of world gas resources among consuming
regions.
Chapter 5 describes the projected evolution of the EU gas market in the Reference Scenario interms of gas demand, gas supply portfolio, world gas trade and transport between pipelinesand Liquefied Natural Gas.
Energy related CO2 emissions constraints and long-term energy development
The Reference Scenario does not ensure that emissions reduction objectives are met for the
Kyoto First Commitment Period (2008-2012). Therefore the Reference represents abenchmark for the identification of the gap further measures need to close in the 2008 to 2012
time horizon and the debate and setting of commitments beyond 2012.
Chapter 6 is more particularly devoted to climate policy issues. It is divided into two parts,
according to the time horizon considered. In the first part, the focus is on the Kyoto First
Commitment Period and most of the attention is paid on the evaluation of the Reference
against the Kyoto targets. A short discussion on the implementation of the Kyoto Protocol andon the state of affairs of international negotiations is also included.
The second part provides a description and a detailed analysis of a CO2 abatement scenario(2030). This carbon abatement case is designed to simulate and assess the potential impacts ofworld CO2 reduction policies on the future development of energy balances and technologies.
This case is defined through the introduction of a “carbon value” that is differentiated by mainworld regions and time horizons. More precisely, the carbon values are determined so toreflect possible regional differences in implementing the Kyoto targets in 2010.

10

CONTEXT AND METHODOLOGY

Box 1: The POLES Model

2

The model structure corresponds to a hierarchical system of inter-connected modules andinvolves three levels of analysis:
i. International energy markets;
ii. Regional energy balances;iii. National models3 on energy demand, new technologies and renewable energy,
power generation, primary energy supply and CO2 emissions.
The dynamics of the model is based upon a recursive simulation process, in whichenergy demand and supply in each national or regional module respond with different lag
structures to international prices variations in the preceding periods. In each module,
behavioural equations take into account the combination of price effects, technicoeconomic constraints and trends.
There are fifteen final energy demand sectors (covering the main industrial branches,transport modes, the residential and service sectors), twelve large-scale power generation
technologies and twelve new and renewable energy technologies.
Oil and gas supply profiles in the largest world producing countries are dealt with a
discovery process model in which oil and gas production depends on the dynamics of thedrilling activity and discovery of new reserves, given the existing resources and thecumulative production. Coal, supply is essentially demand driven.
The integration of import demand and export capacities of the different regions are
ensured in the international energy market module, which balances the internationalenergy flows. One world market is considered for oil (the ‘one great pool’ concept),
while three regional markets (America, Europe/Africa, and Asia) are identified for gas
and coal so as to account for regional differences in cost and market structures. Thechanges in international prices of oil, gas and coal are determined endogenously in thismodule. The international price equations take into account the relevant variables
associated to short-term adjustments in price levels, such as the Gulf capacity utilisation
rate for oil, and to medium and long-term variables such as the Reserve on Production
ratio for oil and gas, or the trend in productivity and production costs for coal.

2

For more information www.upmf-grenoble.fr/iepe/textes/POLES8p_01.pdf
The POLES model identifies thirty-eight world regions or countries, of which the 15 countries of the EU andthe largest countries (USA, Canada, Japan, China, India, Brazil, etc.).

3

11

CHAPTER 2
ENERGY AND TECHNOLOGY TRENDS TO 2030

2.1

KEY ASSUMPTIONSThe Reference scenario
The Reference scenario aims at providing a description of the future world energy system, as
if the on-going technical and economic trends and structural changes were to continue. In thisrespect, it constitutes the appropriate benchmark for the economic assessment of future energy
and climate policy options.
The Reference scenario was designed with the following philosophy:-

The main drivers in the future development of the world energy system will remain the
demography and economic growth (Gross Domestic Product). As the on-going trends forthese two sets of variables are differentiated across the main world regions, theircontinuation results in significant changes in the regional structure of population, GDP,energy demand and associated emissions.

-Technical change has been a continuous phenomenon through history, although thisprocess may be submitted to slowdowns or accelerations. Thus, any projection of theeconomic system has to take into account the consequences of the continuous
improvement in the technologies’ economic and technical performances. As far as energy
technologies are concerned, the hypotheses considered in the Reference indeed take into
account technological progress, at least along the lines of past improvements (hypothesesof breakthroughs are considered elsewhere in the technology cases).

-

The availability of energy resources is clearly a potential constraint for the development offossil fuel use in the long term, or at least it is a factor that can bring tensions on theinternational energy markets and drive the energy prices up. Coal resources are known to
be overabundant, at least for the next century. But huge uncertainties surround any
assessment of the recoverable oil and gas resources at the world and regional level. The
Reference scenario uses median estimates for resources that are identified at the regional
level, with values that are globally well accepted by the experts, in a "business as usual"
perspective.

-

As far as energy and climate policies are concerned, the Reference scenario only includes
the consequences of policy measures, which are actually (2000) embodied in "harddecisions" (investment actually made, regulation actually enforced in law and voluntaryagreement actually signed). It is even considered by judgement that some measures may
not benefit of a full implementation over the projection period. Thus the Reference does
not include the compliance to the policy decisions or announcements made bygovernments, including the European Commission, or industries, such as the Kyoto
13

WETO
commitments, the targeted share of renewables4, the nuclear phase-out in Germany or
Belgium, or the removal of existing economic instruments (eg subsidies or taxes). This is
logical as the cost of these policies, which are being implemented or will be implemented
in the near future, can only be assessed by comparison with a reference scenario that is
free of such constraints or commitments.
As any model, POLES, the model used in this study, is a simplified representation of reality,
mostly based on the fundamental economic relations involved in the world energy system.
Some important factors, which may have a decisive impact on the future development of theworld energy system, are either ignored or at least not explicitly dealt with in the model,
because too complex or impossible to quantify. Among these factors: the geopolitical drivers
and constraints that have already played a major role on the energy scene, such as theindustries’ regulation and organisation schemes, which have changed significantly in the past
twenty years.
As a consequence, the “business and technical change as usual” energy evolutions depicted by
the Reference are mostly driven by changes in economic fundamentals that reflect rational
economic behaviours. How these evolutions would modify the geopolitical constraints or
foster complementary changes in the industries’ regulation and organisation schemes, and,
therefore, which policy response they may induce, is out of the scope of the Reference
generated by POLES.
The dynamics in world population and economic growth
The combined growth in the world population and economy will remain key driving forces inthe development of the energy sector over the next decades. The population outlook used in
the WETO study is based on the UN population prospects5. The economic outlook has been
prepared by the CEPII6 and is based on a simple growth model that takes into account theaccumulation of physical and human capital in the different regions considered.
The resulting picture of the world population and GDP7 to 2030 reflects a combination ofcontinuing trends and of important structural changes. The key features of these dynamics canbe summarised as follows:-

World population growth rate will continue to decrease over the projection period from
1.5 %/year in the past decade to 1 %/year over the 2000 to 2030 period. This results in a
total population of 8.2 billions in 2030, from 6.1 billions in 2000.

-

On average, world economic growth will be, slightly above 3 %/year for the next thirty
years, a figure comparable to the past thirty years (3.3 %/year from 1970 to 2000 and 3.0

4

The EU target is 12 % of gross consumption for renewable energy in 2010, as outlined in the European
Directive (2001/77EC of the European Parliament and the Council of 27 October 2001) on the Promotion ofElectricity from Renewable Energy Sources in the Internal Electricity Market.
5
United Nations, World Population Prospects, The 2000 revision, UN Department of Economic and Social
Affairs, Population Division, New York, 2001.
6
IEPE, CEPII, CIRED, Analyse des stratégies de Réduction des Emissions de gaz à effet de Serre, ARES
project, GICC Programme of the French Ministry of the Environment, 2002.
7
All GDP figures in this study are calculated using a constant 1995 Purchasing Power Parity system.

14

ENERGY AND TECHNOLOGY TRENDS TO 2030
% from 1990 to 2000, due in particular to the transition process in the CEEC and CIS
region during the past decade).
-This is made possible by acceleration in the average per capita GDP growth that isparticularly marked in the 2000-2010 decade, and is largely due to the projected economic
recovery in the CEEC and CIS region.

-

The combination of the continuous slowdown in the growth rates of the population andper capita GDP results, after the initial upsurge, in an economic growth rate that is
weakening over time, from 3.5 %/year in the first decade, to 3.1 %/year and finally 2.6%/year between 2020 and 2030 (Figure 2.1).

Figure 2.1: World population, per capita GDP and GDP growth
4.0%
3.5%
3.0%

%/year

2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
1990-2000

2000-2010

Population

2010-2020

Per capita GDP

2020-2030

GDP

The structure of world population
As noted above, the increase in world population will slowdown over the next thirty years,
and in some regions of the industrialised world the population will even decrease in absoluteterms. This is the case of the EU after 2010, while this decrease only begins after 2020 in the
CEEC and CIS region and in the Japan and Pacific region.
However the world population structure does not change that much over the projection period,as most regions only incur a 1 to 2-percentage points loss in their share. Only two regions
experiment an increase in their share: Latin America (with a very limited gain of 0.4
percentage point) and the Africa and Middle-East region, whose share of world population
goes from 16 % in 2000 to 22 % in 2030 (Figure 2.2).

15

WETO
Figure 2.2: World population, by region
Share of World Population

World Population (Millions)
9000

100%

8000

90%
80%

7000

70%

6000

60%

5000

50%

4000

40%

3000

30%

2000

20%

1000

10%
0%

0
1990

Western Europe
CIS, CEEC
Asia

2000

2010

North America
Latin America

2020

1990

2030

Western Europe
CIS, CEEC
Asia

Japan, Pacific
Africa, Middle East

2000

2010

North America
Latin America

2020

2030

Japan, Pacific
Africa, Middle East

GDP growth projections and changes in relative per capita GDP
The simple growth model that has been used to project the GDP of the different world regions
is based on the hypothesis of a convergence in the GDP growth rates, subject to conditional
hypotheses on investment rates in physical and human capital. The hypotheses used for theGDP projections intend to reflect the particular conditions of each country or region.
Box 2: GDP forecasts

The GDP projections used in the POLES model scenarios are provided by the CEPII(Centre d’Etudes Prospectives et d’Informations Internationales), a research centre of theFrench Government specialised in international economic analysis, modelling andforecasting.

GDP forecast by world region relies on a neo-classical growth model with exogenous
technological progress and an explicit consideration of the human capital.
The main assumption of the model is the convergence in labour productivity towards along-term equilibrium in a closed economy. The active population being exogenous, theforecast depends on three key factors: physical capital, human capital and technology
level incorporated in labour. The physical capital is a function of the investment rate.
The human capital is a function of the school enrolment, linked to the GDP per capita.
The convergence in the labour productivity variation is due to an assumption of adecreasing marginal output of the physical and human accumulated capital.

Investment rates and school enrolment are different by country and the growth of thetechnology level incorporated in labour is higher for developed countries.

16

ENERGY AND TECHNOLOGY TRENDS TO 2030
When translated into per capita GDP levels, the projections show a slight convergence acrossthe different world regions. This convergence can be analysed by calculating the ratio of eachregion’s per capita GDP on that of the higher income region, i.e. North America (Figure 2.3):-

After the 1990-2000 decade during which Western Europe and the Japan and Pacificregions lost some ground comparatively to North America, the projection results in somecatch-up of these two regions in the next decades. The Japan and Pacific region
recuperates its position of 1990 in 2030 (80 % of the North American level) while
Western Europe slightly improves it (from 68 to 72 %).

-As far as the economies in transition are concerned, the per capita GDP ratio relatively to
North America follows a much more uneven trajectory, with a huge drop from 1990 to2010 (from 32 to 18 % of North American level). A sustained recovery follows, without
however allowing a full recovery to the 1990 level (31 % in 2030).

-

The trajectories of the developing regions are contrasted. While Asia sees a significant
improvement in its per capita GDP ratio (from 8 to 19 % of the North American level
between 1990 and 2030), the convergence process of Latin America is much more limited(from 20 to 25 %). The Africa and Middle East region does not experiment any
convergence, as its per capita GDP represents a stable 7.5% of the North American level
over the period.

Figure 2.3: Per capita GDP by region as a percentage of North America
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1990

2000

2010

2020

2030

Latin America

Western Europe

CIS, CEEC

Africa, Middle-East

Asia

Japan, Pacific

17

WETO
The structure of world GDP
The combination of population and per capita GDP growth results in an average world growthrate of 3.1 %/year over the projection period, with significant changes occurring in the world
GDP structure. While the industrialised countries of the West and of the East (CEEC and CIS)
represented up to 70 % of total world GDP in 1990, this share is already brought down to 62% in 2000 due to the transition process in the economies in transition. In spite of the projectedeconomic recovery in that region, the share of the industrialised countries continues to decline
all over the projection and ends up with 45 % of world GDP in 2030 (Figure 2.4).

Figure 2.4: World GDP
World GDP (Billion € 99)

Share of World GDP
100%

100000

90%
80%

80000

70%
60%

60000

50%
40%

40000

30%
20%

20000

10%
0

0%
1990

Western Europe
CIS, CEEC
Asia

2000

2010

North America
Latin America

2020

2030

1990

Japan, Pacific
Africa, Middle-East

Western Europe
CIS, CEEC
Asia

2000

2010

North America
Latin America

2020

2030
Japan, Pacific
Africa, Middle-East

The developing countries’ share of world output thus significantly increases over the period.
Although most of the gains take place in the Asia region, this new balance in the world
economy is a key driving force in the WETO projections. During the next thirty years indeed,
the economic and energy scene is likely to be influenced by the growth in developing regions.
They will progressively become dominant, not only in the overall economic production, butalso in energy consumption, production and CO2 emissions.

18

ENERGY AND TECHNOLOGY TRENDS TO 2030

Key assumptions
Ɣ

The WETO Reference scenario provides a description of the future world energy
system, under a continuation of the on-going trends and structural changes(“business and technical change as usual” context). The scenario results should beseen as a benchmark for the assessment of alternative cases, particularly with respect
to resource, technologies and environmental policy.

ƔWorld population will reach 8.2 billions in 2030, from 6.1 billions in 2000. On
average, world economic growth will be slightly above 3%/year for the next thirty
years, a figure comparable to that of the past thirty years.

ƔTechnological progress continues along the lines of past improvements, without
hypotheses of major breakthroughs.

ƔMedian estimates are considered for the assessment of recoverable oil and gas
resources by region, with values that are globally well accepted by the experts in thisfield and account for technological progress in upstream oil and gas technologies.

Ɣ

The Reference scenario only includes the consequences of the energy efficiency orenvironmental policies and measures that have already been decided up to now. It
does not include a full compliance to the policy decisions or announcements made bygovernments - including the European Commission - or industries. In particular, thecompliance to the Kyoto commitment of the various countries is not introduced as aconstraint.

19

WETO

2.2

INTERNATIONAL ENERGY PRICESOil and gas prices increase throughout the projection period
The long-run evolution of the international oil and gas prices is simulated in the POLES
model, reflecting basically the dynamics and lagged adjustments of world demand and supply(see Box 3). The global picture for oil and gas prices8 in the Reference is illustrated in Figure
2.5.
Box 3: Oil, gas and coal prices modelling
The oil price is calculated at world level, the oil market being described as “one greatpool”. It is considered as depending in the short term on the variations in the capacity
utilisation rate of the Gulf countries and in the medium and long term on the world
average Reserve on Production ratio.
The gas price is calculated for three regional markets: the American market, the EuroAfrican and the Asian market. The gas price on each market then depends partly on a gas
to oil price factor but principally, for the long term, on the variation in the average
Reserve on Production ratio of the core suppliers of each main regional market.
The coal price is also estimated for the same three regional markets. It is obtained by
calculating the average price of the key suppliers on each market, weighted by theirmarket shares. The average price of the key suppliers is derived from variations inmining and operating costs (function of per capita GDP increase and of a productivity
trend) and from the capital and transport costs (both depending on the simulated
production increases, as compared to a "normal" expansion rate of production
capacities).

Figure 2.5 shows a decline in oil price until the middle of the current decade, compared to thehigh level of 2000. This decline is largely due to the moderate oil demand. Later on, the oil
price increases relatively sharply to 24 €/bl in 2010 before a phase of more moderate but
steady increase until 2030. The oil price reaches 29 €/bl and 35 €/bl in 2020 and 2030
respectively9. In fact, before 2010 a new period begins for the oil market, in which the oil
production of the Gulf countries has to grow beyond its maximum historical level of about 23
million bl/day. Consequently, the Gulf oil producers need by that time to continuously
develop new production capacities, while the reduction in Reserve on Production ratios atworld level exerts an upward pressure on oil price. However, the price-path obtained from themodel only indicates a trend that is consistent with the relative dynamics of world supply anddemand and do not pretend to provide a precise oil price forecast. In particular, the projection
do not account for possible geopolitical events that many times in the past proved to affect theprice level.
8

All prices are in € of 1999 (equivalent to US$ of 1995).
In 2030 this represents a doubling over the average oil price in the nineties and a level that is significantly
higher than in EU energy outlook published by DG Energy and Transport. This is because these forecasts reflect
more optimistic views both on oil and gas endowments at world level, with resource hypotheses similar to thoseused for natural gas in the high gas resources case (§ 4.1.2.).

920

ENERGY AND TECHNOLOGY TRENDS TO 2030
Figure 2.5: Oil and gas prices
70
60€99/bl

50
40
30
20
10
0
1975

1985

1995

2005

2015

American gas prices

Asian gas prices

European gas prices

World oil prices

2025

For gas, the three continental markets - America, Europe/Africa and Asia – continue to be
characterised by price levels that are structurally different. These differences reflect diverselevels of development in transport infrastructures and different conditions of supply,
particularly the mix between pipeline gas and Liquefied Natural Gas (LNG). For instance, theAsian gas market is significantly dependent on LNG imports; consequently, current gas prices
on this market are higher than in Europe and America. However, regional price differentials
are expected to diminish significantly over the next 30 years, reflecting more comparable gas
supply mixes by 2030. This is due to increasingly interconnected gas markets, with the same
producers exporting to different consuming regions. Some difference in price levels however
remains - for instance between Europe and Asia - as longer distances and consequenttransport cost differentials imply slightly higher prices in the latter case (+18% in 2030).
On the European and African market, notwithstanding a period of relative stabilisation in the
middle of the current decade, the gas price is projected to increase regularly to reach 28 €/blin 2030.
On the American market, the gas price declines first significantly from the high level of 2000,
down to 14 €/bl before the year 2010 and then increases again steadily, although more slowly
than on the European market, to reach 25 €/bl in 2030.
Contrary to gas prices on the American and European markets, which follow comparable
trends, the gas price on the Asian market increases constantly throughout the projection period
from 20 €/bl in 2001 to 33 €/bl in 2030.
According to the mechanism of oil and gas prices formation (see Box 2), the price movements
mainly depend on the variation of the Reserve on Production (R/P) ratio, which constitutes along-term indicator of the balance between demand and supply. Nevertheless, the Gulf
production capacities are also taken into account for the projection of oil price, as well as apartial oil-indexation term for the calculation of gas prices. The latter parameter is howeverassumed to be of decreasing importance throughout the projection period.
21

WETO

Figure 2.6 shows the evolution of the R/P ratios on the different markets: the international
market for oil and the three regional markets for gas.
As regards to oil, the rather stable profile of R/P in the short-run explains – together with themoderate oil demand and increasing production capacities in the Gulf – why the oil pricetrend is decreasing from 2000 to the middle of the decade. Afterwards, the smooth but steadydecline in R/P in the long run drives the oil price trend upwards.
The pattern of the oil R/P ratio (and consequently the trend in oil price) can be put in relation
with the evolution of the world oil demand: the more pronounced decrease in oil R/P ratio
during the second half of the decade corresponds to a marked increase in world oil demand,
while the more moderate decrease from 2010 onwards can be related to a relative saturation ofoil demand in OECD countries and a less buoyant demand in developing countries.
The Reserve on Production ratios for gas and their evolution throughout the projection period,
illustrate the peculiarities of the different markets:-

The American market is characterised by low values of the R/P ratio (about 20 years
over the last decade) compared to those of the other markets (above 40 years). The
decline of the R/P ratio in the long run, together with the steady increase in oil price although to a lesser extent - explains the increasing profile of gas price from the
middle of the decade onwards.

-

The Asian market has an intermediate R/P ratio. Contrary to the other two markets, its
R/P ratio decreases continuously throughout the projection period. However, thesmoother decrease at the end of the projection period explains the lower price increase
compared to the American and European markets.

-

10

The Europe/Africa market shows the highest R/P ratios10, most particularly over the
1990-2005 period, when they range from 100 to 120 years. In 2000, there was a factor
2 between the R/P ratios in the European and Asian markets and a factor 6 relative to
the American market. The gap is nevertheless projected to shrink progressively overtime: in 2030, the difference between the European and Asian R/P ratio is reduced to
1.5, while the difference between the European and American R/P ratio is brought
down to a factor of 3. The sharp decrease in the R/P ratio in the Europe/Africa market
reflects relatively unbalanced long-term dynamics of supply and demand in this region.

This is weighted average of the R/P ratios of the key suppliers.

22

ENERGY AND TECHNOLOGY TRENDS TO 2030
Figure 2.6: Oil and gas reserve on production ratios

140
120
nb of years

100
80
60
40
20
0
1995

2000

2005

2010

2015

2020

2025

American gas market

Asian gas market

Eur/Afr. Gas market

Oil market

2030

International coal price remains relatively stable
Coal price is independent of oil price and is assumed to remain so. Moreover, and contrary to
oil and gas, coal supply will not be subject to resource constraints over the projection period.
Therefore, in the POLES model, the evolution of coal price is derived from the developmentof production costs of the key producing countries (Box 2).
The Reference scenario projects stable, then slowly increasing, coal prices to reach levels of
about 10 €/bl in 2030. This represents increases of 15 to 35 % from current price levels,
according to the market considered. These limited increases in world coal prices, in spite of asustained growth in consumption, reflect the extreme abundance of coal resources in many
regions, as well as the possibility of significant productivity increases in coal production: inthe next decades, the modernisation and mechanisation of coal production will exert asignificant downward pressure on prices.

Key conclusions·

The oil and gas prices trend corresponds to a significant increase from current levels
until the end of the projection period: oil price is projected to reach 35 €/bl in 2030.

·

A similar statement holds for gas prices, at 28, 25 and 33 €/bl in 2030, respectively
on the European/African, American and Asian markets.

·

The regional gas price differentials are expected to diminish significantly over the
next 30 years, reflecting more comparable gas supply mixes.

·

The coal price is expected to remain relatively stable at around 10 €/bl in 2030.

23

WETO

2.3. GLOBAL OUTLOOK FOR ENERGY AND CO2 EMISSIONS
2.3.1 World energy consumption
Global trends
In the Reference, the picture of the world energy scene in 2030 mainly reflects an expanded
vision of the current system. However, some significant changes occur, particularly in therelative shares of the main world regions and of the primary energy sources. These changes
are associated, respectively, to different population and economic growth dynamics and tohigher energy prices and more efficient technologies. The world energy consumption is
projected to increase by some 70% over the 2000-2030 period (Figure 2.7). This translates
into an average increase of 1.8%/year to be compared with 1.4%/year over the 1990-2000
period.
Figure 2.7: World energy consumption

18000

Mtoe

15000
12000
9000
6000
3000
0
1980

1990

Coal, lignite
Prim. Electricity

2000

2010

Oil
Wood and wastes

2020

2030

Natural gas

In 2030, fossil fuels (coal, lignite, oil and natural gas) are projected to represent 88% of worldenergy consumption. This percentage is greater than the 81% share observed in 2000. Despitea rapid growth of coal and gas utilisation, oil still represents the largest share (34%) of theworld gross inland consumption (GIC) in 2030:-

Oil demand increases at a rate similar to the one observed during the decade 19902000 (i.e. 1.6%/year) and demand reaches 5.9 Gtoe in 2030.

-

Natural gas demand increases by 3%/year on average between 2000 and 2010 and by
2.1%/year afterwards. The share of natural gas in total consumption extends to 25% in
2030 from 21% in 2000.

-

Coal demand is also projected to grow rapidly over the next thirty years. Between
1990 and 2000 the growth of coal consumption was 0.9%/year but after 2000 it goesup to 2.1%/year until 2010 and then to 2.5%/year until 2030 as it becomes morecompetitive than other fuels.
24

ENERGY AND TECHNOLOGY TRENDS TO 2030
The change in the fossil fuel shares impacts considerably on the carbon intensity of the worldenergy system and on the associated CO2 emissions, as discussed in section 2.3.2.
Nuclear energy increases slightly in absolute terms. During the 1990-2000 decade the growthof nuclear was 2.7%/year, but this rate weakens to 0.9%/year over the projection period. In
2030, nuclear represents 5% of the world GIC, compared to 7% in 2000.
The share of large hydropower and geothermal energy stabilises at 2% of world GIC. Wind,
solar and small hydropower increase together by 7%/year between 2000 and 2010 and then byaround 5%/year until 2030. In spite of the marked acceleration in the diffusion process ofthese renewable sources and because of their limited initial penetration, their market sharerepresents less than 1% of world GIC in 2030. Conversely, wood and wastes consumption
decreases steadily during the projection period, but its share in world GIC (5% in 2030, to becompared with 9% today) remains higher than the share of the new renewable sources.
Globally, energy from renewable sources is projected to cover 8% of world energy
requirements in 2030. This is less than the 13% share observed in 2000 and is essentially due
to the continuous decline of traditional biomass consumption in Asia and Africa, due toincreased urbanisation, deforestation and substitution to modern energies in rural areas.
Actually, the evolution of the share of renewables in total energy consumption shows
contrasted patterns across regions, while the EU with a regular increase achieves the highest
progression among industrialised regions.
The detailed results of the Reference scenario by regions are provided in Annex 2.
Key indicators of the world energy consumption
The gross inland consumption is the sum of the final energy demand and the energy demandfor electricity production and other energy transformations. The final demand is modelled at
the level of various sectors. In each sector, energy demand is driven by economic activity
variables and price changes and trends (see section 3.1). The energy demand for electricity
production results from the simulation of power generation technologies (see section 3.2). The
dynamics of the GIC can be analysed through the evolution of three factors: population (POP),
Gross Domestic Product/capita (GDP/POP) and the energy intensity (GIC/GDP). Under thisdecomposition, the Gross Inland Consumption is described as: POP x GDP/POP x GIC/GDP
In the WETO Reference, the gross consumption increases at 1.8%/year between 2000 and
2030, as population grows at a rate of 1%/year and the per capita GDP at 2.1%/year, while theenergy intensity of GDP decreases by –1.2%/year. The projections show that at the world level
and in most regions, the GDP/capita mainly influence the energy consumption growth.
Nevertheless, in Africa, Latin America and Asia, the demography represents an importantfactor of the energy demand growth.
Regional trends
The analysis of regional trends indicates that a major structural change will occur in theworldwide distribution of the GIC over the next decades. The most outstanding element
25

WETO
stemming from the Reference is the slowdown in the energy consumption growth in theindustrialised countries and the sustained high growth in the developing countries. These
combined trends lead to a new balance in the regional structure of the world GIC: the share ofdeveloping countries shifts from 40% to 55% over the projection period.
In the EU, population is expected to be stable over the projection period. Therefore, the0.4%/year increase in energy consumption is mainly due to the impact of the per capita GDP
growth (1.9%/year) that is partially compensated by the 1.4%/year decrease in the energy
intensity of GDP. The projected growth for the EU thus reveals a relative saturation ofequipment ownership (cars, refrigerators, etc.) but not a full stabilisation of the energy
demand: total GIC reaches about 1.7 Gtoe in 2030, from 1.5 Gtoe in 2000.
The above analysis remains valid when the Accession countries are included. In thesecountries, the projected economic growth per capita is higher but the decrease in energy
intensity is also more significant due to large efficiency gains. These indicators balance eachother and the regional trend is not significantly different from the EU picture.

Figure 2.8: EU energy consumption
2000

Mtoe

1500
1000
500
0
1980

1990

2000

2010

Coal, lignite

OilPrim. Electricity

Wood and wastes

2020

2030

Natural gas

In terms of fuels shares, the contribution of natural gas strongly increases from 2000 to 2030,
at the expense of coal, lignite and oil. At the end of the period, natural gas represents 27% of
EU total energy consumption and becomes the second fuel used, behind oil (39%), but aheadof coal and lignite (16%)11.
11

The WETO Reference projects a fuel mix that is different from the one described in the EU energy outlooks
published by DG Energy and Transport. In particular, the share of gas is lower in WETO, while the share of coalis higher. This is explained by two key factors. First of all, the price of gas, relatively to that of coal, is higher in
WETO due to expected less abundant gas resources; this translates into a better cost competitiveness of coalbased electricity generation when GHG emission constraints are ignored. Secondly, the gas consumption islimited by a slower nuclear phase-out in Germany, Belgium and Sweden, as the WETO Reference only considers
the retirement of nuclear power plants at the end of their operating lifetime.

26

ENERGY AND TECHNOLOGY TRENDS TO 2030
In North America the energy intensity of GDP decreases by 1.3%/year, a rate similar to what
is projected in the EU. As a result, the energy consumption rises by 0.7%/year on average,
almost twice faster than in the EU. Coal experiences a steady growth of 1.1%/year on average
resulting in a share of coal of 28% in 2030. This evolution contrasts with the situation of theother industrialised countries where coal consumption stabilises or decreases gradually:
indeed coal, because of more favourable economic conditions, continues to develop on theelectricity market.
In the CIS and CEEC region, the economic recovery drives the energy demand up. The energy
intensity is projected to decrease substantially (-2.3%/year) in the 2000-2010 decade,reflecting the large potential for energy efficiency gains. The energy consumption per capita
returns to its 1990 level around 2020. Gas holds an increasing share in the total energy
demand of the region, exceeding 50% in 2030, mainly at the expense of coal and oil.
In the Japan and Pacific region, the energy demand pattern is similar to the trends observed forthe other industrialised regions but the decrease in the oil market share is more rapid; oil isreplaced by natural gas and primary electricity (nuclear in Japan and renewable in Australia).
Asia experiences the most rapid energy demand increase among all regions because of a.
strong economic growth (progression of 3.7%/year for the per capita GDP between 2000 and2030). The energy intensity of GDP decreases annually by 1.5% on average with the greatest
gains occurring in the 2000-2010 period. Energy consumption in this region reaches exceeds 6
Gtoe in 2030 with a per capita consumption significantly lower than in the EU (1.5 versus 4.6
toe/year). Because of the abundant resources in the region, the share of coal remains high(42%) and does not change significantly. In contrast, the shares of oil and gas increase rapidly
to the expense of biomass that is almost phased out (6% of GIC in 2030 compared to 30% in1990).
In the Africa and Middle East region, the energy consumption per capita remains below 1 toewith very different energy profiles among countries, in particular between Africa and the
Middle East. As in the most populous countries, energy is used to meet the essential needs, theenergy intensity reduction is projected to be lower than in the other developing regions. Oilremains clearly the dominant energy source (39%). In contrast, the shares of gas and coal(mainly in the South African sub-region) increase while the consumption of biomass
decreases sharply from 25% in 2000 to 8% in 2030.
In Latin America, finally, energy demand grows by 2.4%/year on average between 2000 and
2030, with the energy intensity of GDP decreasing by 0.8%/year. The significant feature is theslight decrease in the share of oil that is compensated by a strong penetration of gas, anabundant resource in the region.

27

WETO
Figure 2.9: Energy consumption in the other world regions

CIS, CEEC

3000

2000

2500

1500

2000

Mtoe

Mtoe

North America

1500
1000

500

500
0
1980

1000

1990

2000

2010

2020

0
1980

2030

1990

2000

2010

2020

2030

2020

2030

2020

2030

Africa, Middle East

Japan, Pacific
2000

1000

Mtoe

Mtoe

1500
500

1000
500

0
1980

1990

2000

2010

2020

0
1980

2030

8000

2010

1.500

Mtoe

6000
Mtoe

2000

Latin America

Asia

4000

1.000
500

2000
0
1980

1990

1990

2000

Coal, lignite
Natural gas
Wood and wastes

2010

2020

0
1980

2030

1990

2000

2010

Oil
Prim. Electricity

Regional overview of energy intensity trends
Figure 2.10 illustrates the evolution of the energy intensity of GDP in the different regions
over the projection period. The energy intensity, measured as the GIC per unit of GDP, is anaggregate indicator of the link between economic growth and energy consumption. Its leveland variation are the combined results of very different factors: the stage in the economic
28

ENERGY AND TECHNOLOGY TRENDS TO 2030
development process, energy efficiency and energy price patterns, climate, geography, culture
and lifestyles.
The total energy intensity is expected to decline, at the world level, by 1.2%/year over the
projection period, which is less than the 1.6%/year decrease observed from 1990 to 2000.
Substantial differences appear between regions. In all regions but Asia the intensity
improvements accelerates from past trends in the current decade. Asia continues to decrease
its energy intensity but the particularly rapid fall of 2.9%/year observed from 1990 to 2000 inthis region is somewhat reduced beyond 2010. The CIS and CEEC region reveals large
potentials for energy intensity gains with an annual decrease of 2.3%/year between 2000 and2010.
At world level, the improvements in energy intensity in relative terms are essentially driven by
the reduction of the intensity of final energy demand. This is the case in the EU, in Latin
America and in the Africa and Middle East region. On the contrary, in North America, in theJapan and Pacific region, in the CIS and CEEC region and in Asia, the decreases in final andtransformation sector energy intensities are comparable; to a large extent this reflects
important efficiency gains in the power generation sector.

Figure 2.10: Total and final energy intensity (1990, 2000, 2010, 2030)

0.50
0.45
0.40

koe/€ 99

0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
World

European
Union

North
America

Latin
America

Final

Africa,Middle
East

CIS,
CEEC

Asia

Japan,
Pacific

Transformations

Regional overview of per capita energy consumption trends
Apart from the particular case of the CIS and CEEC region during the 90’s, the per capita
energy consumption steadily increases in all regions (Figure 2.11). Only in North America theprogression tends to slow down over the 2010-2030 period, which may reflect marked
saturation effects, but no region experiences a stabilisation of its per capita energy
consumption. Despite the strong increase in energy consumption in the developing countries,
the magnitude of the gap in the per capita energy consumption between developing andindustrialised countries remains stable with a range of 1 toe/cap in the Africa and Middle East
region to 8.4 toe/cap in North America in 2030. Nevertheless, the ratio between the highest

29

WETO
and lowest levels of per capita energy consumption is projected to decrease to 8 in 2030 from
10 in 2000.
Figure 2.11: Energy consumption per capita

9.0
8.0
7.0

toe/ cap

6.0
5.0
4.0
3.0
2.0
1.0
0.0
World

European
Union

North
America

Latin
America1990

Africa,Middle
East

2000

2010

CIS,
CEEC

Asia

Japan,
Pacific

2030

Trends in energy-related services
In the analysis of long-term energy trends, it is important to identify the ultimate services thatenergy consumption provides. In this respect, the consumption is broken down into three main
services: electricity uses, transport uses (motive power) and thermal uses.
-

Electricity uses per capita

At world level, the per capita electricity demand rises at sustained rates with the per capita
GDP over the projection period: 1.2%/year between 1990 and 2000, 1.4%/year in the next
decade and up to 2.2%/year from 2010 to 2030 (Figure 2.12). In the industrialised countries,
electricity demand follows closely the economic activity as it did in the past. The EU, North
America and the Japan and Pacific region experience a relative slowdown of the progression
between 2000 and 2010 but the growth is faster beyond 2010 (respectively 1%/year and1.6%/year in the EU, 0.3%/year and 1%/year in North America, 1.1%/year and 1.9%/year in
the Japan and Pacific region). Electricity demand per capita grows much faster in Asia
(4.2%/year on average over the projection period) and in the CIS and CEEC region(2.7%/year). Electricity demand also increases strongly in the Africa and Middle East region(2.4%/year) and in Latin America (2.6%/year) although with lower rates than in Asia.

30

ENERGY AND TECHNOLOGY TRENDS TO 2030
Figure 2.12: Electricity use and GDP per capita, 1980-2030

18000
16000
14000

kWh/cap

12000
10000
8000
6000
4000
2000
0
0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

€ 99/cap
World
Africa, Middle East-

European Union
CIS, CEEC

North America
Asia

Latin America
Japan, Pacific

Transport energy use per capita

The per capita transport energy use also increases steadily but the progression slows downslightly from 0.9%/year between 1990 and 2000 to 0.7%/year over the projection period(Figure 2.13). North America is the only region where a decrease is projected beyond 2000.
The potential for energy efficiency gains in vehicles is large in this region while already highequipment rates reduce the diffusion of vehicles. In the EU similarly, the impact of risingincome on demand diminishes slightly in the second half of the projection. This reflects rising
saturation effects and constraints on road traffic such as congestion and limits to infrastructuredevelopment as well as long-term adjustment of the vehicle stock to increasing oil prices. For
all other regions, a relative slowdown of the increase in the indicator is projected for the 20102030 period relative to the 2000-2010 period but the increase in China and India isnevertheless considerable (around 3%/year).

Figure 2.13: Transport energy use and GDP per capita, 1980-2030
2.5

toe/cap

2.0

1.5

1.0

0.5

0.0
0

5000

10000

15000

20000

25000

30000

35000

40000

45000

€ 99/cap

World
Africa, Middle East

European Union
CIS, CEEC

31

North America
Asia

Latin America
Japan, Pacific

50000

WETO
-

Thermal uses per capita

The thermal uses per capita mimics the increase in per capita GDP, reversing the decreasing
trend observed from 1980 until the late 90’s. As a result, the per capita thermal uses in 2030
return to the level of 1980 (Figure 2.14).
In the EU, after a decrease until the late nineties, the per capita thermal uses increase
moderately up to 2010 and then evolves relatively independently from the per capita GDP
behaviour. The trend in the Japan and Pacific region is comparable to the trend in the EU. In
North America instead, the decrease observed until 1995 is much larger than in the EU; it isfollowed by a stabilisation between 1995 and 2015 and then by a slight but steady decrease
until 2030. The CIS and CEEC region is projected to show a rapid increase in the per capita
thermal uses since the year 2000 when its economy starts to recover from the years ofrestricted consumption and economic recession. In the industrialised countries, the relative
stabilisation of this indicator compared to the per capita GDP reflects essentially the saturation
in household heating and the transformation of these economies towards less energy
demanding industrial production structures. On the contrary, the increase in Asia and Latin
America reflects the increase in thermal uses in response both to rising income levels and to
rapid growth in manufacturing output.

Figure 2.14: Thermal uses and GDP per capita, 1980-2030

4.0
3.5
3.0

toe/cap

2.5
2.0
1.5
1.0
0.5
0.0
0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

€ 99/cap

World
Africa, Middle East

European Union
CIS, CEEC

North America
Asia

Latin America
Japan, Pacific2.3.2 Energy related CO2 emissions
Global CO2 emissions more than double between 1990 and 2030
This section examines the dynamics of the energy-related CO2 emissions that reflects theincrease in fossil fuel combustion underlined above. On a world scale, CO2 emissions morethan double over the 1990-2030 period, from 21 to 45 Gt of CO2. The regional shares alsochange significantly: in 1990, the emissions from the industrialised regions represented 70%

32

ENERGY AND TECHNOLOGY TRENDS TO 2030
of CO2 emissions; this share decreases to 42 % by 2030. By then China is the largest world
CO2 emitter in absolute terms but not relative to population.

Figure 2.15: Energy-related CO2 emissions

10000
9000
8000
Mt of CO2

7000
6000
5000
4000
3000
2000
1000
0
1990

2000

2010

European Union
USA
India
Japan

2020

2030

EU & Accession Countries
BrazilChina

Emissions growth in developing countries is expected to be extremely rapid, whereas
developed and industrialised regions undergo a more moderate growth or even a decline. For
instance, India experiences a six-fold increase (5%/year). The emissions in the otherdeveloping regions increase in a range of 200- 350%.
CO2 emissions of the CIS and CEEC decreased spectacularly during the economic recessionof the nineties, with a drop in emissions of 41% and 22% respectively in the 1990-2000
period. Only in 2030 do their CO2 emissions reach again the level of 1990. The EU, the Japanand Pacific region and North America experience a more moderate but still substantial growthof their emissions with increases of 18%, 32% and 50% respectively.
The contrasted CO2 emission trends in the different regions reflect a large number of factors
including economic growth, population, fuel mix as well as historical and policy related
elements.
Three determinants of CO2 emissions dynamics
The CO2 emissions dynamics can be analysed through the decomposition into three factors:
the GDP, the carbon intensity of the gross inland energy consumption and the energy intensity
of GDP (CO2 emissions = CO2 emissions/GIC X GIC/GDP X GDP).

33

WETO
Usually, the GDP and the energy intensity have opposite effect on CO2 emissions but up tonow, the growth in GDP dominated resulting in increases in energy consumption andassociated emissions.
While natural gas and oil use emits approximately 30% and 25% less CO2 per unit of energy
than coal, electricity produced from nuclear, hydro, solar and wind is almost CO2 emission
free, at least at the operational stage. The energy produced by biomass combustion isconsidered as CO2 neutral, as far as a re-growth process compensates for the re-emission of
the carbon captured during the biomass growing. In summary, decreasing the carbon intensityof energy consumption will imply increasing the share of low CO2 energy sources anddecreasing that of CO2 intensive sources.
CO2 emission increases the most in developing countries
China experiences the largest economic growth over the 40-years period and becomes the
major world emitter of CO2 in 2030. While its GDP is multiplied by ten between 1990 and
2030, making of China the largest economy in the world, this remarkable economic
development impacts dramatically on the energy consumption. During the same period, China
is also projected to be the most successful region in decreasing the energy intensity of theGDP, with a reduction of 66% relative to the 1990 level (see Figure 2.16). In spite of thismajor change, energy demand still increases by nearly 250% over the period. The third factor,
the carbon intensity of energy consumption, increases by 12% and leads to an additional risein China’s CO2 emissions beyond the energy demand growth. In total, CO2 emissions areprojected to increase by 290% relative to the 1990 level. In terms of energy mix, it appears
that, though China succeeds in reducing the share of coal in its energy consumption by 3%,
the carbon intensity of total consumption increases because the relative share of traditional
biomass decreases substantially, as in every fast developing country.
Similar conclusions can be drawn for the other developing regions as all countries experiencea large growth in GDP and a decrease in the energy intensity of GDP. Yet, the latter effectdoes not compensate for the former and as a result, the total energy consumption increases
considerably and so do the energy-related CO2 emissions.
The carbon intensity of energy consumption increases in all developing regions, reinforcing
the trend in CO2 emission growth. In India, in South East of Asia, in Africa and Middle East,
the share of traditional biomass decreases and the increment in energy demand is mostly met
by fossil fuels. India sees the greatest increase in the share of coal and the most limited
increase in the share of natural gas. This results in the sharpest projected increase in the
carbon intensity of the total consumption (+79%) of all developing regions. In spite of thesubstantial reductions in the energy intensity, India thus experiences the strongest increase inCO2 emission of all regions, namely a six-fold increase.
The growth in the carbon intensity of the energy consumption is much more moderate in Latin
America, where a 7% increase is projected. This change is explained by trends that are
different from those of the other developing regions. While the supply of CO2-free energy
produced by hydropower plants and biomass does not keep pace with energy demand, thedecline in their market share is however compensated by a relatively low carbon source,
natural gas, in place of coal or oil. Even under a scenario with substantial economic growth34

ENERGY AND TECHNOLOGY TRENDS TO 2030
and significant expansion of the energy supply, the energy demand in Latin America appears
the least carbon intensive in 2030.
CO2 emissions increase in industrialised countries at a slow pace
Energy demand increases in the industrialised countries but not as much as in the developing
countries. The lowest growth appears in the CIS (8%) and the highest reaches 51% in theJapan and Pacific region.
All industrialised regions decrease the carbon intensity of their consumption with the only
exception of North America. In that region, the share of oil in the energy consumption
decreases but this reduction is almost entirely compensated by an equal increase in the shareof coal use, while the share of other primary energy sources remains stable. The overall resultin 2030 is an increase in the carbon intensity of 7%. Together with the 40% increase in theenergy demand itself, this leads to a 50% increase in CO2 emissions above the 1990 level.
In the EU, the shares of coal and oil decrease respectively by 7% and 4% and the share ofnatural gas increases by 10%, leading to a drop in carbon intensity of energy consumption of amodest 6%. However, due to the increase in energy consumption, total CO2 emissions
increase by 18% between 1990 and 2030.
In the Japan and Pacific region, Japan decreases the carbon intensity of its energy
consumption by 12%. The share of coal in Japan decreases marginally, by less than 1% in
2030. Instead the share of oil decreases substantially by 18% and the share of natural gas risesof 12%. Furthermore, the Reference projects a considerable growth in the electricity
production by nuclear energy: 29% of the electricity produced in 2030 compared to some 19%
in 1990. Nevertheless, despite the substantial decrease in carbon intensity, CO2 emissions still
increase by 32% relative to the 1990 level as a main consequence of the increase by 51% of
the energy demand.
Finally, in the CIS and CEEC region, the shares of coal and oil decrease and the share ofnatural gas increases more rapidly than in the EU. This shift induces a reduction of some 10%
in the carbon intensity. Together with a moderate increase in GDP and a decrease in theenergy intensity of GDP, CO2 emissions reach similar levels in 2030 than in 1990.
The carbon intensity of the GDP decreases significantly in all regions but in Africa
Figure 2.16 shows the regional disparities in the carbon intensity of GDP but illustrates also
the significant reductions projected in the Reference. At world level, the drop is about 40%
between 1990 and 2030. The reductions are particularly substantial in the EU, North America,
the CIS, CEEC region and in Asia. In contrast, the carbon intensity of the GDP remains
roughly constant in the Africa, Middle East region.

35

WETO
Figure 2.16: Carbon intensity of GDP

1.4
1.2

kgCO2/ € 99

1.0
0.8
0.6
0.4
0.2
0.0
World

European
Union

North
America
1990

Latin
America
2000

2010

Africa,MiddleEast

CIS, CEEC

Asia

Japan,
Pacific

2030

However, the reduction in the carbon intensity of GDP does not compensate for the
pronounced increase in the revenue in the different regions. As a result, growing CO2
emissions are projected.
CO2 emissions per capita increase, but mostly at the end of the projection period
The regional differences in CO2 emissions per capita as well as the evolution over the 19902030 periods are illustrated in Figure 2.17. Developing countries’ per capita emissions remain
well below those of the industrialised regions in absolute levels, North America remaining thelargest emitter per inhabitant. Whereas, CO2 emissions per capita increase slightly between
2000 and 2010, the increase is more significant over the 2010-2030 period.
Finally, it is worth underlining that the gap between the highest (North America) and lowest(Africa and Middle East region) levels of CO2 emissions per capita is projected to be reduced
to 8 in 2030 from 12 in 2000.
Figure 2.17: CO2 emissions per capita

20

tCO2/cap

15

10

5

0
World

European
Union

North
America
1990

Latin
America
2000

2010

36

Africa,Middle
East
2030

CIS, CEEC

Asia

Japan,
Pacific

ENERGY AND TECHNOLOGY TRENDS TO 2030

Key conclusions·

World energy consumption is projected to increase at about 1.8%/year between 2000
and 2030. This growth is driven by economic and population growth (of respectively
3.1% and 1%/year on average), whose impacts are nevertheless moderated by adecrease in energy intensity of 1.2%/year, due to the combined effects of structuralchanges in the economy, of technological progress and of energy price increases.

·

Industrialised countries experience a slowdown in their energy demand growth(0.4%/year in the EU). Conversely, the energy demand of developing countries is
growing rapidly. In 2030, some 55% of the world energy demand is expected to comefrom developing countries, compared to 40% now.

·

The world energy system will continue to be dominated by fossil fuels. In 2030,
fossil fuels are expected to represent almost 90% of total energy demand. Oil remains
the main source of energy (34%) followed by coal (28%). Almost two-thirds of theincrease in coal demand between 2000 and 2030 comes from Asia. Natural gas is
projected to represent one quarter of world energy demand by 2030; power
generation provides the bulk of the incremental gas demand.

·

In the EU, natural gas is expected to be the second energy source, with a share ofaround 27% in 2030, behind oil but ahead of coal and lignite. Nuclear and renewableenergies would altogether represent slightly less than 20%.

·Given the continued dominance of fossil fuels, world CO2 emissions are expected to
grow rapidly, at a rate slightly higher than energy consumption (2.1%/year on
average). In 2030, world CO2 emissions are more than twice the level of 1990. In the
EU, CO2 emissions are projected to increase by 18% in 2030 compared to the 1990
level. In the USA, the increase is around 50%. While the emissions from developing
countries represented 30% of the total in 1990, these countries will emit more thanhalf the world CO2 emissions in 2030.

37

WETO

2.4

PRIMARY FUEL SUPPLY

2.4.1 Simulation of oil and gas discovery
The POLES model provides a relatively detailed simulation of the oil and gas discovery
process. This feature is in particular essential to the endogenous calculation of international
oil and gas prices. In broad terms, the modelling oil and gas supply is based on the following
sequence (see Box 4):-

The Ultimate Recoverable Resources (URR) of oil and gas are simulated from a baseyear value on the basis of the impact of increasing recovery rates (price dependent);
Discoveries increase with cumulative drilling (also dependent);
Reserves are equal to the total discoveries minus the past cumulative production;
For all regions except the Gulf, the production depends on a price dependent Reserveon Production ratio.

2.4.2 World oil supply
Figure 2.18 describes the conventional oil development profile in the Reference. Sufficient oil
reserves exist to satisfy the projected oil demand over the next three decades. The production
increases by about 65% to reach some 120 million barrels per day in 2030. About thousandbillion barrels will be needed to satisfy the cumulative oil demand over the 2000-2030 period.
The total conventional oil reserves decline between 2000 and 2030 by some 22%. Moreprecisely, oil reserves start declining from the middle of the current decade. This decline ishowever limited by the increase in URR due to the increase in recovery rates (from 30-40% in
2000 to 50-70% in 2030, depending on the region), induced partially by autonomous progressand by oil price increases: in 2030, world oil URR end up at 4500 Gbl. As the productionlevel is increasing during the projection period, the world Reserves to Production ratio
decreases from 40 years to 18 years: in the model simulation this is the key driving force
explaining the increase in oil price from the end of the current decade onwards (see Section
2.2).

38

ENERGY AND TECHNOLOGY TRENDS TO 2030

Box 4: The simulation of oil and gas reserves
The modelling of oil and gas reserves and production is carried out in three stages in the
POLES model.
First, the model simulates the level of oil and gas resources discovered each year (cumulated
discoveries) as a function of the Ultimate Recoverable Resources and of the cumulative drilling
effort. URR are not fixed as considered usually: they are the product of the oil and gas in place
for a base year (from USGS estimates12) and of a recovery ratio that increases with the price andan autonomous technological trend. The drilling effort is also a function of the price and atrend.
Second, the reserves are equal to the difference between the cumulative discoveries and thiscumulative production for the previous period.
Finally, the model calculates the production. For oil, it results from applying a Reserve on
Production ratio in the “price-taker” regions, while the “swing-producers” balance between theoil demand and supply. For gas, it is derived from the simulated demand.

Oil in Place

Ultimate Recoverable Resources

Cum. Discoveries

Reserves

Cum. Production

Cumulative drilling

12

U.S. Geological Survey World Petroleum Assessment-2000, Description and Results, USGS World Energy
Assessment Team, Denver, 2000.

39

WETO
Figure 2.18: World conventional oil resources

URR in 2000

3000
2500

Gbl

2000
Oil Reserves

1500
1000
500
0
1975

1985

1995

Cumulative Discov.

2005

2015

2025

Cumulative Prod.

The development of oil supply shows different pictures for OPEC and non-OPEC countries(Figure 2.19), illustrating the different patterns of behaviour of oil producers. Countries
outside OPEC are considered as “price-takers” and their production only depends on theirown reserves and production capabilities. In contrast, OPEC countries are modelled as“swing-producers” and their oil production is determined by the difference between total oil
demand and the production of non-OPEC countries (conventional and non-conventional oil).
Gains in production are expected for both OPEC and non-OPEC producers (respectively+108% and +10% between 2000 and 2030), and one quarter of the production increase are
expected to come from non-OPEC countries. This basically reflects the resource and Reserveon Production constraints that are expected to severely limit non-OPEC production in the
coming decades. Non-OPEC production in 2030 is projected to be 3 millions barrels per day
higher than it was in 2000, against 33 for OPEC. As a result, OPEC countries, which currently
provide 40% of total oil supply (of which 27% from the Middle East), will account for 60% in
2030 (of which 46% from the Middle East). These developments are opposite to the ones
observed since 1975 when the production of non-OPEC countries increased the fastest(respectively 1.8%/ year on average for non OPEC and 0.2% for OPEC).
In contrast to oil production, discoveries progress more in non-OPEC countries, at least during
the last 20 to 25 years of the projection period when oil price begins to increase.
These contrasted developments of oil production and discoveries in these two areas have a
direct influence on oil reserves: the latter decline more significantly in non-OPEC than in
OPEC countries (respectively -84% and –19% between 2000 and 2030) despite similar
recovery rates. Thus, although more than 80% of world’s oil reserves were alreadyconcentrated in the OPEC countries, this percentage will reach 95% at the end of the
projection period. This increasing dependence on OPEC resources raises questions in terms ofprobability of occurrence and geopolitical feasibility that are out of the scope of the WETO
study.

40

ENERGY AND TECHNOLOGY TRENDS TO 2030

Figure 2.19: OPEC and non-OPEC conventional oil resources

OPEC

Non-OPEC
2000

2000
URR in 2000

1000

Gbl

Gbl

URR in 2000

1500

1500
Oil Reserves

500

1000
500

0
1975

1985

1995

Cumulative Discov.

2005

2015

0
1975

2025

Cumulative Prod.

1985

1995

Cumulative Discov.

2005

2015

2025

Cumulative Prod.

The production of non-conventional oil, which is currently negligible (1% of total oil
production worldwide), is projected to represent about 10 million barrels per day in 2030.
Furthermore, the reserves of non-conventional oil increase steadily (contrary to the reserves of
conventional oil which decline) to cover one third of total oil reserves in 2030.
The evolution of oil production by main region illustrates the increasing share of OPEC
countries in world oil supply (Figure 2.20). Oil production shows the highest increase in the
Gulf countries (+160% over the projection period) where there are plenty of low-costresources. It is projected to more than double in all OPEC countries but Venezuela where theincrease is limited to 50% over the 2000-2030 period. On the contrary, it rises moderately in
the CIS (+5%) and even declines in OECD countries (-15%) and notably in the USA (-5%).
Ten countries cover three third of total oil demand in 2030 (Saudi Arabia, Iraq, Iran, CIS,
USA, UAE, Kuwait, Venezuela, Canada and Brazil. In North America, the US production
decline is more than offset by production increases in Canada. Brazil’s production is projected
to rise the most: its share in total oil production increases to 5% in 2030 from 1% in 2000.

41

WETO
Figure 2.20: World oil production
6000
5000

Mtoe

4000
3000
2000
1000
0
1975

1985

1995

GULF

2005

Other OPEC

CIS

2015
OECD

2025
Other

2.4.3 World gas supply
The outlook for gas supply is different from oil in several respects. First, gas reserves are
expected to increase over the projection period (+9%) while oil reserves decline. Second, thereserves are more widely distributed among regions for gas than for oil. However, as for oil,more than half of gas reserves are located in few countries, namely the CIS and the Gulf
region. Third, the recovery rate for gas is and will continue to be higher than for oil: it
increases over the projection period from 80% in 2000 to around 94% in 2030.
The rapid growth in natural gas reserves observed in the past is projected to continue for thecurrent decade, followed by a moderate but steady decrease (Figure 2.21). Progress in drilling
activity contribute to increase gas discoveries by around 1.4%/year over the period. Some 100
Tm3 of additional production will be required to meet the cumulative demand from 2000 to
2030. This is equivalent to about two third of the proven gas reserves at the end of 2000.

Figure 2.21: World gas resources

400

URR in 2000

Tm3

300
200

Gas reserves100
01985 1990 1995 2000 2005 2010 2015 2020 2025 2030
Cumulative Discov.

42

Cumulative Prod.

ENERGY AND TECHNOLOGY TRENDS TO 2030

About 68% of existing gas reserves are located in the CIS and in the Gulf region. Moreover,gas reserves are expected to grow in both areas over the projection period (+14%) so that theirshare in world reserves will reach 72% in 2030 (Figure 2.22). Total gas discoveries areprojected to reach similar levels at the end of the projection periods; on the contrary,
cumulative production in the Gulf region will be less than half the CIS level in 2030,
reflecting disparities in supply costs to final markets. The CIS is projected to cover about one
third of the cumulative gas demand over the 2000-2030 period, compared to slightly morethan 10% for the Gulf region. Similarly to oil, this result raises questions in terms ofprobability of occurrence and geopolitical feasibility that are out of the scope of the WETO
study.

Figure 2.22: Gas resources in the CIS and the Gulf

CIS

Gulf

150

150
URR in 2000

100
Gas reserves
50

Gas reserves

50

0
1985

URR in 2000

Tm3

Tm3

100

0
1995

2005

Cumulative Discov.

2015

2025

1985

Cumulative Prod.

1995

2005

Cumulative Prod.

2015

2025

Cumulative Discov.

Figure 2.23 shows the development of gas production by main region. It illustrates not only
the remarkable increase in gas production but also the important changes in the regional
allocation of total gas supply over time.
It is worth pointing out the moderate increase in production taking place in the OECD region(+3% between 2000 and 2030) as compared to the significant increases in the other regions,and more particularly in the Middle East (+470%). Although the OECD region accounted foraround 15% of the world’s total gas reserves at the end of 2000, it accounted for more than
40% of the world’s total production, followed by the CIS with 28%. In 2030, the picture looks
quite different: about one third of the gas production will come from the CIS and theremaining production is projected to be almost equally allocated among the OECD, theMiddle East, and the other gas producers in Latin America and Asia. Furthermore, the tenlargest gas producers in 2030 will ensure more than 80% of the world’s total production. But
contrary to oil, the ten largest gas producers in 2030 remain more evenly distributed among
the different world regions, although the CIS represents more than 40% of their total
production.

43

WETO
Figure 2.23: World gas production

5000

Mtoe

4000
3000
2000
1000
0
1975

1985

1995

2005

Middle East

CIS

OECD

2015

2025

Other

2.4.4 World coal supply
The distribution of coal reserves is more evenly distributed than for oil and gas. Significant
reserves exist in North America, in Asia, in Africa and in the Pacific region. Important coalreserves also exist in Russia but coal production and transport costs are there considerably
higher than in the other regions, resulting in relatively low production levels compared to theother regions with abundant coal reserves.
In the present outlook, coal supply is not subject to resources constraints and the production isessentially demand driven and follows the primary demand for coal. Coal production is
expected to grow by 2.3%/year on average over the projection period, mostly in Africa andAsia (respectively 4.5% and 3%/year). In contrast, production will continue to decline in the
EU (-0.8%/year). In 2030, more than half the world’s coal production will originate from
Asia, and most particularly from China (35%), while the USA will remain the second
producer with a share of about 20% (Figure 2.24).

Figure 2.24: World coal production
5000

Mtoe

4000
3000
2000
1000
0
World Western CIS,
North Japan, Africa,
Europe CEEC America Pacific Middle
East
2000

2030

44

Latin
Amer

Asia

ENERGY AND TECHNOLOGY TRENDS TO 2030

Key conclusions·

Sufficient oil, gas and coal reserves exist worldwide to satisfy the projected demandduring the next three decades. The decline of conventional oil reserves iscompensated by an increase in the reserves of non-conventional oil. The reserves ofnatural gas are abundant and expected to increase by around 10%. Coal reserves areenormous and do not constitute a constraint to coal demand at the horizon of 2030.

·

World oil production is projected to increase by about 65% to reach some 120
million bl/day in 2030: three quarters of the production increase will come fromOPEC countries, where the largest part of oil reserves is concentrated. As a result,
OPEC would account for 60% of total oil supply in 2030 (compared to 40% in 2000).

·

World gas production is projected to double between 2000 and 2030. However,regional disparities in gas reserves and production costs are expected to modify theregional gas supply pattern in 2030: about one third of the total gas production will
originate from the CIS while the remaining production is projected to be almost
equally allocated among OECD countries, the Middle East, and the other gas
producers in Latin America and Asia.

· World coal production is also expected to double between 2000 and 2030, the growth
taking place mostly in Africa and in Asia. This latter region is projected to cover
more than half the total coal production in 2030.

45

CHAPTER 3
SECTORAL OUTLOOK

3.1

ENERGY DEMAND

3.1.1 Global trends
World final energy consumption is projected to grow by 1.8 %/year on average over the
projection period (Figure 3.1); however, the growth declines from 2 %/year during the first
decade to 1.5 %/year over the last two decades. This progression is similar in the three final
demand sectors between 2000 and 2030 but the pace of increase varies significantly between
the different sectors. Energy demand from industry increases the most over the 2000-2010
period with 2.4 %/year on average and then slows down to reach 1.2 %/year over the last ten
years of the projection period. Energy demand for transport increases more regularly by 1.7%/year up to 2010 and by 1.5 %/year beyond. The household, service and agriculture sector
experiences a steady increase of its energy demand with an average increase of 1.9 %/year.
Figure 3.1: World final energy consumption

12000

Mtoe

9000
6000
3000
0
1990

2000

Industry

Transport

2010

2020

2030

Household, service, agriculture

There are few changes in the fuel shares over the next thirty years. The only notable changes
are the increase in the share of electricity from 15 % in 2000 to 22 % in 2030 and the decreasein the share of renewables from 13 % to 6 % due to the significant shift from traditional
biomass to fossil fuels and the penetration of electricity in developing countries.

47

WETO
3.1.2 Regional trends
The evolution of final energy demand shows contrasted patterns from one region to the otherin relation to their level of industrial development. In the EU, the final energy demand is
projected to increase by 0.5 %/year (i.e. less than one third the growth in world final demand)
whereas, at the opposite side of the range, final demand in Asia increases by 3 %/year over the
projection period (see Figures 3.2 and 3.3). Among industrialised regions, the EU is projected
to have the lowest increase, with a more rapid progression for the household, service andagriculture sector (0.7 %/year) than in transport (0.4 %/year) and industry (0.3 %/year).
The household, services and agriculture sector is the principal contributor to the projected
growth of final energy demand in the industrialised countries, whereas all final demand
sectors contribute almost equally to the demand growth in developing countries. The
worldwide fastest growing segment of final demand is transport in Asia with an averageincrease of 3.9 %/year over the projection period.
Changes in fuel mix vary according to the region but oil remains the dominant fuel in mostregions with stable shares ranging from 40 to 50 %. Oil is principally used for transport inindustrialised countries, which is a major difference with developing countries where oil isalso largely consumed in industry. The share of solid fuels in final energy demand decreases
significantly in all regions but in Asia, where it remains constant, and in Africa, where it
increases slightly. The share of electricity increases in all regions either at the expense offossil fuels in industrialised countries or at the expense of traditional biomass in mostdeveloping countries. Electricity experiences the fastest growth, among energy forms andworld regions, in Asia with 5.1 %/year on average. In the Africa and Middle East region andin Latin America, the electricity demand increases also significantly, above the world average.

Figure 3.2: EU final energy consumption

Mtoe

1500
1000
500
0
1990

2000

Industry

Transport

2010

2020

2030

Household, service, agriculture

48

SECTORAL OUTLOOK
Figure 3.3: Final energy consumption in the other world regions

In the POLES model, the total final energy demand is allocated into four main sectors:
industry, transport, households and services including agriculture. Industry is broken down
into 4 branches (steel, chemicals, non metallic minerals and others). Transport considers 6
modes (passenger/road, road/goods, rail/passenger, rail/goods, air and others). In industry,
households and services, the model separates thermal uses from captive uses of electricity.
The demand is basically modelled in each sub-sector through econometric relations,
integrating short term and long-term price effects as well as technological trends (see Box 5).

49

WETO

Box 5: Modelling of final energy demand

Final energy demand is represented in the model as follows. Two standard equations areused to calculate on the one hand the total energy demand for each sector and on theother hand the demand for each individual fuel in the sector. The variation of the final
energy consumption is a function of:- an income or activity variable with an income elasticity.
- a short-term price response to the variation in the average price of the sector over thetwo previous years with a short-term price elasticity. This short-term effect mainlyreflects behavioural changes.
- a long-term price effect which is supposed to be investment-driven and therefore
includes an asymmetry factor and a distributed lag corresponding to the duration of theprice effect, with a long-term elasticity.
- an autonomous technological trend.

3.1.3 Industry
At world level, the energy intensity of industry (Figure 3.4) decreases by 1.2 %/year on
average over the projection period. This means that the energy productivity of industry is
progressing by 1.2 %/ year: more value added can be produced with less and less energy .The
greatest improvements in the energy productivity are expected in Asia (1.5 %/year) and in the
CIS and CEEC region (1.4 %/year). North America and the Japan and Pacific region are
projected to have progression of around 1 %/year The EU, with an annual average reductionof 0.9 %, has the slowest energy intensity decrease among industrialised regions. However, inabsolute terms, the EU has low levels of energy intensity compared to most world regions: inthe nineties, together with the Japan and Pacific region, it experienced the lowest level ofenergy intensity. Beyond 2010, it will only be overtaken by Asia where energy intensity is
projected to decrease significantly in industry. Despite a continuous and significant decline,
the energy intensity of the CIS and CEEC’s industry is projected to remain the highest in theworld. Finally, since the energy intensity is projected to decrease the least in Latin America,
industry in this region becomes more energy intensive in 2030 than in most other regions.

50

SECTORAL OUTLOOK
Figure 3.4: Energy intensity of the industry sector

0.40
0.35

koe/€ 99

0.30
0.25
0.20
0.15
0.10
0.05
0.00
1990

1995

2000

2005

2010

2015

2020

2025

World

European Union

North America

Latin America

Africa, Middle East

CIS, CEEC

Asia

Japan, Pacific2030

The industrial sector is very diverse from the point of view of energy use. The POLES modelaccounts for a breakdown of the sector into four main industrial activities: iron and steel,chemical, non-metallic and other industries. Fuel substitution is modelled according to thestructure of the different industrial sub-sectors.
Remarkable improvements in the energy efficiency of steel production are expected in moststeel producing countries or regions. Nevertheless, significant differences remain among
countries as to the level of energy use per unit of steel produced in 2030. The most efficient
steel industry is and remains located in the EU despite relatively low energy efficiency
improvements over the projection period. In the USA, no significant declining trend is
expected and this country remains at the second place after the EU in terms of energy
efficiency. Brazil experiences some energy efficiency gains after 2015 but its steel industry
remains the most energy intensive: it consumes twice as much the amount of energy required
to produce one ton of steel in the EU in 2030. India and China continue their rapid declining
trend and reach intermediate levels of energy efficiency in 2030. The iron and steel industry inJapan is characterised by some losses in energy efficiency up to the middle of the projection
period, mainly due a reduction of steel production below the optimal level of steel plants’capacity.
Steady decreases in the energy intensity of both chemical and non-metallic industries are
expected in all regions. Moreover, the decreases are such that the regional differences inenergy intensity are reduced in 2030 compared to 2000.

3.1.4 Transport sector
The slower increase in the overall energy use in transport, compared to past trends, resultsfrom a combination of competing factors. On the one hand, the Reference projects for all
regions a growing number of cars per inhabitant. Between 2000 and 2030, the growth reaches
1.3 %/year on average at world level with extreme figures ranging from 6 %/year in Asia and

51

WETO
0.3 %/year in the EU and North America where car ownership saturates around one car per
driving license (Figure 3.5). Over the projection period, the ratio between the number of cars
per inhabitant in developed and developing regions is projected to decrease from 22 to 10.
Figure 3.5: Number of cars per 1000 inhabitants

600
500
400
300
200
100
0
1980

1990

2000

2010

2020

World

European Union

North America

Latin America

Africa, Middle East

CIS, CEEC

Asia

Japan, Pacific2030

The number of kilometres travelled per car slightly decreases in most regions. This trend is tobe associated more to the expansion of the car stock and to shifts in transport modes in favourof aviation or rail, rather than to a reduction in the demand for transport. This is particularly
true in North America and Europe, where the average distance per car is already close tosaturation levels (because of constraints in time-budgets), and where substitutions to fastmodes (air, fast trains) are already taking place on long distances.
On the other hand, significant improvements of the specific consumption of cars tend to
decrease the energy demand. Over the projection period, the average consumption of car
decreases by 9 % in the EU even though the negotiated agreements13 with the automobile
industry is not taken explicitly into account in the Reference. In the USA, the specificconsumption decreases by 18 % over the same period but remains higher than in the EU. Suchtechnical evolutions have been observed in these regions for the past twenty years, but theirimpact on the fuel demand has been partly offset by a regular increase in the average size ofvehicles (at least since 1986, when the oil price dropped). In the Reference, the increasing
tensions on the price of oil on the international market curve down the size effect.
Overall considered, the increase in energy demand for transport results principally from thegrowing number and size of vehicles that is only partially compensated by gains in thespecific consumption of cars.
3.1.5 Household sector
The thermal energy use per household is expected to decrease in the industrialized countries
with important improvements in energy efficiency. In the developing countries, at the
exception of China that follows the trends of industrialized nations, the thermal energy use
13

Negotiated agreements concluded with the European (1999/125/EC), the Japanese (2000/304/EC) and the
Korean car manufacturers (2000/303/EC).

52

SECTORAL OUTLOOK
slightly increases, as the efficiency gains are not fully compensated by the steady increase of
population and the development of the household sector. In the EU and Japan, non-electricenergy use in households is no longer linked with the growth in income level over the
projection period.
The increasing use of electrical appliances and lighting in all regions is expected tosignificantly soar the energy use. The energy use per household increases significantly in thedeveloping countries but in absolute terms, the quantity of energy required grows the most in
the industrialised countries.
In terms of the total energy use per dwelling, the consumption remains roughly constant in the
EU and Japan whereas it slightly drops in the other world regions as greater efficiency gains
occur.
3.1.6 Services and agriculture
The service and agriculture sector exhibits impressive energy demand growth rates in all
world regions. In industrialised countries, this sector develops steadily and a continuous
average reduction of around 1 %/year in energy intensity of services is expected for thermal
uses. In Brazil and India, remarkable reductions in energy intensity of respectively 2.4 and 4.2%/year are projected and these figures contrast with the increase of 0.4 %/year in China,
where space heating needs are developing.
On the contrary, the energy intensity of services for captive uses grows in all regions andcountries. The fastest increases are expected in India (3.3 %/year) and China (2.7 %/year)
while lower increases are projected in the EU (0.9 %/year) and in the USA (0.5 %/year). The
evolution of energy demand in the services and agriculture indicates that the gains in energy
efficiency projected for thermal uses are more than counterbalanced by the increase in the
demand for captive uses consuming principally electricity.
Key conclusions·

The world final energy demand is expected to grow at a similar pace as the grossinland consumption (1.8 %/year). Moreover, at world level, all final sectors are
expected to experience similar energy demand growth. As a result, the share of thesectors in final demand remain roughly constant at around 35 % for industry, 25 %for transport and 40 % for the residential and tertiary sectors.

·

The sectoral energy demand shows different patterns according to the regions: indeveloped countries, energy demand in the services sector is the fastest growing
segment of final demand; in developing countries, all sectors experience sustained
demand growth above 2 to 3 %/year.

· There are some changes in the fuel mix over the next 30 years. The most notablechanges are the remarkable increase in the share of electricity in all world regions,the continuous decline of coal in developed countries and the steady decrease in theuse of biomass in developing countries. However, electricity accounts for less than aquarter of final energy demand in 2030, with oil remaining the dominant fuel with apractically constant share ranging from 40 to 50 % according to the region.

53

WETO

3.2

POWER GENERATION AND RENEWABLE TECHNOLOGIES

3.2.1 Global trends
In the Reference, the world electricity demand and production rise steadily at an average rateof 3 %/year over the projection period, to a level 2.3 times higher in 2030 than in 2000. The
level of detail in the POLES model allows the detailed analysis of the evolution of the power
generation technology mix.
The modeling of power generation capacity planning and power plant management in the
POLES model is described in Box 6.

TWhFigure 3.6: World power generation

40000
35000
30000
25000
20000
15000
10000
5000
0
1990

Adv. coal

2000

2010

Conv. coal

Oil

Gas

2020

Nuclear2030

Large hydroRenew able

More than half the total electricity production in 2030 will be provided by technologies thatemerged in the nineties and afterwards like gas combined cycle turbines, advanced coaltechnologies and renewables. These two fossil fuel-based technologies are expected to largely
replace conventional thermal power plants by the end of the projection period. The share ofconventional coal in power generation is expected to decrease from 36 % in 2000 to 12 % in
2030 while the share of gas increases from 16 % to 25 % and advanced coal takes a share of
33 % in 2030.
In spite of a continuous expansion, the development of nuclear power does not keep pace withtotal electricity production: nuclear world market share comes down to 10 % of total
electricity production in 2030, from 18 % in 2000. The same applies, although to a lesser
extent, to large hydropower, whose market share decreases from 19 % to 13 %. On thecontrary, the share of other renewable technologies is expected to increase from 2 % to 4 %despite the rapid increase in solar and wind power of about 11 %/year at world level.
The general trend in the EU is similar to the evolution at world level (Figure 3.7). However,the penetration of advanced coal is more limited - 19 % of total electricity production in 2030

54

SECTORAL OUTLOOK- while renewable technologies are projected to represent 8 % in 203014. It is worth underlying
here that the Reference does not include any specific policy measures in favour of renewables
and that the penetration of these technologies is based solely on their potential, cost andperformance. Similarly, recent decisions at national level on a progressive phasing out of
nuclear production are not accounted for in the Reference; nevertheless, the share of nuclear
power is projected to decrease from 35 % in 2000 to 25 % in 2030.

Figure 3.7: EU power generation
4000
3500

TWh

3000
2500
2000
1500
1000
500
0
1990
Adv. coal

2000
Conv. coal

2010
Oil

Gas

2020
Nuclear2030
Large hydroRenewable

Box 6: Modeling of power generation

The expected capacities for the different plant categories are simulated by taking into
account the future electricity demand and the relative costs of the different categories ofpower plants. These total costs per kWh (fixed and variable costs) are calculated for six
reference load factors (from 730 to 8760 hours), while taking into account investment
and fuel costs. The total electricity demand and load curve, anticipated to a t+10 years
horizon, are also simulated by the model, as an extrapolation of current demand and load
curves.
Primary electricity sources, such as hydro and nuclear electricity, are supposed to be
used in priority for producing the base-load part of the demand curve. All other types ofpower generation plant are considered as competing (in t+10) for the fulfillment of theremaining part of the base-load and of the expected load curve. On the basis of total costcomparisons a “screening curve”-like process makes it possible to derive the desired
capacities for each type of plant in the future.
Once the planning of new capacities is simulated, the model deals with power plant
management and electricity production for the “actual” simulated demand at time t. A
type of “order of merit” process is used, ensuring that, once the capacities are installed,then the management of the power plant types will supply sufficient electricity for theload curve, while using in priority the plants with the lowest variable cost (and not total
costs).

14

In particular, the Reference does not fully account for respect of the European Directive of 2001 fixing an
indicative target of 22 % of electricity produced from renewable energy sources in 2010.

55

WETO

The evolution of the power generation mix shows contrasted regional patterns mainly
influenced by the endowment in coal and gas resources (Figure 3.8): the share of coaldecreases in all regions except in regions with abundant coal in North America, where itstabilises, and in Asia, where it increases significantly; the share of gas increases steadily inthe three major gas producing regions (CIS, Middle East and Latin America); the share of oilremains small and even tends to zero in North America and in the Japan and Pacific region.
More specifically, advanced coal power production increases very rapidly in North America
and reaches 37 % of total electricity production in 2030. Globally, the share of coal remains
stable at more than 50 % of total electricity production, advanced coal mainly substituting
conventional coal.
Asia will continue to rely heavily on coal for power generation (more than 60 % of total
electricity production) and advanced coal power plants are expected to represent no less than
three quarter of total coal-based electricity production.
In the CIS and CEEC, with the availability of abundant gas resources, the share of gas
increases significantly and this fuel is expected to represent the largest share (47 %) in 2030.
On the contrary, nuclear power is expected to decrease from 21 % in 2000 to 10 % in 2030 as
the existing plants will be progressively replaced by gas power plants.
In the Japan and Pacific Region, the shares of gas and nuclear increase, principally at theexpense of oil.
In the Africa and Middle East region, the most significant development is the increase in thegas share from 33 % in 2000 to 48 % in 2030; on the other hand, advanced coal is expected torepresent 19 % of total electricity production in 2030.
Contrary to what happens in most world regions, coal-based electricity production is marginalin Latin America where power generation is expected to rely almost equally on gas and largehydro power plants.

56

SECTORAL OUTLOOK
Figure 3.8: Power generation in the other world regions

Adv. coalConv. coal

Oil

Gas

NuclearLarge hydroRenewable

3.2.2 Renewables
The diffusion of renewables in the POLES model depends on their performance, costs andpotential (See Box 7).
At world level, the growth of electricity production from biomass, solar, wind and small hydrois remarkable (more than 4 %/year on average) although no policy targets for renewables (asfor instance the EU Directive of 2001) have been taken into account in the Reference. The
growth is the most pronounced for solar and wind, whose production is expected to increase at
an average rate of about 11 %/year over the 2000-2030 period (Figure 3.9). In spite of thisquick development and because of very low initial levels, electricity from renewable sources
is not expected to exceed 3 % of world total electricity production in 2030 (16 % when largehydro and geothermal are included).

57

WETO
Figure 3.9: World electricity production from renewables

TWh

1500
1000
500
0
1990

2000
Biomass

2010
Solar

2020

Small hydro

2030
Wind

Figure 3.10 displays the outlook for electricity production from renewables (excluding largehydro and geothermal) in the EU. The development of wind is the most significant feature
together with a low contribution of solar photovoltaic. However, this expansion steadily
remains below the world growth rate with an increase of about 7%/year. Power generationfrom small hydro and biomass increases steadily covering together half the electricity
produced from renewables in 2030, the other half being fulfilled by wind power production.

Figure 3.10: EU electricity production from renewables

TWh

400
300
200
100
0
1990

2000
Biomass

2010
Solar

2020

Small hydro

2030
Wind

The prospects for the other world regions are illustrated in Figure 3.11.
In North America, wind is expected to grow rapidly over the projection period and to cover 55% of the electricity produced from renewables in 2030; instead, electricity from biomass will
drop to 30 % in 2030 from slightly less than 70 % in 2000.
In the CIS and CEEC region, biomass continues to be the dominant renewable energy sourcefor electricity production with more than 50 % ahead of wind and small hydro.

58

SECTORAL OUTLOOKIn the Japan and Pacific region, the most significant evolution is the expected development ofsolar photovoltaic. On the contrary, wind power production is modest compared to the outlook
for wind in the rest of the world; in 2030, power generation from renewables is distributed
almost evenly between biomass, small hydro and solar.
In Asia, wind and biomass power production grows significantly at respectively 14 % and 8%/year over the projection period, whereas electricity production from small hydro remains
stable; in 2030, each of the above renewable energy source represents one third of total
electricity generated from renewables.
Power generation from wind also increases rapidly in the African and Middle East region andreaches more than 50 % of electricity produced from renewables in 2030. The growth of solar
photovoltaic is also notable but less significant than for wind.
In Latin America, wind power generation is developing steadily beyond 2010. In 2030,
electricity produced from renewables is almost evenly allocated between biomass, small hydroand wind.
Figure 3.11: Electricity production from renewables in other world regions
North Am erica

CIS, CEEC
300

300
TWh

TWh

400
200

100

100
0
1990

200

0

2000

2010

2020

2030

1990

2000

Japan, Pacific

2020

2030

2020

2030

2020

2030

Asia

150

500
400

100

TWh

TWh

2010

50

300
200
100

0

1990

0

2000

2010

2020

2030

1990

2000

Africa & Middle East

Latin Am erica
80
60

60

TWh

TWh

90

30

40
20

0

1990

2010

2000

2010

2020

Biomass

0

2030

Solar

1990

Small hydro

59

2000

Wind

2010

WETO
Box 7: Modelling the diffusion of new and renewable energy technologies

The diffusion of new and renewable technologies is determined by a logistic curve
function of two key factors: the size of the economic potential and the length of the
diffusion process, which are different according to the technology.
The size of the economic potential is determined by the share of the technical potentialthat turns out to be economically competitive under the conditions simulated by themodel (investment cost of the technology considered, cost of the alternative conventional
solutions). This share is a function of the average payback period for the consideredinvestment: the lower is the payback period (i.e. the more cost-effective the technology)
and the larger the share of the technical potential that is considered as an economic
potential.

Technical/Resource potential
Economic potential Ta
Diffusion Ta
Economic potential Tb
Diffusion Tb

Time
Ta = technology with high RoI
Tb = Technology with medium RoI

The speed of the diffusion process is defined through the “take-over time”, i.e. the timethat is necessary to go from a 10% to a 90% market penetration, and is a function of a
maximum take-over time and of the actual payback period. As a consequence, the shorter
the payback period, the quicker is the diffusion process.

60

SECTORAL OUTLOOKKey conclusions·

World electricity production rises steadily at an average rate of 3 %/year. More thanhalf the total electricity production in 2030 will be provided by technologies thatemerged in the nineties and afterwards like gas combined cycle turbines, advanced
coal technologies and renewables.

·

The share of gas increases steadily in the three major gas-producing regions (CIS,
Middle East and Latin America) and the share of coal decreases in all regions except
in North America where it stabilises and in Asia where it increases significantly. The
development of nuclear power does not keep pace with total electricity production:
nuclear world market share comes down to 10 % of total electricity production in
2030.

· World electricity production from renewables is expected to rise from 2 % in 2000 to

4 % in 2030, mainly because of a rapid increase in the electricity production from
wind.

61

CHAPTER 4ASSESSMENT OF UNCERTAINTIESThe Reference scenario provides a picture of the future world energy system under a set ofbroadly accepted assumptions as to, among others, the general macro-economic background,future energy and environmental policies, energy prices and resources, and the technicoeconomic development of energy technologies. Considerable uncertainty remains however onthese hypotheses and may change the course of world energy development in the next three
decades. Two important uncertainties are examined in detail in this chapter and assessedagainst the Reference: the resource estimates for conventional oil and gas (section 4.1) and thepace of development of some key energy technologies (section 4.2). The goal of this analysis
is to evaluate the sensitivity of the reference energy projection according to these
uncertainties.

4.1. OIL AND GAS RESOURCES
As to the hydrocarbon resources, the Reference assumes current conventional wisdom on oil
and gas availability. However, to assess the sensitivity of the Reference scenario to otherhypotheses on hydrocarbon resources and examine their impacts on international oil andregional gas prices and consequently on the world energy system, two alternative cases havebeen designed: a low oil and gas resources case (Low case) and a high gas resource case (Highcase).
The principal source of information for the design of these two cases is the USGS 2000 study.
Indeed, besides the median estimate for oil and gas endowments (in terms of Ultimate
Recoverable Resources), used in the Reference, this study also provides alternative resources
estimates. On the one hand, low estimates attaching a 95% probability to a “pessimistic” viewconcerning the oil and gas recoverable resources. On the other hand, it describes a state of theworld in which the resource constraint is supposed to be considerably alleviated (Figure 4.1).
This is supposed to happen with a 5% probability15.
These alternative hypotheses on oil and gas Ultimate Recoverable Resources have an impact
on the projected oil and gas reserves and production levels, and consequently on oil and gas
prices and demand.

15

The interpretation of the above probabilities is as follows: there is a 95% probability that actual resources arehigher than the low estimates, there is a 50% probability that actual resources are higher than the medianestimates, and there is a 5% probability that actual resources are higher than the high estimates.

63

WETO
Figure 4.1: Ultimate Recoverable Resources in the Reference and Resource cases16

(Gbl)

OIL

GAS

Low

2127

1597

Low case

Median2708

2157

Reference

High

3651

3116

High case

4.1.1 Low oil and gas resources
The Low case allows testing the sensitivity of the Reference scenario to low hydrocarbon
recoverable resources at world level and assessing the impact of higher oil and gas prices on
the world energy system to 2030.
The impact on oil and gas ultimate recoverable resources, reserves, production and prices
Changes in the key variables describing oil and gas development in the Low case compared to
the Reference are described in Tables 4.1 and 4.2.
The impact of lower estimates for the Ultimate Recoverable Resources of conventional oil isparticularly strong for countries outside the Gulf and OECD. As far as gas is concerned, themost significant impact is for countries outside the CIS and OECD regions. However, thedifference in oil and gas URR is decreasing over time: as oil and gas prices are higher than in
the Reference, progress in recovery rates is also higher. Also, reserves and production of nonconventional oil are significantly higher than in the Reference.
In the Low case, the structure of world oil production is considerably modified with the
exception of the Gulf whose production represents constantly 40% of world production in
2030. On the contrary, the OECD share is 6% in the Low case instead of 12% in the
Reference, and the other oil producers 18% instead of 34%. Finally, the share of nonconventional oil grows to 18% from 8% in the Reference.

16

The URR estimates are based on the technology of 2000. Along the simulation path of the model, recovery
technologies are supposed to improve, thus increasing the quantity of oil and gas that can be recovered.

64

ASSESSMENT OF UNCERTAINTIES

Table 4.1: Oil supply: Low case versus Reference
OIL

2010

2020

2030

URR
Gulf
OECD
Other
World

-13%
-21%
-26%
-20%

-11%
-19%
-24%
-18%

-10%
-18%
-22%
-16%

OiI reserves
Gulf
OECD
Other
Non conventional
World

-20%
-43%
-28%
20%
-18%

-34%
-51%
-41%
34%
-23%

-52%
-47%
-50%
16%
-31%

Oil production
Gulf
OECD
Other
Non conventional
World

40%
-37%
-22%
27%
-2%

36%
-51%
-35%
67%
-2%

9%
-47%
-46%
153%
6%

R/P ratio

-15%

-20%

-28%

Oil price

9%

16%

22%

URR: Ultimate Recoverable Resources

Lower gas availability also results in a different structure of world gas production but themodifications are less pronounced than for oil; the most important change concerns gas
production in North America whose share in the total decreases to 11% from 18% in the
Reference at the 2030 horizon.
As a result of the above-described changes in oil and gas availability and production patterns,
oil and gas prices are higher in the low resource case: about 20% in 2030 compared to theReference for oil, and between +20% and almost 60% for gas, depending on the market
considered.

65

WETO
Table 4.2: Gas supply: Low case versus Reference

GAS

2010

2020

2030

URR
OECD
CIS
Other
World

-19%
-25%
-30%
-26%

-18%
-25%
-30%
-25%

-17%
-24%
-29%
-25%

Gas reserves
OECD
CIS
Other
World

-36%
-6%
-34%
-26%

-46%
-14%
-37%
-31%

-54%
-26%
-40%
-37%

Gas production
OECD
CIS
Other
World

-11%
13%
-2%
-2%

-15%
4%
-2%
-5%

-42%
-2%
-5%
-13%

R/P ratio

-25%

-28%

-27%

Gas import price
American market
European market
Asian market

7%
11%
3%

25%
13%
6%

57%
28%
22%

URR: Ultimate Recoverable Resources

The impact on the world energy system and CO2 emissions
Higher oil and gas prices in the Low case result in a very different outlook for the worldenergy system in 2030: the energy intensity of the GDP and Gross Inland Consumption arelower than in the Reference scenario (-3% in 2030) as are CO2 emissions (-1.9% in 2030)(Table 4.3).
As this case is more coal intensive than in the Reference, the magnitude of the impact ishigher for the Gross Inland Consumption than for CO2. Notwithstanding this evolution, theinfluence of higher fuel prices on the global energy demand dominates and CO2 emissions arelower than in the Reference scenario.
In general terms, a lower availability of oil and gas resources at world level translates into a
reduction of the global demand for these fuels and to a larger penetration of coal. Natural gas
is the most penalised fuel in terms of consumption and market share. The demand for natural
gas is 13% lower than in the Reference. This decrease is the combination of a drop inelectricity produced from natural gas of one fifth in 2030 and a reduction of gas demand forfinal uses of some 10%. The share of gas for electricity production represent no more than
23% in 2030, compared to 28% in the Reference. The oil consumption growth slows down:
1.4%/year on average over the period 2000-2030, compared to 1.7%/year in the Reference.
66

ASSESSMENT OF UNCERTAINTIESThe decrease in oil and gas demand is compensated by larger quantities of coal (+7 %) and toa lesser extent by the development of non-fossil energies, with an increase of slightly less than
4% of nuclear and renewables in 2030.
Table 4.3: World energy consumption and CO2 emissions: Low case versus Reference

2010

2020

2030

Energy intensity of GDP

-1.7%

-2.4%

-3.0%

CO2 emissions

-1.9%

-2.4%

-1.9%

Gross inland consumption
Coal, lignite
Oil
Natural gas
Other

-1.7%
-0.3%
-3.2%
-2.7%
0.8%

-2.4%
1.7%
-5.2%
-5.1%
1.8%

-3.0%
7.4%
-6.4%
-13.0%
3.8%

4.1.2 High gas resources
The High case uses the upper range estimate for the ultimate recoverable gas resources and the
median estimate for oil, both to account for uncertainties on the resources level and to provide
a scenario where gas prices are structurally lower than oil prices.
The impact on gas resources, reserves, production and prices
The simulation of the high gas resource case provides a significantly different picture of world
gas development to 2030, as illustrated in Table 4.4. The Ultimate Recoverable Resources ofgas for the base year is 44% higher than in the Reference. However, due to the impacts ofprice on recovery rates, symmetrical to those described in section 3.1.1, the difference in
Ultimate Recoverable Resources is decreasing over time. The impact is particularly strong for
Latin America (+83% in 2030), China (+74% in 2030) and the CIS (+40%). The additionalgas resources are unevenly distributed geographically, about half of them occurring in the CIS
with large additions also recorded in Iran and Latin America.
By 2030, reserves and production levels are respectively 45% and 20% higher than in the
Reference. As a result, the reserve to production ratio increases. In particular, gas reserves inNorth America are notably higher than in the Reference.

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WETO
Table 4.4: Gas supply: High case versus Reference
GAS

2010

2020

2030

URR
OECD
CIS
Other
World

32%
42%
50%
43%

31%
41%
49%
42%

30%
40%
48%
42%

Gas reserves
OECD
CIS
Other
World

52%
8%
5%
11%

92%
16%
27%
30%

124%
28%
43%
45%

Gas production
OECD
CIS
Other
World

4%
2%
12%
7%

19%
5%
12%
12%

35%
7%
23%
20%

R/P ratio

4%

16%

20%

Gas import price
American market
European market
Asian market

-14%
-14%
-14%

-25%
-21%
-15%

-39%
-28%
-16%

In the High case, the Middle East represents 13% of world gas production in 2030, instead of
16% in the Reference, the CIS 31% instead of 35%, and the OECD region 27% instead of
24%. As a whole, the High case portrays a world with a lesser degree of dependence on gas
supply from the Middle East and the CIS.
As a consequence of the above trends in reserves and production levels, and in spite of thehigher demand for natural gas, natural gas prices are lower by 16% and up to 40% dependingon the regional market considered. More precisely, gas prices in the High case are projected to
be 16, 20 and 28 €/bl in 2030, respectively on the American, Euro-African, and Asianmarkets.
The impact on the world energy system and CO2 emissions
As expected, the High case provides a fully different (nearly opposite.) picture of the worldenergy system at the 2030 horizon, compared to the Low case. The world energy outlook
described in the Reference is also affected by the lower gas prices resulting from theworldwide abundance of resources. The major change concerns the share of the different fuelsin gross inland consumption: the demand for natural gas is 20% higher than in the Reference(Table 4.5). Gas replaces principally coal (-8.5%) but also some quantities of oil (-3%) and68

ASSESSMENT OF UNCERTAINTIES
non-fossil energies (-4%). As a result, natural gas increases its market share in 2030 to 30%,
from 25% in the Reference.
In contrast, total energy demand and CO2 emissions are only slightly affected by the low gas
prices. The average energy intensity of the economy and total energy demand are 1.5% higher
than in the Reference in 2030, while CO2 emissions are 0.2% lower. The latter figure showsthat the replacement of coal by natural gas, a fuel with lower carbon intensity, compensates
for the increase in gross inland consumption and for the decrease in non-fossil energies,
principally nuclear.
Table 4.5: World energy consumption and CO2 emissions: High case versus
Reference

2010

2020

2030

Energy intensity of GDP

0.1%

0.9%

1.5%

CO2 emissions

-0.8%

-0.4%

-0.2%

Gross inland consumption
Coal, lignite
Oil
Natural gas
Other

0.1%
-4.2%
-0.9%
5.7%
0.2%

0.9%
-5.9%
-1.8%
12.2%
-0.9%

1.5%
-8.5%
-2.9%
21.2%
-3.7%

Key conclusions·

With lower oil and gas resources than the Reference, oil and gas prices are projected
to be much higher than in the Reference, around 40 €/bl in 2030. This induces alower world energy demand (-3%), which benefits particularly coal and non-fossil
energies, to the disadvantage of natural gas (-13%) and oil (-6%). As a result, world
CO2 emissions are 2% lower than in the Reference.

·

Increased availability in gas resources would lead to a drop in gas prices to 16, 20
and 28 €/bl in 2030, respectively on the American, European and Asian markets. In
contrast, the oil price decreases only slightly underlying low substitution possibilities
between oil and gas. Although the world energy demand is slightly affected (+1.5%
compared to the Reference), the fuel mix is substantially modified in favour ofnatural gas (+21%, against –9% for coal ,-3% for oil and -4% for primary electricity )

69

WETO

4.2. TECHNOLOGY DEVELOPMENT FOR POWER GENERATION
Besides the availability of fuels and the related fuel prices, assumptions on the development ofenergy technologies play a crucial role in the analysis of future energy systems. The ability to
reduce greenhouse gas emissions and especially the cost of the corresponding policies will
largely depend on the available technologies. Alternative proposals to the Kyoto protocol evencall for a multi-lateral agreement on research and development (R&D) in order to accelerate
the development of new energy technologies and thus provide cheap options for the reductionof greenhouse gas emissions. This section provides a closer look on the role of energy
technologies in carbon emissions and emission reduction. The purpose is to determine to what
extent technology development or accelerated technology substitution can reduce energyrelated greenhouse gas emissions by applying more efficient technology and changing thefuel-mix.
Technology development and learning
Forecasting technology development is a highly speculative activity, especially for a long-termtime horizon. However, considerable efforts have been recently made to improve themodelling of technology development in energy models. The simplest approach relies
exclusively on exogenous forecasts based on expert judgement on technology development
and economic performance17. It can be replaced by a description of technology cost dynamics
which allows to endogenise, at least partially, technological change in energy models18. For
WETO the method applied takes into account the "learning by doing" effect and also theimpact of R&D on technology development. This approach yields projections of technology
development which are consistent with historic trends (see Figure 4.2). The WETO Reference
thus contains a coherent set of assumptions with respect to technology development.
For the technology cases it is assumed that accelerated technology development, or
technological breakthroughs, may occur for certain clusters of technologies. To describe theenhanced technology performance, the conversion efficiency, total investment cost19, as well
as operation costs are changed. Here it is assumed that these breakthroughs present a deviationfrom the trajectory of technology development as applied in the Reference. Expert judgements
have been used to define a possible albeit optimistic set of assumptions for improved
technology performance up to the year 2030. The technology cases thus use a hybrid approach
applying exogenous technology improvements to a set of consistent endogenous projections
on technology development. The model used is able to estimate the amount of additional
17

E3-TDB, the database on energy technologies used in the POLES model has been developed under several
research projects under the JOULE programme of the European Commission (Bess M. et al., Technology
Database E3TDB, in International Journal of Global Energy Issues, Special Issue, Vol. 14, Nos. 1-4, pp. 398403, 2000).
18
See Kouvaritakis N., Soria A., Isoard, S., Modeling energy technology dynamics: methodology for adaptive
expectations models with learning by doing and learning by searching, in International Journal of Global Energy
Issues, Special Issue, Vol. 14, Nos. 1-4, pp. 104-115, 2000
19
The cost figures presented hereafter refer to total investment costs, i.e. they include the so-called overnight
construction costs (the cost of the equipment) plus financial costs that accrue during the construction time, as
well as decommissioning costs.

70

ASSESSMENT OF UNCERTAINTIESR&D necessary to bring about accelerated technological progress. However, the focus of thetechnology cases is to analyse the impact of a defined technological breakthrough rather than
the issue of higher R&D investments or more focussed technology policies to provoke
technological development. For this reason the hybrid approach has been chosen and the link
between R&D and technology improvement is not treated in this study.
20

Figure 4.2: Learning curves for power generation technologies up to 2030

5000
4500

Hydro
Nuclear
New nuclear design
Photovoltaics
Conventional lignite
Conventional coal
Small hydroBiogas turbine
Biomass CHP
Coal gasification cc
Direct coal
Supercritical coal
Conventional gas
Solar thermal power
Wind
Fuel cells (SFC)
Gas combined cycle
Fuel cells (PEM)

4000
3500

Total Investment Cost [€99/kW]

3000
2500
2000

1500

1000
900
800

2000

700

2010

600

WETO Reference
2030

500
100

1000

10000

1000001000000

10000000

cumulative installed capacity [MW]The technology cases can be summarised as follows:- The "Gas case", which assumes enhanced availability of natural gas and introduces
improvements for gas turbine combined cycle plants and fuel cells.
- The "Coal case", which involves major improvements in advanced solid fuel burningtechnologies, namely Supercritical coal plants, Integrated coal gasification combined cycle
plants and direct coal firing plants.
- The "Nuclear case", which assumes a breakthrough in nuclear technology in terms of costand safety. It has an influence on standard large light water reactors but especially on a
new evolutionary nuclear design.
- The "Renewable case" involves a major effort in renewable energies notably, wind power,
biomass gasification, solar thermal power plants, small hydro and photovoltaic cells.

20

The learning curves or progress curves show the historic development of investment cost for the energy
technologies over the total cumulative installed capacity and their projections up to the year 2030 for the WETO
Reference. The symbols indicate time steps of five years.

71

WETO
All the cases are technology scenarios looking exclusively at technologies for electricity
generation. They are focused on changes in the technology portfolio on the supply side and do
not analyse policies and technologies on the demand side. Whilst this can be considered alimitation of the exercise at the same time it provides better consistency in the assessment of agiven breakthrough.
4.2.1 Gas
This case combines modifications in the performance and costs of some key technologies andan expansion of world ultimate gas resources. This latter was carried out by following the 5 %probability upper estimate for undiscovered resources and corresponds to the high gas
reserves case (High case) as described in the previous section. The technology side of the casegas powered technologies based on gas turbines have been dealt with:- Gas turbine combined cycle (GTCC). This is already the most successful power
generating technology in the Reference contributing about 22 % of total generation by theyear 2030. This gain in share achieved in the face of substantial increases in natural gas
prices is mainly due to the major improvements in techno-economic performance
incorporated already in the Reference: i.e. a 40 % decrease in capital costs mainly due toan increase in efficiency from around 53 % at present to 59 %. For the gas case capitalcosts are reduced by a further 20 %, specific fixed operation costs reduced by 20% andefficiencies raised to 63 %.
- Gas turbine combined cycle for combined heat and power. It is another gas-turbine
dependent technology that sees relatively sluggish performance in the Reference due tohigher gas prices. For the technology case apart from the lower gas prices this technology
is assisted by a two point increase in both electric and steam conversion efficiency but also
by a 20 % reduction in specific capital cost, fixed and variable operating costs.
This technology case represents a radical alternative in terms of world energy market
configurations due to the enhanced natural gas resource base. Already the High case sees areduction of global CO2 emissions of -0.1%. With the changed assumptions on technologies as
introduced in the Gas case global emission the emission reduction reaches -1.6%.
As described in the section on the High Gas Resources case (High case), in spite of muchhigher cumulative production, world reserves are more than one and a half times theirreference level in 2030 resulting in much lower bulk gas prices. This has strong impacts for
low to medium loads (residential/commercial electricity) where due to the suitability of GTCC
to meet such demand, electricity prices have fallen on average world-wide by nearly 10%. In
spite of an increase in consumption, electricity generation stays at the same level since gas
turbines for combined heat and power generation as well as fuel cells are used to a muchhigher extent in industry so that distribution losses are reduced.
Within the power generating sector, many considerable changes occur world-wide. Generationfrom gas turbine combined cycle plants increases considerably bringing their share to 28% of
total generation instead of 22% in the Reference. This increase is achieved at the expense of
super critical coal (-1080 TWh) and the other coal technologies (-820 TWh) but also of
nuclear (-1700 TWh, 60 % of which the new nuclear design which finds little room todevelop). Combined heat and power from combined cycles sees its contribution increasing by
72

ASSESSMENT OF UNCERTAINTIES
35%. On the other hand, many renewable sources of electricity see their shares reduced (egwind power plants by 10%).
The Gas case has produced weak results as far as CO2 emissions is concerned. The emission
reduction vis-à-vis the Reference is -1.6%. This is due partly to the uneven geographicaldistribution of the enhanced resources resulting in the gas not being available at sufficiently
cheap prices where it could have made the biggest impact (the big Asian coal users China andIndia). For some other regions assuming higher resources implies that prices tend to stayrelatively lower during the simulation time horizon, causing demand to expand, particularly
from the power generating sector. Also this effect limits the impact of the advanced gas
technology on the reduction of CO2 emissions.
Table 4.6: Assumptions and results of the Gas case2000
Gas turbine combined cycle
Total investment cost [€99/kW]
Efficiency [%]Electricity generation [TWh]Total
Electricity generation [TWh]CO2 emissions [Gt]
CO2 emissions [Gt]

2010

2030

ReferenceGas case

ChangeReferenceGas case

Change

745
53.5
1311

587
57
5240

548
57
6111

-7%
0%
17%

533
59
8334

427
63
10409

-20%
7%
25%

15639
6794
2318

20159
8184
2457

20175
8162
2412

0.1%
-0.3%
-1.8%

36621
12562
4298

36720
12359
3990

0.3%
-1.6%
-7.2%

from electr. generation

4.2.2 Coal
The coal case analyses the effect of improvements of advanced coal based energy
technologies. The following technologies have been considered:- The supercritical coal power plant. This power plant type achieves high conversion
efficiencies applying supercritical steam conditions (higher pressure and temperature of
the steam). Special materials are necessary that can withstand these conditions. In thereference case the conversion efficiency achieved in 2030 is 49 % and specific capital costof the technology is around 1100 €/kW with low operating and maintenance costs (by coal
fired power plant standards). This technology is the “winning” coal technology in the
Reference gaining about 20 % of world total central power generation and 30 % of world
coal generation by 2030. For the purpose of this case the efficiency was increased to 55 %and the capital cost brought down to 800 €/kW by 2030 while a 10 % reduction in
operation and maintenance (O&M) costs was also introduced.
- The integrated coal gasification combined cycle power plant (IGCC). This technology
applies coal gasification with combustion of the coal gas in a gas turbine and the recovery
of waste heat in a boiler. The technology in the Reference reaches about 50 % efficiency
and costs 1350 €/kW by 2030 with still relatively high operating and maintenance costs ofabout 87 €/kW. In that case, it achieves a penetration of about half the importance of

73

WETO
supercritical coal. In the Coal case the techno-economic performance of this type of plantis substantially improved to reach 54 % efficiency by 2030 while achieving 28 %reductions in capital and 10% in fixed O&M costs.
- The direct coal fired combined cycle plant. Like the IGCC plant this technology isapplying a gas turbine and a steam turbine in a combined cycle. However, the coal is
directly burnt in the gas turbine without previous gasification.. The presence of coalparticles inside the turbine poses technical problems, which still have to be solved.
Therefore, it is assumed that this technology will be available only after 2015. This
technology is costing 1250 €/kW, reaching 50 % thermal efficiency by 2030 withrelatively low operating costs. It achieves a penetration comparable to the IGCC plant in
the Reference. A capital cost of 960 €/kW and an efficiency of 54 % is retained for the
scenario resulting in cost performances similar to those of the IGCC plant.
A salient effect of this case is a noticeable displacement of gas-fired combined cycles by coalfired power plants even in regions with access to reasonably cheap gas prices. Coal-fired
power plants exhibit a competitiveness threshold with respect to combined cycles for loads
higher than 6500 hours/year in the Reference, whereas in the advanced coal case this thresholdmoves to around 4500 hours/year. The development over time of electricity generation cost of
a supercritical coal plant and a gas combined cycle plant can be seen in Figure 4.3.

Figure 4.3: Cost of electricity: gas combined cycle versus supercritical coaltechnology

0.075

0.070

Supercritical Coal (Coal case)Supercritical Coal (Reference)
Gas Combined Cycle

0.065€99/kWh(5100 hours, Europe )
0.060

0.055

0.050

0.045

0.040
2000

2005

2010

2015

74

2020

2025

2030

ASSESSMENT OF UNCERTAINTIES
Table 4.7: Assumptions and results of the Coal case
2000

2010

2030

Reference Coal case Change

Supercritical coal
Total investment cost [€99/kW]
Efficiency [%]Electricity generation [TWh]Reference Coal case Change

1970
44
0.009

1303
46
1391

1181
47.7
1518

-9%
4%
9%

1117
49
6989

805
55
8608

-28%
12%
23%

Integrated Coal Gasification (IGCC)
Total investment cost [€99/kW]
2631
Efficiency [%]43.5
Electricity generation [TWh]
0.11

1805
49
355

1637
49
396

-9%
0%
12%

1361
49.8
3101

980
54
3752

-28%
8%
21%

Direct coal
Total investment cost [€99/kW]
Efficiency [%]Electricity generation [TWh]

n.a.
n.a.

1733
46.5
n.a.

1696
50
n.a.

-2%
8%

1252
49.3
1893

969
54
2140

-23%
10%
13%

15639
6794
2318

20159
8184
2457

20167
8170
2443

0.0%
-0.2%
-0.6%

36621
12562
4298

37006
12560
4309

1.1%
0.0%
0.3%

Total
Electricity generation [TWh]CO2 emissions [Gt]
CO2 emissions [Gt]from electr. generation

The Coal case produces no change in world CO2 emissions, with relatively high regional
differences: a decrease in Asia (-1.0 %), an increase in Western Europe (1.4 %) and the OECD
as a whole (0.8%), and stagnation in the rest of the world. Advanced coal plants are more
efficient and therefore produce considerably less CO2 per kWh than conventional coal-fired
plants. However, this is offset in some regions by the fact that clean coal plants also become
cheaper and therefore often are preferred to nuclear and gas-fired plants which produce evenless CO2 per kWh. Coal consumption in power stations increases by 5 % while gas
consumption decreases by 14 %, oil by 13 % and nuclear generation by 6 %.
Concerning new coal technologies the largest change occurs for the supercritical coal plants.
Supercritical coal’s share of world centralised power generation goes up from under 20 % toaround 25 % while the increase in IGCC generation is less marked (share up from 9 % to 11%). The improvements supposed for the Direct Coal combustion plants are insufficient tosignificantly increase its cost-competitiveness. Thus, its contribution remains at 5.5%. The
results are reflected in the learning curves for the Coal case (Figure 4.4).

75

WETO
Figure 4.4: Learning curves for advanced coal technologies

2500
Supercritical Coal (Reference)Supercritical coal (Coal case)
Integrated Coal gasification (Reference)
Integrated Coal Gasification (Coal case)
Direct Coal Combustion (Reference)
Direct Coal Comb. (Coal case)

2250

Total Investment Cost[€99/kW]

2000
1750
1500

1250

1000

750
10000

1000001000000

Cumulative Installed Capacity [MW]The advanced coal technologies replace very substantially gas combined cycle generation(-1300 TWh). Since already in the Reference the bulk of coal based electricity generation
comes from new technologies (78%) the potential for replacement of these technologies by
new coal technologies is limited. Indeed, the generation from conventional coal technology is
reduced by only 85 TWh. The new coal technologies act as a break for the development of
new nuclear design power plants (-36%), while conventional nuclear plants are less affected.
Also severely affected are the biomass gasification combined cycle plants (-18 %) and wind
power generation (-10 %) mainly due to the lower base load electricity prices (nearly 10 %lower). International coal prices are 5-7 % higher which is clearly not sufficient to reducesignificantly the competitiveness of the new coal technologies.
4.2.3 Nuclear
This case has been implemented by altering the techno-economic characteristics of the two
types of nuclear power plants considered in this study:-

Standard large Light Water Reactor (LWR). In the reference case this plant type is
supposed to exhibit capital costs slightly increasing over time due to increased investment
in security measures. In the technology case, the investments as well as O&M costs are
assumed to be about 35 % lower as compared to the Reference in 2030.

- New evolutionary nuclear design. This technology is assumed to be introduced gradually
after 2010 in the Reference and costs about 30 % less to construct than the LWR by to2030 thanks primarily to its inherent safety characteristics. In the Reference it gained asubstantial share of the total nuclear market (approx. 12 %). For the nuclear technology
case this type of plant is assumed to be 35 % cheaper to construct and 35 % to operate
than in the Reference.
76

ASSESSMENT OF UNCERTAINTIES

Table 4.8: Assumptions and results of the Nuclear case
2000

2010

2030

Reference Nuclear case Change

Reference Nuclear case ChangeLight Water Reactor (LWR)
Total investment cost [€99 /kW]Electricity generation [TWh]

3632
2627

3574
3155

3159
3158

-12%
0%

3639
2832

2365
4253

-35%
50%

Advanced Nuclear Design
Total investment cost [€99 /kW]Electricity generation [TWh]

n.a.
n.a

6770
n.a.

5980
n.a

-12%

2560
377

1663
1443

-35%
283%

15639
6794
2318

20159
8184
2457

20225
8202
2473

0.3%
0.2%
0.7%

36621
12562
4298

36849
12214
3984

0.6%
-2.8%
-7.3%

Total
Electricity generation [TWh]CO2 emissions [Gt]

CO2 emissions [Gt]from electr. generation

These changes have an important impact on the market penetration of these plants. In the
Reference they become less and less competitive in most regions of the world even for thehigh annual loads. In the nuclear technology case, they become generally cost-attractive vis-àvis combined cycle gas turbines at around 5500 hours/year and vis-à-vis supercritical coaltechnologies in the region of 4500 hours/year. The competitiveness gains are particularlymarked for the new nuclear design. It is worth noting, however, that the changes in costs arephased in gradually and that power plants and especially nuclear ones are characterised by aslow capital turnover.
The overall effect of this technology case is a worldwide reduction of CO2 emissions in 2030
of 2.8% (4.6 % in the OECD). At global scale there is considerable increase in nuclear
electricity generation. Overall nuclear contribution increases from 9 % to over 15.5 % (from16 % to 37 % in the OECD). Nuclear power – an expensive option in the Reference
projection – penetrates into the high to medium annual loads displacing coal and gas fired
electricity production (see Figure 4.5). The relatively important reduction in GTCC justreflects its fundamental contribution in middle and high loads in the reference case.
International coal prices are 5-10 % lower while gas prices are down 3-8 %. World oil prices
stand virtually unaffected (-1 %) since most of the changes implied by this technology caseoccur within the electricity sector where petroleum plays a small role.

77

WETO
Figure 4.5: Impact of the nuclear case on the electricity generation by technology

1400

conventional gas

biomass gas turbine

windconventional coaldirect coal

350

coal gasification

TWh

700

supercritical coal1050

gas combined cycle

Nuclear case in 2030

-350
-700

nuclearnew nuclear

0

4.2.4 Renewables
This case is different from the previous ones in that it is not organised around a single
technological breakthrough or a generic cluster of technological developments. It is rather
representative of a situation where a major R&D effort would be directed on decentralised
renewable technologies producing drastic improvements in their techno-economic
characteristics of a number of them. The main technologies affected in this technology caseare:
- Biomass gasification for electricity production in small scale (less than 25 MW)
combined cycle plants. In the Reference, the specific capital cost of this technology is
reduced by 15% and the conversion efficiency increased from to 43 %. Under thesecircumstances the contribution of this technology is growing at an average 5.5 %/year.
For this technology case, specific capital costs are assumed to be cut by 30% by 2030 withsome further improvements in efficiency and operating costs. The impact of these changes
is a doubling of the contribution of this technology in 2030, albeit with an inflexion of
growth towards the end of the period due to the limited availability of cheap biomass
resources.
- Photovoltaics. In the Reference, their capital cost is drastically reduced from about 15000€/ kW in 1990 to 4400 €/kW by 2010 and 3200 €/kW by 2030. Specific fixed O&M costs
are halved between the present and 2030. Impressive as these reductions are they leave thecost of electricity produced at a generally uncompetitive level and the technology had arelatively symbolic contribution. The Renewable Case implies a halving of 2030 reference
costs, which translates into a reduction of the cost of the kWh delivered to around 17 €ct.
This cost, although still not generally competitive as compared with network electricity,
allows at least the development of niche markets and leads to a contribution of around 32
TWh worldwide by 2030. Of these only about 6 TWh are produced in developing
countries despite the fact that on average they enjoy better insolation conditions.

78

ASSESSMENT OF UNCERTAINTIES- Molten Salt Tower Solar plant with storage. This is the main solar thermal power
technology considered with a capital cost reduced to 2050 €/ kW and a capacity factor of
36 % by 2030 in the Reference. In the technology case these figures reach 1450 €/kW and
38 % respectively, and the total electricity generation is 119 TWh worldwide. Though thisfigure is relatively modest, it does not represent the full potential impact of this technology
as by 2030 it is still in the stage of rapid take off in industrialised countries and has noteven entered that stage in developing countries where most of the physical potential exists.
- Small hydro. In the Reference, it is assumed to be a mature technology registering
insignificant gains over the projection period. Capital cost are halved in this technology
case and hence its contribution rises from 250 TWh to 380 TWh worldwide by 2030.
However by the end of the period the technology displays clear signs of saturation as thebest available sites are gradually exhausted.
- On-shore wind turbines (over 500 kW capacity). In the Reference relatively modest
reductions in capital costs from 1000 €/kW to 820 €/kW in 2030 are assumed withimprovements in capacity factors to a range of 12-30 % depending on the site. The
technology case by contrast implies a reduction of capital costs to two thirds of theirpresent level and further significant increases (+ 25 %) in capacity factors. Thesedevelopments render wind power highly competitive, in spite of its intermittent characterand lead to massive development worldwide. This development is furthermore fairly
evenly distributed, with about half occurring in industrialised countries.
Table 4.9: Assumptions and results of the Renewable case
2000

2010

2030

Reference

Renewable
caseChangeReference

Renewable
caseChangePhotovoltaics
Total investment cost [€99/kW]
Electricity generation [TWh]

6457
0.02

4373
0.26

3936
0.33

-10%
27%

3146
0.88

2202
2.04

-30%
132%

Biomass gasification
Total investment cost [€99/kW]
Electricity generation [TWh]

2368
0.11

2198
255

1978
218

-10%
-15%

2087
169

1461
371

-30%
120%

Wind turbines
Total investment cost [€99/kW]
Electricity generation [TWh]

996
23.6

911
171

820
230

-10%
35%

816
710

571
2016

-30%
184%

15639
6794
2318

20127
8184
2457

20159
8150
2432

0.2%
-0.4%
-1.0%

36621
12562
4298

35802
12188
3917

-2.2%
-3.0%
-8.9%

Total
Electricity generation [TWh]CO2 emissions [Gt]
CO2 emissions [Gt]from electr. generation

79

WETO
In addition to the above the renewable case includes three more technologies where theimprovements implied are insufficient to produce a significant impact. These are lowtemperature passive solar, which due to insufficient cost reductions remains a niche option,
rural photovoltaic, which becomes uncompetitive with network connection and therefore faces
a shrinking market potential as electrification proceeds.
The Renewable case results in a 3 % reduction in worldwide CO2 emissions (3.2 % in Asiaand 2.4 % in the EU). This is primarily achieved by an across the board reduction in centrally
produced electricity (-1600 TWh of coal fired -950 TWh of gas fired and -180 TWh of nuclear
generated electricity world-wide).
World oil prices are hardly affected (around -1 %) but wholesale gas and coal prices are more
substantially reduced (around - 5 %) allowing for some increase of the consumption of thesefuels outside the power generation (especially in industry). This phenomenon partially offsets
the substantial reductions in power generation. Generally this technology case has major
implications for new and renewable technologies but fails to produce a major impact on CO2emissions in the 2030 horizon because these technologies are mostly applicable to the power
sector and often (being mostly intermittent) even a limited section of this sector. In addition,
the some of the renewable technologies become truly competitive only towards the end of theperiod, thus having little time to display their full potential.

4.2.5 Impact on CO2 emissions
The technology cases as described in section 4.2 provide a closer look on the role of energy
technologies in carbon emissions and emission reduction. The different assumptions ontechnology development lead to significant changes in the electricity production structure(Figure 4.10). The impact on total global CO2 emissions, however, is limited. The maximum
reduction vis-à-vis the Reference was 3%. The technology cases as defined here do not offer
definitive solutions for the global CO2 emission problem. There are many reasons for this.
Some of them are inherent to the way these cases were set up, whereas other are related to thestructure of energy markets.
Table 4.10: Summary of the impact of the technology cases
Electricity generation

Total

based on

CO2
CO2
Total
generation emissions emissionschanges as compared
to Reference in 2030

Gas

Coal

NuclearRenewables

Gas case

21.6%-12.2%-5.3%-10.5%

0.3%

-7.2%

-1.6%

Coal case-16.0%

15.0%

-6.5%

-10.2%

1.1%

0.3%

0.0%

Nuclear case

-7.1%

-8.1%

77.5%

-9.9%

0.6%

-7.3%

-2.8%

Renewable case-12.3%

-8.8%

-2.4%

132.0%

-2.2%

-8.9%

-3.0%

80

ASSESSMENT OF UNCERTAINTIESKey conclusions·

The different assumptions on technology development lead to significant changes inthe structure of electricity production. However, the technology cases defined here do
not offer definitive solutions for the global CO2 emission problem.

·

This is largely because the technology cases are defined in terms of clusters oftechnological breakthroughs affecting only a part of the energy market, basically thepower generation sector. Important though the power sector may be, it only accounts
for about one third of world CO2 emissions. Technologies addressing only this sector
can be expected to have an impact limited by this share.

·

The extension of these energy technology cases to other important CO2 emitting
sectors should be a priority in the future. An area where such an impact of a clusterof emerging technologies could be convincingly found is in road transport. Also newtechnologies in industrial energy-intensive sectors as well in the residential andtertiary sector could be analysed.

·

Cases involving major improvements in fossil fuel technologies produce low impacts
on CO2 emissions because of two opposing effects. On the one hand, advanced fossilfuelled technologies reduce specific carbon emissions due to enhanced conversion
efficiency. On the other hand, they make fossil-fuel technologies more attractive due
to lower costs and therefore foster the use of fossil fuels. Therefore, scenarios
involving non-fossil energy delivered markedly better a greater impact on CO2emissions.

· It is hard to see how clusters of energy technologies could by themselves make amajor impact on the global CO2 problem if they are not accompanied by major policy
initiatives albeit market related ones. Combining the technology cases withinternalisation of external costs through taxation would magnify the impact and tend
to neutralise some of the more ambiguous side effects quite apart from the fact thatthese policy instruments can by definition act on a much wider front. Section 6.3 isshowing that advanced technologies can have a considerable impact on the cost of
meeting emission reduction targets.

81

CHAPTER 5
EU GAS MARKET IN A WORLD PERSPECTIVE
In the EU, natural gas has been the fastest growing component of the energy consumption
over the last ten years. At world level, the increase in gas demand has also been remarkable.
The increasing synergy between gas and electricity generation was, without any doubt, a key
determinant of this remarkable evolution. As the Reference projects the continuation of thistrend at world level through 2030, it is worth asking how the projected growing market forgas, combined with the decline of gas production in Europe, will affect the outlook ofEuropean gas supplies to 2030 and what the impacts could be on the security of natural gas
supply in the EU.
The chapter starts with a description of the projected evolution of EU gas demand in the
Reference and compares this evolution with past trends in the EU and with the evolution in
the other world regions. In this analysis, particular attention is given to the prospects of gas
use in electricity generation. In the next section, the projected changes in gas production levels
by world region and in gas supply patterns for the EU and the other regions are described andanalysed, as well as the consequences in terms of inter-regional gas trade and gas transport
infrastructures (i.e. pipelines versus LNG). Finally, the last section deals with the implications
for the security of natural gas supply in the EU and describes how the uncertainties on gas
resources may affect the security.
In this chapter, the EU gas market is examined under two configurations: the present
European Union of 15 Member countries (EU) and the enlarged EU including the 12
Accession countries21 (EU + Acc. Countries).

5.1

GAS DEMAND

EU contribution to world gas consumption
The WETO Reference projects a significant increase in the world demand for gas. Over theperiod 2000-2030, gas demand is expected to double, reaching 4.3 Gtoe in 2030. This increaseis the result of the remarkable growth of 3%/year on average from 2000 to 2010 followed by aslightly lower growth of 2.1%/year over the period 2010-2030. On average, the gas demand
growth through 2030 will be higher than during the last ten years, namely 2%/year. However,
it is worth pointing out that, during that period, the world natural gas consumption growth wassubstantially reduced due to a considerable decrease in the CIS’s consumption.
The pace of growth shows however contrasted patterns between world regions (Figure 5.1).
For instance, the EU’s contribution to this impressive rise in gas demand is minor compared
21

Hungary, Poland, Czech Republic, Slovakia, Latvia, Estonia, Lithuania, Slovenia, Romania, Bulgaria, Malta
and Cyprus.

83

WETO
to the contribution of certain regions, in particular Asia and the CIS, which represent the bulkof the increase.

Figure 5.1: World gas demand

5000

Mtoe

4000
3000
2000
1000
0
1990

2000

2010

2020

EU + Acc. Countries

Other Western Europe

CIS

North America

Japan, Pacific

Africa, Middle East

Latin America

Asia

2030

In fact, the EU gas demand is projected to increase more slowly than the world average, at
0.8% per year over the outlook period22, but also in comparison to the last ten years when it
grew at an exceptional average annual rate of 4.9%. The growth rate is slightly higher, namely
0.9%/year, when the Accession countries are included. Despite this apparent low growth,
natural gas remains the second fastest growing primary source23 in the EU. For the sake ofcomparison, coal and oil primary demands are projected to increase respectively by 0.5% and0.2%/year. The EU is with North America the region where gas demand increases the least.
The average rate of increase in North America is projected to be 1.2%/year for the next thirty
years.
On the opposite side of the range, the projections of natural gas consumption show a rapid
growth in Asia and Latin America, above 4%/year between 2000 and 2030. On the other hand,the average growth in the CIS, Africa, Middle East, Japan and Pacific ranges from 2.3 to 3%.
The largest increments in gas demand compared to the present situation are therefore expectedin Asia and Latin America. In fact, about one third of the increase in world gas demand overthe next thirty years comes from Asia. In contrast, Latin America accounts for 12% of theincremental gas demand as it starts from a smaller share of world gas consumption in 2000.
EU with Accession countries contributes to 7% of the increase in world gas demand over theoutlook period (Figure 5.2).
Consequently to the above regional trends in natural gas demand, the share of developing
countries in the world gas demand increases to 40% in 2030 from around 25% in 2000.
22
23

1.7% per year on average between 2000 and 2010, and 0.4% thereafter.
The fastest growing component is wind energy but its share in GIC remains small.

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EU GAS MARKET IN A WORLD PERSPECTIVE

Figure 5.2: Gas consumption increase from 2000 to 2030

Other Western Europe
Japan, PacificEU + Acc. Countries
Latin America
North America
Africa, Middle East
CIS
Asia
0

100

200

300

400

500

600

700

Mtoe
Pow er generation

Other uses

Although the EU gas demand is projected to grow moderately compared to the recent trend, it
is progressing faster than the gross inland energy consumption. Therefore, the share of natural
gas in total energy requirements is still expected to grow to 27% in 2030 from 24% in 2000.
Furthermore, primary gas consumption in EU grows faster than final gas demand, principally
because of the increasing preference for gas as a power generation fuel and the increasing
penetration of electricity in the economies. Several factors contribute to slow the progressionof gas used by final consumers: the moderate growth of the overall final energy demand due toa steady decrease in final energy intensity, and the saturation of gas demand for several enduses, like space and water heating in the residential and tertiary sectors, reflecting the maturityof the gas market in many European countries.
Increase of gas in the EU power generation
As stressed in the above section, the driving force behind the gas demand growth in the EU is
the increased consumption of natural gas for power generation24: electricity production is
expected to contribute to more than 50% of incremental gas demand between 2000 and 2030.
More generally, in all world regions except the CIS, over 40% of incremental gas demand
results from the expansion of gas for power generation. In contrast, the largest part ofincremental gas demand in the CIS results from final gas uses (Figure 5.2). This particularsituation in the CIS comes from the fact that although gas-based electricity production
increases significantly, at an average rate above 4%/ year, the replacement of old gas-fired

24Power generation includes here electricity generated by CHP power plants.

85

WETO
plants with more efficient combined cycle gas turbines limits considerably the rise in gas use
for power generation.
In the 1990s, the EU, similarly to most world regions, experienced a rapid rise in the market
share of natural gas in electricity production: in 2000, about 20% of total electricity was
generated from natural gas compared to 12% in 1990. Low capital costs and high conversion
efficiency of gas turbine technologies; environmental concerns and competitive gas prices
were the driving factors behind this remarkable change. This evolution was also characterisedby a growing interconnection between European gas and power industries. The
implementation of the European Parliament and Council Electricity and Gas Directives25
introducing greater competition into EU Member States’ electricity and gas markets is
expected to perpetuate this trend, provided that power plants operating on natural gas remaincompetitive compared to other technologies, principally advanced coal technologies.
In fact, the use of natural gas for the production of electricity depends on several factors
including the future electricity demand growth, the need for new generation capacity, theevolution of the prices of competing fuels (particularly coal) and the evolution of the costs of
new power generation technologies
Between 2000 and 2010, natural gas is projected to account for the largest share (nearly 70%)of the increase in electricity production in the EU. As a result, some 27% of electricity should
be produced from gas-based power generation and CHP plants in 2010 (Table 5.1). The
favourable outlook for gas is projected to continue in the Reference scenario up to 2020: overthis period, the projected increases in real gas prices will not remove the competitive
advantage of natural gas compared to other generation fuels or energy forms. On the contrary,
expectations for the period 2020-2030 are that advanced coal technologies may account forthe bulk of incremental electricity demand, the net result being a stabilisation of the share ofnatural gas based electricity production at 2010 level.
The Reference shows similar developments in Japan, Pacific and North America. However, inthese regions, larger investments in advanced coal power plants from 2020 to 2030 comparedto those in combined cycle gas turbines lead to a slight decrease of the gas market share forelectricity generation in 2030.
In contrast, the share of gas-based power generation continues to rise steadily over the
projection period in the other regions. At the world level, the share of gas use for electricity
generation and combined heat and power production is expected to rise to 28% in 2030 from
18% in 1990 and 19% in 2000.

25

Directive 96/92/EC of the European Parliament and of the Council of 19 December 1996 concerning common
rules for the internal market in electricity; Directive 98/30/EC of the European Parliament and of the Council of
22 June 1998 concerning common rules for the internal market in natural gas.

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EU GAS MARKET IN A WORLD PERSPECTIVE
Table 5.1: Share of electricity generated from natural gas
1990

2000

2010

2020

2030

European Union

12%

22%

27%

29%

27%

CIS, CEEC

35%

30%

36%

44%

49%

North America

15%

14%

22%

24%

20%

Japan, Pacific

24%

31%

40%

37%

35%

Africa, Middle East

25%

34%

39%

47%

49%

Latin America

10%

15%

29%

38%

40%

Asia

5%

12%

13%

16%

17%

World

18%

19%

25%

28%

28%

In all regions and over the 2000-2030 period, gas-based electricity production is progressing
more rapidly than total electricity production: 4% and 3% per year respectively at world level;
1.9% and 1.2% per year respectively for the EU. The outlooks are the same for coal-based
electricity. These trends result principally from the projected moderate increases of electricity
produced in nuclear and hydro power plants. As a consequence, the share of these electricity
generation technologies in total world electricity production decreases considerably to 24% in
2030, from 37% in 2000, to the benefit of gas and coal power plants and to a lesser extent ofwind turbines.
Finally, gas input to power generation grows less rapidly than gas-based electricity
production, reflecting the increase in the average conversion efficiency of gas-fired power
plants. The difference is particularly impressive in the CIS where the conversion efficiency of
existing gas-fired power capacities is very low compared to new gas-fired technologies. Gas
input to power generation in the CIS grows at an annual average rate of 1.6% over the
projection period while the growth of gas-based electricity production is 4.3% per year. In theEU, North America, Japan and Pacific the two growth rates are much closer.

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WETO

5.2

GAS SUPPLY

Gas reserves
The most recent assessment of world natural gas reserves, some 164 Tm3 in 2001, indicatesthat natural gas is an abundant energy source. However, 70% of these reserves are located in
two world regions: the CIS and the Middle East. Western Europe represents 5% of the world’s
proven gas reserves and North America 4%.

Figure 5.3: Gas reserves26

34%

36%

5%
7%
14%

4%

CIS, CEEC

Western Europe

North America

Other

AfricaMiddle East

Gas production
To meet the fast growing demand for natural gas at world level, production should double
between 2000 and 2030. WETO shows that natural gas production is expected to increase in
all regions except in the EU where gas production is projected to decrease by half and would
represent no more than 2% of world gas production in 2030, compared to 9% in 2000 (Figure
5.4).
The major increases in natural gas production will occur in Latin America (more than fourtimes the 2000 production level in 2030) and in Africa, Middle East (more than three times).
In 2030, the CIS will be the lead gas producer with over one-third of world gas production,
followed by Africa and Middle East (23%), North America (18%) and Latin America (10%).
It is worth pointing out that gas production in the two main producing regions is not only
driven by increased gas demand in regions with limited gas resources, but also by the growing
domestic gas requirements. In fact, more than 50% of the natural gas produced in the CIS,
Africa and Middle East will remain inside the regions.
26

As 1st January 2001; source: Cedigaz, Preliminary estimates, March 2002.

88

EU GAS MARKET IN A WORLD PERSPECTIVE
Figure 5.4: Share of gas production

35%
28%

28%
23%
18%
13%
10%

9%

13%
8%

2%
EU + Acc.
Countries

5%

3% 2%

Other
WesternEurope

2% 2%
CIS

North
AmericaJapan,
Pacific

2000

Africa,MiddleEast

Latin
America

Asia

2030

Despite the steady increase in gas production in North America and Asia, of 9% and 23%
respectively over the period 2000-2030, the shares of these regions in world production should
decline because of a faster progression in the other large producing regions.
Natural gas production in the EU including the Accession countries is concentrated in the
Netherlands and the United Kingdom. In 2000, it covered slightly more than 50% of theregion’s gas demand (this percentage goes up to 66% if Norway's gas production is included).
The remaining demand was met essentially by pipeline imports from Norway, the CIS andAlgeria, and by LNG from Algeria and Nigeria. The other net importing region in the world in2000 is Japan, Pacific. About two third of gas consumption in this region was covered by
LNG imports mainly from the South East of Asia and the Middle East. Elsewhere in theworld, gas production is sufficient to meet gas needs within the defined regional areas.
In the longer term, the regional imbalance between consumption and production is not only
expected to increase in the EU, the Accession countries and Japan, but also to take place inAsia and to a lesser extent North America. In contrast, the CIS, Africa, Middle East, thePacific region and Latin America would remain (or become - for Latin America) net exporting
regions (Figure 5.5).

89

WETO
Figure 5.5: Gas consumption and production in 2030

1600
1400
1200

Mtoe

1000
800
600
400
200
0
EU + Acc. OtherCountries Western
EuropeCIS

North Japan, Africa, Latin
Asia
America Pacific Middle America
East

Production

Consumption

The dependence of the EU and Accession countries on extra-regional gas supplies increases
steadily throughout the projection period: the region’s gas imports are projected to more thandouble between 2000 and 2030. In 2030, the EU gas production would represent less than
16% of the region’s natural gas requirements. In other words, gas dependence of the EU with
the Accession countries could reach 80% within 30 years.
The growing demand for gas in all regions combined with regional disparities in gas reserves
and production costs will thus foster the development of inter-regional gas trade and increase
the linkages between regional markets. The WETO outlook shows that inter-regional trade
would represent some 36% of gas consumed worldwide in 2030, compared to 14% now. This
will imply new investments in long distance pipelines from producing to consuming regions
and significantly increased LNG trade and investments in LNG infrastructure.
One key question then is how the huge amounts of gas made available to meet the world gas
demand will be allocated between the regional consumption areas, or put in other words, towhat extent the rapid growth in gas demand in developing regions with limited gas reserves(e.g. Asia) will affect the long-term EU gas supply pattern.

90

EU GAS MARKET IN A WORLD PERSPECTIVE
Gas trade between Europe and the CIS
In the POLES model, the market shares of gas exporter on each regional market are
determined endogenously on the basis of the production and transport costs of the various gas
exporters and gas prices on the regional markets: America, Europe/Africa/Middle-East andAsia (Box 8). Moreover, the export potential of gas producers accounts for the evolution ofgas demand in the producing countries or regions.
Regional disparities in gas reserves, supply costs, prices and demand growth lead to changes
over time in regional supply patterns, as reflected by the gas trade matrices. These matrices
provide information about intra- and inter-regional gas trade within and between sevenregions (Table 5.2). The level of integration of gas transport infrastructure and supply inEurope leads to consider Western, Central and Eastern Europe as one regional market,
referred to in the following as “Europe”. Nevertheless, separate figures for EU’s internal andexternal supplies within the region (exclusively from Norway) are provided where possible.

Box 8: The simulation of gas trade and production

While the gas discoveries and reserves dynamics are modelled in a way that is similar to thatused for oil, the gas trade and production are simulated in a more complex process that accounts
for the constraints introduced by gas transport routes to the different markets. Three main
regional markets are considered for gas price determination, but the gas trade flows are studied
with more detail for 14 sub-regional markets, 18 key exporters and a set of smaller gas
producers.
The natural gas trade and production is modelled on the one hand on the basis of the capacities
from each producer to each sub-regional market and on the other hand on the actual quantities
supplied by each producer for the demand simulated by the model.
First the model calculates the total new capacities required by each market. Then, the projected
capacities along the different routes depend on the gap between the price on the consideredmarket and a cost benchmark, associated to each route: the larger this gap, the higher the
incentive to develop new capacities. A constraint allows limiting the possible “crowding out”
effect of new entrants on the different market.
The actual capacities are then derived from projected in the previous five years period, with aconstraint ensuring that new capacities will not induce a rapid exhaustion of the available
reserves of the considered producer.
Finally the model allocates the market shares of the major exporters on each market, on thebasis of the variable transport costs on each route.

91

WETO
Natural gas supply projections in the Reference scenario show that EU external gas supplies
should continue to arrive primarily from the CIS, Norway and North Africa (Algeria and
Libya). Other sources of imports into the EU are the Middle East (mainly pipeline gas via
Turkey) and LNG from Nigeria but their combined share is not expected to exceed 10% in2020 and 5% in 2030 of imports.
The relative contribution of these core gas suppliers for the EU is however projected tochange in the next thirty years. Starting from 28% in 2000, the share of the CIS is expected toincrease steadily to reach 54% of gas requirements in Western Europe and CEEC. This
increase translates into a tripling of traded volumes with the CIS during the projection period.
The share of gas supplies from Africa and Middle East would reach a peak of 22% in 2020
and then decrease to 15% of the European gas demand in 2030. This decrease is concerning
mainly supplies from the Middle East, which are exported mostly towards Asia after 2020. On
the contrary, the share of gas imports from Africa (mainly Algeria and Nigeria) is expected toremain stable up to 2030, ranging from 10 to 15% of Europe’s gas requirements. Twice thevolumes of gas currently imported from Africa and Middle East would be exported to Europe
in 2030.
Gas supplies from Norway would double over the next ten years, reaching 23% of European
gas requirements in 2010, and then decrease slightly but constantly until 2030. For that time
horizon, imports from Norway would represent the same market share as in 2000, namely
15% of the European gas market.

92

EU GAS MARKET IN A WORLD PERSPECTIVE
Table 5.2: Gas trade matrix

2000

Im porting
regions
Exporting
Gm 3
regionsNorth
Am erica

Latin
Am erica

EuropeCIS

Africa,Middle East

Asia

Japan,
Pacific

Total
production

North Am erica

659

0

0

0

0

0

2

661

Latin Am erica

1

116

0

0

0

0

0

117

Europe

0

0

294

0

0

0

0

294

CIS

0

0

137

521

0

0

0

658

Africa, Middle East

2

0

62

0

239

0

8

311

Asia

0

0

0

0

0

246

75

321

Japan, Pacific

0

0

0

0

0

0

41

41

Total consum ption

662

116

493

521

239

246

126

2404

North
Am erica

Latin
Am erica

EuropeCIS

Africa,Middle East

Asia

Japan,
Pacific

Total
production

North Am erica

837

5

0

0

0

0

4

846

Latin Am erica

31

187

0

0

0

0

0

218

Europe

0

0

304

0

0

0

0

304

CIS

0

0

204

613

0

5

0

822

Africa, Middle East

0

2

125

0

304

14

10

455

Asia

0

0

0

0

0

425

121

546

Japan, Pacific

0

0

0

0

0

0

63

63

Total consum ption

868

194

633

613

304

444

198

3254

North
Am erica

Latin
Am erica

EuropeCIS

Africa,Middle East

Asia

Japan,
Pacific

Total
production

North Am erica

866

16

0

0

0

0

4

886

Latin Am erica

73

372

0

0

0

62

0

507

Europe

0

0

220

0

0

0

0

220

CIS

0

0

420

1007

0

265

0

1692

Africa, Middle East

1

0

114

0

606

378

8

1107

Asia

0

0

0

0

3

187

188

378

Japan, Pacific

0

0

0

0

1

0

90

91

Total consum ption

940

388

754

1007

610

892

290

4881

2010

Im porting
regions
Exportingregions2030

Im porting
regions
Exporting
Gm 3
regions93

WETO
Gas demand in Asia
One key determinant of the long-term gas supply pattern of Europe (and therefore of the EU)
is the fast growing gas demand in Asia, and most particularly in China and South Asia. Gas
requirements in the whole region is projected to rise at an average rate of 4.6%/year over the
2000-2030 period, the highest growth among the regions. In contrast, gas production in that
region will grow much less rapidly at 0.7%/year on average, and most of the gas produced in
the South East Asia (Indonesia and Malaysia) will continue to be traded outside the region,
mainly to Japan.
As a result, Asia will switch from being a net gas exporter to a net importer around the year
2020. At that time horizon, more than 300 Gm3 would be required externally to meet theregion’s gas demand; these volumes correspond to half of the total gas requirements. They
would come mainly from the Middle East in the form of LNG (70%) and to a lesser extend
from the CIS via pipelines (30%). In 2030, gas production is projected to decline dramaticallyin China and South Asia, resulting in the need for further external supplies, which would thenrepresent some 80% of total gas demand in Asia.
Over a thirty years’ time horizon, this evolution in Asia is similar to the projected situation in
Europe, where 70% of the region’s gas demand would have to be met by external gas
supplies. However, in the case of Asia, the bulk of external supplies is projected to come from
the Middle East (70%), while in the case of Europe, it would originate principally from the
CIS (77%). The significant projected gas exports from the Middle East to the Asian market, atthe expense of the European market results from model’s comparisons between supply costs
from the CIS and the Middle East to the importing regions and between the gas prices on thetwo regional markets, namely Asia and Europe.
The export position of Asia is another noteworthy difference with Europe. The projections
show that Asia increases its gas imports from outside the region during he period 2000-2030,
while at the same time it increases also its exports abroad. This situation can be explained by
the fact that whereas China and South Asia are net importers of gas, South East Asia is a net
exporter to Japan. On the contrary, Europe would not export significant gas volumes outside
the region.
Inter-regional gas trade
As a result of the increased dependence of most world regions on external gas supplies, interregional gas trade will develop considerably over the period to 2030. At the world level, interregional gas trade is projected to be five times larger in 2030 than in 2000. Asia is not only the
major contributor to this significant progression but it also becomes the region the mostdependent on extra-regional gas supplies. This is a fundamental change compared to thecurrent situation where Europe and Japan contribute to almost 100% of the inter-regional
trade (Figure 5.6).

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EU GAS MARKET IN A WORLD PERSPECTIVE
Figure 5.6: Inter-regional gas trade by region of destination

1600

Gm3

1200

800

400

0
2000
Europe2010
North America

2020

Japan Pacific

Latin America

2030
Asia

In 2000, gas trade by pipeline accounted for 58% of inter-regional gas flows, reflecting, forthe most part, volumes of Russian gas delivered to Europe. On the other hand, Asia accounted
for some 70% of total LNG inter-regional trade (mainly deliveries from South East Asia toJapan), followed by Algeria with slightly less than 20%.
During the projection period, traded volumes of both pipeline gas and LNG will increase
considerably; however, no significant change in their relative contribution to inter-regional
trade is expected, assuming no significant changes to current trade patterns in particular fromthe CIS (pipeline gas) and the Middle East (LNG)27. Gas trade by pipeline would still accountfor about half the inter-regional gas trade in 2030.
As far as Europe is concerned, pipeline gas deliveries from the CIS would represent 75% of
external supplies in 2030, imports by pipeline from North Africa and the Middle East 20%(via among others the pipelines from North Africa under the Mediterranean sea and from Iranvia Turkey), the remaining 5% corresponding to LNG deliveries mainly from Nigeria.
It is worth pointing out here that gas trade projections were made on the basis of long-term gas
supply conditions where gas prices are indexed partially on the price of oil. As a consequence,the percentage of LNG deliveries projected in 2030 do not account for LNG volumes
purchased on a spot or short-term basis, for which markets are expected to develop over time.

27

These developments are based on likely transport routes, taking into account geopolitical constraints. They
may be affected if alternative routes are developed, such as for instance LNG production in Russia or gas
pipelines from the Middle East to India, not considered in this study.

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WETO

5.3

SECURITY OF EU GAS SUPPLY

The security of gas supply covers a large number of aspects and requires therefore a large
range of solutions and guarantees. Security is related as much to physical risks as well as toeconomic risks. As far as gas is concerned, the physical risks are not so much related to theavailability of gas resources than to potential political crisis, disruptions in the transport chain(e.g. due for instance to an accident) or uncertainties as to the realisation of the required
investments to bring gas from the producing to the consuming regions.
In its Green Paper “Towards a European strategy for the security of energy supply”, theEuropean Commission outlines a strategy to keep the security of EU energy supply to thehighest level possible and makes proposals in terms of potential safeguards. The security ofgas supply is of course one important element in this strategy, given the expected expansion ofnatural gas imports in the European energy markets in the long term.
Nevertheless, it is worth pointing out that the projected growth in gas demand not only at EU
level but also worldwide, and the rising imbalance between gas production and demand inseveral world regions do not constitute by themselves a security problem but however increase
the risks in terms of price instability or temporary supply disruption. Gas resources areabundant and a potential exists for technological improvements concerning gas production,transport by pipeline, and LNG plants and carriers. However, appropriate policies need to be
developed and implemented to limit the risk factors related to geopolitical events or to therequirements of massive investments for gas infrastructure. In this respect, international
cooperation and partnerships between EU and Accession countries and key producing
countries bringing a stable framework for investment and trade, as well as the diversificationof transport routes and further integration of the European gas networks are certainly
important elements for the security of EU gas supply.
The WETO outlooks for natural gas in the Reference scenario and in the Resource cases allow
bringing to light at least two inter-related aspects of EU gas security: the dependence on
imports and the diversity of supply. The increasing dependence of EU and Accession
countries on gas imports is described in the different projections as an ineluctable trend.
Nevertheless, in face of this dependence, the diversity of supply results from economic
mechanisms and/or from political considerations. It concerns both the fuels used to meet the
primary energy requirements and the sources of natural gas consumed (e.g. number ofsupplying countries, number of transport options, share of each major gas supplier).
The examination of selected energy indicators provides the background for a first appraisal of
the evolution of the position of the EU including the Accession countries with regard to longterm gas security, and of the influence of the level of available gas resources on this evolution.
These indicators include the share of gas in Gross inland consumption and for electricity
production, the dependence on gas imports and the diversification of gas supplies (Table 5.3).

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EU GAS MARKET IN A WORLD PERSPECTIVE
Table 5.3: Overview of EU and Acc. Countries position regarding gas security

ReferenceHigh case (*)

Low case (*)

1990

2000

2010

2030

2010

2030

2010

2030

Share of gas in GIC

16%

24%

27%

27%

29%

34%

27%

27%

Share of gas in electricity

12%

21%

27%

27%

28%

32%

26%

23%

46%

53%

71%

80%

65%

77%

79%

86%

60%

48%

29%

53%

42%

30%

18%

production
EU external dependence to gas
Share of gas supplies from
Europe
CIS

28%

32%

56%

29%

46%

46%

61%

Africa, Middle East

13%

20%

15%

18%

12%

24%

21%

(*) High case: high gas resource case; Low case: low oil and gas resource case

Over the period 2000-2030, the share of gas in Gross inland consumption is projected to growmoderately in comparison to the increase observed during the last ten years. This share willremain below 30% except in the High case where it is projected to reach a peak of 34% in
2030. From now to 2020, the share of gas increases principally at the expense of coal’s share,
while after 2020, the increase is compensated by a decrease in the share of oil, the share ofcoal meeting again with its level of 2000. However, in the High case, the share of coalremains lower than in 1990 over the projection period reflecting the competitive position ofgas through 2030.
The share of gas for electricity generation follows similar evolutions. However, it is worth
underlining that in the Low case, the share of gas-based electricity decreases steadily
compared to the Reference whereas the shares of gas in gross inland consumption weresimilar in the Low and Reference projections. This reflects the higher potential for fuel andtechnology switching in this sector that may result from changes in the relative competitive
positions of coal and gas.
As a consequence of the steady gas demand growth and the decline of gas production in the
EU through 2030, the dependence of the region to external gas supplies (including supplies
from Norway) will raise from 53% in 2000 to 77%-86% in 2030, depending on theassumptions on natural gas resources. The lower percentage in the range corresponds to theHigh case; in this scenario, EU gas resources are assumed to be higher and are exploited sothat the dependence to external gas supplies is reduced. On the contrary, under the assumptionof lower gas resources (Low case), external gas supplies would represent more than 85% of
EU total gas demand. It is worth pointing here that the dependence of the EU to external
supplies is not only a function of gas resources but also of energy efficiency policies. Indeed,
improved energy efficiency resulting from technological or behavioural changes may also
reduce the dependence on energy in general and in gas in particular. Such reinforced policies
are not incorporated in the WETO Reference projections but the Carbon Abatement case

97

WETO
discussed in Chapter 6 provides an insight as to the impact improved energy efficiency may
have on the external gas dependence of the EU.
Finally, the Reference scenario and the Resource cases show contrasted gas supply patterns.
Although in all above projections, the CIS is expected to be the lead gas supplier of the EU
countries in 2030, its contribution may vary from 46% in the High case to slightly more than
60% in the Low case. The major difference between the cases rests mainly on the respective
shares of the CIS and Europe (including Norway) in total gas supply. In the High case, theshares are comparable (around 44%), whereas, in the Low case, the share of CIS is more than
three times the share of Europe. On the other hand, supply countries located in Africa and in
the Middle East would represent no more than 20% of gas demand in EU and Accession
countries.

Key conclusions·

The EU gas market is rapidly expanding and growth is expected to continue in thenext two decades. The expansion of gas in the EU is determined principally by thesurge of gas use for power generation. Nevertheless, the EU contribution to world gas
consumption is expected to decrease steadily.

·World gas reserves are abundant but concentrated in two world regions, the CIS andthe Middle East, where gas production is projected to grow considerably during thenext thirty years. In contrast, the European gas resources are limited and production
is expected to decline steadily beyond 2010, resulting in an increasing dependence on
external gas supplies.

·

Natural gas demand is also projected to increase in the other world regions: some ofthem with limited or declining gas reserves are expected to become net importers
leading to modification of the world gas trade patterns. For instance, the rapid gas
demand growth in Asia is expected to have some influence on the EU gas supply
pattern in 2030: while Asia is projected to rely predominantly on gas supplies from
the Middle East, the EU and Accession countries should import more than half its
natural gas needs from the CIS region at the horizon of 2030.

· This outcome may translate into higher supply risks for the EU. These risks could

however be limited through different actions as outlined in the European Commission
Green Paper, like the multiplication of gas transport routes, the further integration of
the European gas network, and a continuous dialogue with gas producing countries.
Long-term contractual LNG supplies are projected to move up but more moderately
and from more diverse sources from Africa and the Middle East.

98

CHAPTER 6
IMPACTS OF CLIMATE CHANGE POLICIESIn the Reference scenario it is assumed that CO2 emissions, the predominant greenhouse gas
emitted by human activities, occur without complying necessarily with the reduction
commitments of the Kyoto Protocol. This key assumption leaves aside the hypothesis of theemergence of policy regimes on climate change mitigation. Negotiations on this regime havefilled the international environmental agenda in recent years and many countries have alreadyintroduced measures in order to limit the amount of greenhouse gas emitted. In the coming
years, more countries are expected to adopt climate change mitigation policies, with the entry
into force of the Kyoto Protocol.
If future climate change policies do effectively limit the expected increase in greenhouse gas
emissions at world level or even reduce them in the industrialised world, then the global
energy system will experience major changes. One would expect on the one hand, importantconsequences on energy consumption and, on the other hand, significant shifts in the primaryand final energy mix. These shifts would indeed correspond to a lower use of carbon intensive
sources and technologies and, conversely, to a more rapid development of low carbon power
generation and renewable energy technologies. Other technologies, as carbon sequestration,
could also emerge; they have however not been taken into account in this study. The purposeof this chapter is to illustrate the main consequences for the global energy system of such acarbon constrained alternative.

6.1

INTERNATIONAL AGREEMENTS

Increasing scientific evidence of human interference with the climate system began to pushclimate change onto the political agenda in the mid-1980s. In 1990, the Intergovernmental
Panel on Climate Change established by the United Nations issued its First Assessment
Report, confirming that climate change was indeed a threat and calling for a global treaty toaddress the problem. This call, translated into the United Nations Framework Convention on
Climate Change (UNFCCC), opened to signature in the 1992 “Earth Summit” in Rio deJaneiro. The Convention entered into force in 1994 and counts, a decade after its adoption,
186 governments (including the European Community) as Parties.
The ultimate objective of the UNFCCC is to achieve the “stabilization of greenhouse gas
concentrations in the atmosphere at a level that would prevent dangerous anthropogenic
interference with the climate system” (Art.2). The Convention does not define what levels
might be “dangerous”, although it does state that ecosystems should be allowed to adapt
naturally, that food supply should not be threatened, and that economic development shouldbe able to proceed in a sustainable manner. No concentration target is thus defined but arecommendation for a stabilisation by 2000 of the greenhouse gas emissions in theindustrialised countries was adopted.
The rising trend in world emissions called for more action in the direction of the Convention
objective. International negotiations continued and in December 1997 the Kyoto Protocol to
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WETO

UNFCCC was adopted. The most striking element of this Protocol is that most industrialised
countries accepted that the average emissions over the 2008-2012 period for a country should
not exceed a given amount, defined as a percentage of the country greenhouse gases emissions
in the base year, i.e. 1990 for most countries. The list of countries with their emission target
appears in Annex B to the Kyoto Protocol. The emission limitation covers a basket of six
different greenhouse gases, i.e. carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O),
hydro-fluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6). As
defined in Kyoto, the aggregate commitments in terms of emission reduction should lead to adecrease in the aggregate emissions of the Annex B countries of 5 % from the 1990 level,
during the first commitment period, i.e. from 2008 to 2012. The list of commitments isreminded in Box 8 and includes EU countries targets within the EU “burden sharing
agreement”.
In meeting their commitments, countries that adopted targets may use several policy options.
The most straightforward option is to reduce domestically the greenhouse gas emissions.
However, the Protocol also contains other options, mainly inspired by the concept offlexibility in the abatement policies and by the corresponding cost reduction opportunities.
First, the Protocol recognises the principle of carbon absorption in the biosphere as a way tocompensate for greenhouse gases emissions. Countries are allowed to take into account theabsorption of greenhouse gases by their biosphere resources, as long as this capture isadditionally induced by human activities. This option is referred to as ‘sinks’ activities.
Additional carbon capture in the biosphere could indeed be less expensive than domestic
emission reduction, however the temporary nature of the capture increases the risk of thisoption from both the economic and environmental point of view.
Second, the Protocol introduces three flexible mechanisms to take advantage of the costdifferences for emission reductions between countries. The International Emission Trading(IET) scheme allows countries that emit more greenhouse gas than their total allowances tobuy emission allowances from other countries that reduce their emissions beyond theircommitment. The two other mechanisms are project-based and referred to as Joint
Implementation (JI) and Clean Development Mechanism (CDM). Under both mechanisms, aninvestor (public or private) from a country with a commitment may obtain carbon credits fromthe implementation of a project in another country member of the Protocol. Provisions on
Joint Implementation concern projects in Annex B countries, particularly those undergoing atransition to a market economy, and the Clean Development Mechanism involves countries
that did not adopt commitments in Kyoto.
At the time of its adoption, the Kyoto Protocol left a number of implementation mattersundecided. The flexible mechanisms, sinks and compliance provisions were agreed upon inprinciple but their operational guidelines still needed to be defined. The modalities of themonitoring, reporting and verification systems necessary to assure compliance and thebanking provisions for different types of emission allowances also remained to be discussed.
The principle of sinks enhancement was accepted but the list of eligible sinks activities andthe extent of their use was still undecided.
All these unresolved issues led the countries that adopted targets to delay their ratification of
the agreement. On their side, developing countries demanded more concrete rules on how the100

IMPACTS OF CLIMATE CHANGE POLICIESdeveloped countries would assist them in the adaptation to the adverse consequences ofclimate change. It took the negotiating countries nearly four years to decide upon these
extended guidelines and to make the text on the different instruments of the Kyoto Protocol
operational. The rulebook has been completed in November 2001 and is referred to as the
Marrakech Accords.
Box 9: Kyoto Protocol emissions targets and EU burden sharing
Country
EU-15, Bulgaria, Czech Republic, Estonia,
Latvia, Liechtenstein, Lithuania, Monaco,
Romania, Slovakia, Slovenia, Switzerland
United States
Canada, Hungary, Japan, Poland
Croatia
New Zealand, Russian Federation, Ukraine
NorwayAustralia
Iceland

Country
Luxembourg
Denmark, Germany
Austria
United Kingdom
Belgium
Italy
The Netherlands
Finland, France
SwedenIrelandSpain
GreecePortugal

Target (1990*-2008/2012)
-8 %

-7 %
-6 %
-5 %
0
+1 %
+8 %
+10 %

Target (1990-2008/2012)
-28 %
-21 %
-13 %
-12.5 %
-7.5 %-6.5 %
-6 %
0
+4%
+13 %
+15 %
+25 %
+27 %

The Kyoto Protocol will enter into force only if 55 countries ratify the treaty and if thesecountries account for at least 55 % of the 1990 CO2 emissions of those industrialised countries
listed in the Annex I of the UNFCCC. The limit of 55 ratifications, including ratification fromthe EU and Japan, has been attained but the second necessary condition is more difficult tofulfil since the United States of America, in spite of their ratification of the Convention, haveofficially declared in February 2001 that they have no intention to ratify the Kyoto Protocol.

*

Some economies in transition have a base year other than 1990.

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6.2

A CO2 EMISSION ABATEMENT CASE FOR 2030

Rationale and definition
In order to explore the long-term consequences for the energy sector of greenhouse emission
constraints at world level, a Carbon Abatement case (CA) has been developed up to the 2030
horizon. Its aim is to describe a reasonable hypothesis for the development of CO2 emissions,while taking into account the different regions’ consent to commit themselves in mediumterm reductions and the expected reinforcement of climate change policies beyond the year
2010.
The CA case is designed through the introduction of a value for CO2 emissions within the
POLES model, a method that impacts, in theory, identically as the introduction of regional
taxes on CO2 emissions or as a system of CO2 permits within a world emission trading
system. The CA case is defined so as to reach a level of CO2 emissions in 2030 that iscomparable to the emissions projected in the “B1” scenario28 of the IPCC projections (IPCC,
2001). The IPCC integrated assessment analysis indicates that this type of emission profile
assumes the implementation of sustainable development policies in a large amount of sectorsof the economy. Such an emission path lies at the upper end of an emission control strategy
that would remain compatible with an objective of stabilisation of greenhouse gas
concentration around 550 ppmv (twice the pre-industrial concentration) by the end of thiscentury and a global temperature rise of no more than 2°C relative to the year 1850.
In order to take into account the commitments of the industrialised countries for the Kyoto
period, the carbon value is differentiated by main regions up to 2010. For Western Europe andthe Accession countries a value of 13.5 €/tCO229 is chosen, a lower value (5.5 €/tCO2) being
applied to the other countries that accepted a commitment. No carbon value applies to the CIS- that remains below its target without the implementation of any carbon constraint - and tocountries without commitments until 2010. As a consequence, these countries follow the CO2
emissions trends projected in the Reference until 2010. Between 2010 and 2030 and in order
to meet an emission path that remains compatible both with the global concentration target
and with long-term EU indicative emission targets30, a 60 €/tCO2 carbon value is thenimplemented in Western Europe and the Accession countries whereas a value of 30 €/tCO2
applies to the other world regions.
To some extent, the CA case describes a world in which Europe is ahead of the othercountries in terms of climate policy. This also means however that the abatement costs
accepted are higher, as indicated by the level of the carbon value that is twice the level of theother world regions.

28

The “B1 family” of scenarios projects world CO2 emissions from fossil fuel and industrial processes in 2030 ofabout 41 GtCO2 per year.
29
To have the price in €/tC, the figures must be multiplied by 3.66.
30
From the 6th Environment Action Programme (COM(2001)31), these targets come out as an average emission
reduction rate of 1 %/year.

102

IMPACTS OF CLIMATE CHANGE POLICIESWorld energy demand and CO2 emissions
The major changes in world energy-related CO2 emissions, total energy consumption and fuelswitching as resulting from the above-defined alternative case are illustrated in Table 6.1.
Table 6.1: World energy demand and CO2 emissions

CO2 emissions (GtCO2)
Total consumption (Gtoe)
Coal, lignite (Gtoe)
Oil (Gtoe)
Natural gas (Gtoe)
Nuclear (Gtoe)
Renewable (Gtoe)

1990

Ref 2030

CA 2030% Change CA-Ref

20.8
8.7
2.2
3.1
1.7
0.5
1.1

44.5
17.1
4.7
5.9
4.3
0.9
1.4

35.3
15.2
2.7
5.4
4.3
1.2
1.8

-21 %
-11 %
-42 %
-8 %
0%
36 %
35 %

The carbon value leads to the achievement of a reduction of about 9 GtCO2 compared to theReference, i.e. a decrease of 21 %. Nevertheless, both cases project an increase in world CO2
emissions in 2030 compared to the 1990 level. The average growth between 1990 and 2030 isprojected to be 1.3 %/year in the CA case compared to 1.9 %/year in the Reference. It is worth
underlying here that the environmental impact of the CA case depends only on the total
reduction at world level, while the changes in world energy consumption patterns depend on
the reductions implemented at the regional level.
The results of the CA case show that the projected reduction by 21 % of world CO2 emissions
compared to the Reference comes in equal parts, on the one hand from the reduction in energy
demand and on the other hand from the decrease in the carbon intensity of the total
consumption – which is the result of drastic changes in the world energy mix. The total energy
demand decreases from 17.1 Gtoe to 15.2 Gtoe. This reduction needs to be examined in thelight of the projected increase of the total consumption from about 8.7 Gtoe in 1990. It also
shows that both actions on the energy system, i.e. the slowdown in energy demand growth andthe changes in the primary fuel mix, are necessary to achieve significant CO2 emission
reductions.
The 11 % reduction in the carbon intensity of the world total consumption in the CA casereflects the opportunities for fuel substitution in the energy system. As expected, the carbon
value affects primarily the fuels with the greatest carbon content, namely coal (-42 %) and oil(-8 %). Natural gas is not affected as the downward pressure on gas consumption iscompensated by gas-to-coal substitutions; the market shares lost by coal and oil arecompensated with nuclear (increase of 36 %) and renewable energies31, which increase by 35% on average over the projection period. Within the renewable, a 20-fold increase for wind,solar and small hydro is expected.
Impacts on regional energy demand and CO2 emissions
The decrease in the emissions from the EU and Accession countries is greater than the world
average (see Table 6.2): 0.4 %/year until 2010 and 0.6 %/year beyond. In 2030, some 1.2
31

Biomass, wind, solar, small hydro, large hydro, geothermal and wastes are here included into the renewables.

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GtCO2 emissions of annual emissions are avoided and this brings the enlarged EU toemissions level nearly 15% lower than the 1990 level. The decrease in the carbon intensity ofthe total consumption (12 %) is in the range of the world reduction. As it is the case at theworld level, the emission reductions come in the enlarged EU in equal parts from thereduction in energy demand and from the decrease in the carbon intensity of the total
consumption.
Table 6.2: Energy demand and CO2 emissions in EU and Accession countries

CO2 emissions (GtCO2)
Total consumption (Mtoe)
Coal, lignite
Oil
Natural gas
NuclearRenewable

1990

Ref 2030

CA 2030% Change CA-Ref

4.1
1608
449
626
262
198
64

4.7
2000
387
727
546
238
122

3.5
1759
151
635
527
322
191

-26 %
-12 %
-61 %
-13 %
-3 %
35 %
56 %

Changes in the fossil fuels mix of total energy consumption in the EU and Accession
countries are similar to the world pattern. However, as the carbon value is higher in thisregion, more pronounced changes are projected. The reduction of coal consumption is thelargest of all regions in relative terms (-61 %) and the decrease in oil demand is alsosignificant (-13 %). The decrease in supply from these sources is compensated for with nuclear
and renewable energy. Demand for natural gas is not significantly changed by the carbon
value.
In the other world regions, the carbon value induces a slowdown in CO2 emissions and energy
consumption growth everywhere, but this is more significant in regions with the highest
energy intensity. For instance, the decrease in Japan is rather limited compared to the impacts
in other regions.
In the Japan and Pacific region (see Table 6.3), the reduction in demand for coal iscompensated for by renewable, nuclear and natural gas. Demand for oil decreases slightly.
Table 6.3: Energy demand and CO2 emissions in the Japan and Pacific region

CO2 emissions (GtCO2)
Total consumption (Mtoe)
Coal, lignite
Oil
Natural gas
NuclearRenewable

1990

Ref 2030

CA 2030% Change CA-Ref

1.4
537
111
291
61
51
25

1.8
812
160
291
188
135
45

1.5
766
95
282
197
142
62

-14 %
-6 %
-41 %
-3 %
5%
5%
39 %

104

IMPACTS OF CLIMATE CHANGE POLICIESThe largest changes in CO2 emissions occur in Asia and in North America, with reductions of
4.1 and 2.1 GtCO2 respectively (see Tables 6.4 and 6.5), in spite of relatively low carbon value
in the CA case. From one scenario to the other, Asia and North America both experiencesimilar reductions in their emissions by 2030 in relative terms, with about –22 %. These
regions also experience the highest percentage of reduction in the carbon intensity of energy
consumption with about 12 % decrease in 2030, compared to the Reference: this is largely due
to the important reductions in coal use in these two regions.
Table 6.4: Energy demand and CO2 emissions in Asia

CO2 emissions (GtCO2)
Total consumption (Mtoe)
Coal, lignite
Oil
Natural gas
NuclearRenewable

1990

Ref 2030

CA 2030% Change CA-Ref

4.1
1736
709
371
74
23
553

18.5
6369
2698
2175
856
160
521

14.4
5604
1649
2042
1025
304
694

-22 %
-12 %
-39 %
-6 %
20 %
90 %
33 %

The most significant changes in the fuel mix in Asia are the rapid development of nuclear anda higher gas penetration. The increase in renewable results from growth in wind, solar andsmall hydro energy and also from an increase in biomass energy, as the use of modern
biomass now compensates for the decrease in traditional biomass.
North America experiences a large decrease in coal demand and a significant development of
renewable and nuclear (Table 6.5).
Table 6.5: Energy demand and CO2 emissions in North America

CO2 emissions (GtCO2)
Total consumption (Mtoe)
Coal, lignite
Oil
Natural gas
NuclearRenewable

1990

Ref 2030

CA 2030% Change CA-Ref

5.3
2202
484
849
571
173
100

8.0
3082
859
1004
836
225
172

6.1
2715
446
930
815
291
273

-23 %
-12 %
-48 %
-7 %
-2 %
29 %
59 %

The CIS sees its emissions reduced by 18 % and remains below its 1990 level (Table 6.6). In
this region, emissions reduction comes primarily from reduction in energy demand as large
potentials for energy efficiency still exist. However, the decrease in the carbon intensity of thetotal consumption is lower than the world average, namely 7 % over the projection period. As
no carbon value is applied before 2010 in this region, it remains therefore with a relatively
high level of carbon intensity and the large potential for decrease is not entirely exploited by
the end of the projection.
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Table 6.6: Energy demand and CO2 emissions in the CIS

CO2 emissions (GtCO2)
Total consumption (Mtoe)
Coal, lignite
Oil
Natural gas
NuclearRenewable

1990

Ref 2030

CA 2030% Change CA-Ref

3.6
1356
289
415
560
54
42

3.5
1465
146
303
897
76
45

2.8
1305
80
257
800
78
116

-18 %
-11 %
-45 %
-15 %
-11 %
3%
161 %

In the Africa and Middle East region (Table 6.7), the emissions reduction also comesprimarily from a reduction in energy demand, as the projected fuel mix of this region in the
Reference is based more on oil and gas than on coal. Thus the decrease in the carbon intensityof the total consumption is lower than the world average and the changes in fuel mix are more
limited than in most other regions.
Table 6.7: Energy demand and CO2 emissions in Africa and the Middle East region

CO2 emissions (GtCO2)
Total consumption (Mtoe)
Coal, lignite
Oil
Natural gas
NuclearRenewable

1990

Ref 2030

CA 2030% Change CA-Ref

1.2
620
78
240
109
2
188

4.7
1762
378
690
526
6
170

3.9
1566
248
614
513
7
213

-16 %
-11 %
-34 %
-11 %
-3 %
15 %
26 %

In Latin America also (Table 6.8), the decrease in the carbon intensity of the total
consumption is lower than the world average and the emissions reduction comes primarily
from a reduction in energy demand. Nuclear power develops rapidly in relative terms and theincrease in renewable - although greater than nuclear in absolute terms – is relatively modest
in comparison to other regions.
Table 6.8: Energy demand and CO2 emissions in Latin America

CO2 emissions (GtCO2)
Total consumption (Mtoe)
Coal, lignite
Oil
Natural gas
NuclearRenewables

1990

Ref 2030

CA 2030% Change CA-Ref

0.9
454
20
239
76
3
99

2.7
1251
58
605
345
14
232

2.5
1186
31
571
323
23
248

-9 %
-5 %
-46 %
-6 %
-6 %
60 %
7%

106

IMPACTS OF CLIMATE CHANGE POLICIESSectoral energy demand
The decrease in final energy demand in the CA case relative to the Reference (-9 %) is slightly
lower than the reduction of the world total energy demand (-11 %). The carbon constraint
results in a lower final energy demand in all sectors, however, the largest reductions occur inindustry (-14 %), followed by households, service and agriculture (-8 %) (Table 6.9).
Reductions in energy demand for transport are the lowest with 4 %. This result is easily
explained by structural differences in sectoral tax regimes that occur in most regions. Indeed,
when the carbon value applies uniformly on all sectors in relation with their carbon content,
the average fuel price in industry increases more than in the household sector and significantly
more than in transport where tax levels are already very high. Moreover, industry is the final
sector, which relies the most on coal so that it can react to the carbon value both by energy
demand reductions and by switching to lower carbon intensity fuels. Transport emission
reductions are also projected to be more limited than in the other sectors as fuel andtechnology alternatives remain more expensive.
Table 6.9: Sectoral energy demandGtoe

Ref 2030

CA 2030% change

12.1
4.3
2.8
5.0

11.0
3.7
2.7
4.6

-9 %
-14 %
-4 %
-8 %

Final energy demand
Industry
Transport
Household, Service, Agriculture

Power generation technologies
In a context where electricity demand grows at an annual rate twice the growth of final energy
consumption and where power generation technologies with very different carbon content are
currently competing, the carbon value also results in significant substitutions among fuels andtechnologies. Table 6.10 shows the effect of the carbon value on electricity generation for theworld and the EU and Accession countries.
Table 6.10: Electricity generationTWh

Ref 2030

CA 2030% ChangeWorld
EU and Accession countries

34700
4350

31200
3940

-10 %
-9 %

Figure 6.1 shows the change in the fuel mix for electricity generation. In relative terms, thelargest impact is for renewable sources: wind (2.7 fold increase), solar (two-fold increase) andsmall hydro (+60 %). In absolute terms however, the most significant changes occur for
nuclear and combined heat and power (CHP), while thermal production decreases
significantly.

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WETO

Figure 6.1. World electricity generation in 2030

30000
25000
TWh

20000
15000
10000
5000

P
CH

yd
ro
lH

d

Sm
al

W
in

ar
So
l

ar
H
yd
ro
+G
eo
th

uc
le
N

Th
er

m

al

0

Reference

CA caseAmong thermal power plants, the carbon value reduces significantly the development of coaland advanced coal power plants that were the “winner technologies” in the Reference (Figure6.2). Indeed, while the advanced coal technologies lead to substantial improvement inconversion efficiency and local pollution, their possibilities in terms of CO2 emissions
reduction are limited compared to technologies directly based on less carbon intensive fuels32;
the share of advanced coal drops from about 45 % of thermal power production in 2030 in the
Reference to 25 % in the CA case. On the contrary, gas and biomass power plants increase
their share by respectively 48 % and 7 % in 2030.

6.3

CONSEQUENCESDEVELOPMENTOF

ACCELERATEDTECHNOLOGY

In this section the potential effect of accelerated technology development on the cost of
fulfilling environmental targets (in this case a carbon emission reduction target) is examined.
For this purpose the assumptions on accelerated technology development as defined in thetechnology cases described in section 4.2 have been applied to the above carbon abatementcase. The carbon values used in the CA case result in lower emissions as compared to theReference. Subsequently, these lower emission levels have been taken as the emission
reduction target33 with the assumptions on accelerated technology development so as to
identify the corresponding carbon values.
Figure 6.2 illustrates the evolution of the carbon values associated to emission reduction for
the CA case and for the same emission reduction with the accelerated technology
development. The carbon values correspond to the marginal abatement cost and the32

When carbon recovery and sequestration are not considered, as is the case in this study.
In the POLES model, emission reduction policies can be simulated in two different ways, either through theintroduction of an increasing carbon penalty (a carbon tax) or through the implementation of an emission target,with the endogenous computation of the corresponding carbon value.
33

108

IMPACTS OF CLIMATE CHANGE POLICIES
hypothetical price that carbon emissions permits would reach in a perfect market for these
permits were established. Even if the values shown in Figure 6.2 are marginal and not total
cost and do not incorporate all costs and benefits of the respective case, the following
comments can be made:-The accelerated technological development can have considerable impact on thecosts of meeting environmental targets. Marginal abatement costs are reduced by
up to approximately one third for the technology cases.

-

The nuclear scenario produces in the long run (up to 2030) the lowest carbon
values. Results by region - not provided here by sake of conciseness - show thatcost reductions are more marked in OECD countries, which are better placed tobenefit from the technologies concerned.

-

The renewable scenario, mainly involving non-fossil fuel technologies also has aconsiderable effect, offering cheap alternative possibilities to fulfil the carbon
emission reduction target. Moreover, for the medium term (until 2020) this
scenario is the one offering the cheapest opportunities. The impact of therenewable scenario is smaller for the EU since the potential (especially for windenergy) is limited and already used to a large extent in the case without
accelerated technology development.

-

The clean coal scenario yields carbon values to fulfil the carbon emission target
that are sometimes even a little bit higher than the CA Case. This is due to thepresence of cheaper coal-based technologies that make comparatively more
expensive to renounce to use coal as a primary energy source and, in particular,
to produce electricity. However, the total costs corresponding to this scenario
would be lower (due to the benefits embedded in the technology case).

-

The gas scenario shows less effect on the carbon value than one might expect.
Gas technology is already intensively used in the carbon abatement case without
accelerated technology development. The higher penetration of gas technology
in the Gas case offers cheaper opportunities to generate electricity but these areoffset by the higher demand caused by lower gas34 and electricity prices.

34

The Gas case assume higher global natural gas reserves which lead to lower gas prices (see scenario definitionin chapter 4.2.1 ).

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Figure 6.2: The role of technology to reduce marginal abatement costs
Marginal abatement cost[€/tCO ]270

Coal case (EU)Gas case (EU)

Carbon Abatement Case 60(EU)

Renewable case (EU)50

40

Nuclear case (EU)
Carbon Abatement Case 30(Rest of the world)

Coal case (Rest of the world)
Gas case (Row)

20

Renewable case (Row)
Nuclear case (Row)

10
2010

2020

2030

2040

Key conclusions

Ɣ With a carbon value on the fossil fuel use, CO2 emissions in 2030 are 21 % lower
than in the Reference. At the world level and in most regions, this reduction isequally achieved by a reduction in energy demand and by a decrease in the carbon
intensity of energy consumption.
Ɣ More than half of the world energy demand reduction is achieved in the industry
sector.
Ɣ The decrease in the carbon intensity comes mainly from substitutions away from coaland lignite and to a lesser extent from oil; gas demand remains roughly stable as fuelswitching in favour of gas takes place. In contrast, the consumption of biomass
increases significantly, nuclear progresses considerably, large hydro and geothermal
remains stable; finally, wind, solar and small hydro jumps up by a factor 20.
Ɣ Accelerated technology development can have a considerable impact on the cost toachieve emission reductions.

110

DEFINITION OF REGIONSWORLD BREAKDOWN INTO 7 REGIONS IN WETO1

Latin

Western Europe: Austria, Belgium, Cyprus,
Denmark, Finland, France, Germany, Greece,
Iceland, Ireland, Italy, Luxembourg, Malta,
Netherlands, Norway, Portugal, Spain, Sweden,
Switzerland, Turkey, United Kingdom

America:

CentralAmerica(including

Mexico), South America and Caribbean
Japan, Pacific: Japan, Australia, New Zealand,
Papua New Guinea, Fiji, Kiribati, Samoa (Western),
Solomon Islands, Tonga, Vanuatu

CEEC, CIS2:
CEEC (Central and Eastern European
Countries): Albania, Bosnia-Herzegovina,
Bulgaria, Croatia, Czech Republic, Estonia,
Hungary, Latvia, Lithuania, Macedonia, Poland,
Romania, Serbia & Montenegro, Slovak
Republic, Slovenia

Asia: Afghanistan, Bangladesh, Bhutan, Brunei,
Cambodia, China, Hong-Kong, India, Indonesia,
Lao, Macao, Malaysia, Maldives, Myanmar,
Mongolia, Nepal, North Korea, Pakistan,Philippines, Thailand, Singapore, South Korea, Sri
Lanka, Taiwan, Vietnam.

CIS (Community of Independent States):
Armenia, Azerbaijan, Belarus, Georgia,
Kazakhstan, Kyrgyz Rep., Moldova, Russia,
Tajikistan, Turkmenistan, Ukraine, Uzbekistan

Africa, Middle East:
Africa:North

Africa(Algeria,

Tunisia,

Morocco, Libya, Egypt) and Sub-Saharian

North America: USA, Canada

AfricaMiddle East: Bahrain, Iran, Iraq, Israel, Jordan,
Kuwait, Lebanon, Oman, Qatar, Saudi Arabia,
Syria, United Arab Emirates, Yemen

1

The POLES model identifies thirty-eight world regions orcountries, of which the 15 countries of the European Union andthe largest countries (USA, Canada, Japan, China, India, Brazil,etc…).

2This composite region is used because of lack of data by
country for countries of the Former Soviet Union before 1992.

111

OTHER REGIONSEU (European Union): Austria, Belgium, Denmark, Finland, France, Germany, Greece,
Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom
Other Western Europe: Iceland, Switzerland, Norway, Turkey
Accession Countries: Bulgaria, Cyprus, Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Malta, Poland, Romania, Slovak Republic, Slovenia
OECD: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France,
Germany F.R., Greece, Hungary, Iceland, Ireland, Italy, Japan, Luxembourg, Mexico,
Netherlands, New Zealand, Norway, Poland, Portugal, Spain, Slovak Republic, South Korea,
Sweden, Switzerland, Turkey, United Kingdom, USA
OPEC (Organisation of Petroleum Exporting Countries): Venezuela, Nigeria, Indonesia,
Algeria, Libya, Saudi Arabia, United Arab Emirates, Iraq, Iran, Kuwait, Qatar
OPEC Middle East: Saudi Arabia, United Arab Emirates, Iraq, Iran, Kuwait, and Qatar
Gulf: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates, Yemen

112

LIST OF ACRONYMS AND ABBREVIATIONS€
AAU
Acc. Countries
BfP
bl
CA
cap
CC
CDM
CEEC
CEPII
CER
CHP
CIS
Cum
DG
EU, EU 15
GDP
GHG
GIC
Gm3
Gt
GTCC
Gtoe
GWP
IEA
IEPE
IET
IGCC
IIASA
IPCC
JI
koe
LNG
LWR
Mt
Mtoe
O&M
OECD
OPEC
PEM
POLES
(1)

Euro at 1999 prices (=US$ at 1995 prices)
Assigned Amount Units
Accession countries (to the European Union)
Bureau Federal du Plan (Belgium)
BarrelCarbon Abatement
CapitaCombined cycle
Clean Development Mechanisms
Central and Eastern European Countries
Centre d’Etudes Prospectives et d’Informations Internationales
Certified Emission Reduction
Combined heat and power
Community of Independent States (1)Cumulative
Directorate General
European Union (15 countries) (1)Gross Domestic ProductGreenhouse Gas
Gross Inland Consumption (=primary energy consumption or Total
Primary Energy Supply)
Million cubic meter
Billion of tons
Gas Turbine Combined Cycle
Billion of tons oil equivalent
Global Warming Potential
International Energy Agency
Institute of Energy Policy and Economics
International Emission Trading
Integrated coal gasification combined cycle
International Institute for Applied System Analysis
International Panel on Climatic Change
Joint Implementation
kilogram oil equivalent
Liquefied Natural Gas
Light water reactor
Million tons
Million ton oil equivalent
Operation and Maintenance
Organisation for Economic Cooperation and Development
Organisation of Petroleum Exporting Countries
Proton Exchange Membrane
Prospective On Long Term Energy Systems

See definition of regions

113

POP
ppp
ppmv
Prim
R&D
R/P
RMU
SFC
toe
TWh
UAE
UN
UNFCCCURR
US-DOEUSGS
WEC

Population
Purchasing power parities
Parts per million by volume
Primary (electricity): nuclear, hydro, geothermal, wind, solar
Research and Development
Reserve on Production
Removal Units
Solid oxide Fuel Cell
Ton of oil equivalentBillion kWh
United Arab Emirates
United Nations
United Nations Framework Convention on Climate Change
Ultimate Recoverable Resources
US Department of Energy
United States Geological Survey
World Energy Council

114

AKNOWLEDGMENTWETO has been prepared by a consortium of four European research organisations and has
been funded by the European Commission 5th RTD Framework Programme (DG Research
Energy programme, socio-economic activities).
The team has been co-ordinated by Bruno Lapillonne from ENERDATA and the members of
the team were Dominique Gusbin (principal author), Philippe Tulkens and Willem van Ierlandfrom the Bureau Fédéral du Plan, Patrick Criqui from the Institut d’Economie et de Politiquede l’Energie (CNRS-IEPE) and Peter Russ from the Institute for Prospective Technology
Studies (JRC-IPTS). All team members have participated in the thorough analysis of the draft
text and Domenico Rossetti di Valdalbero (European Commission, DG Research) has
supervised the work.
Silvana Mima (IEPE) and Nathalie Quercia (ENERDATA) have provided support in the
preparation of Figures and Tables. In addition, valuable comments have been received from
Bertrand Chateau (ENERDATA) and Michela Nardo (IPTS).
An in-depth peer-review of WETO has been held in Brussels in December 2001 and relevantsuggestions have been given by the following experts: Georges Dupont-Roc fromTotalFinaElf, Bernard Laponche from International Conseil Energie, Peter Pearson from
Imperial College and Clas-Otto Wene from the International Energy Agency.
From the European Commission, constructive remarks have been made by Pedro de Sampaio
Nunes, Knut Kübler, Manfred Decker, Franz Xaver Soeldner, Timo Aaltonen and Christine
Jenkins from DG Energy and Transport, Jos Delbeke and Peter Zapfel from DG Environment,
Hardo Bruhns, Michel Poireau, Piet Zegers and Claude Thonet from DG Research.

115

ANNEX 1
COMPARISON OF WORLD ENERGY STUDIESIntroduction
This appendix compares the WETO Reference hypotheses and results with the projections
provided by other world energy studies. Three institutions carry out forecasts whose scope iscomparable to WETO:···The International Energy Agency (IEA) also produces a world energy outlook to 2020.
Insofar as the 2001 report has been dedicated to energy supply issues, based on the
projections of the World Energy Outlook 2000, we use this IEA 2000 Reference Scenario
for comparison.
IIASA has developed for the World Energy Council a set of scenario projections to theyear 2100. For this comparison, we use the WEC 1998-A2 scenario, which assumes an oil
and gas resource availability that is comparable to the one used in the WETO Reference.
The Energy Information Administration of the U.S. Department of Energy provides yearly
updated energy forecasts to 2020 in its International Energy Outlook. For this comparison
we used the US-DOE 2002 Reference Case projection.

The four studies compared here use database and conversion factors that may slightly differ
from one model to the other. In order to reduce the resulting discrepancies and to improve thecomparability of results, all data have been harmonised while applying the growth rates
derived from each study to the initial 2000 values of the WETO study. This allows having aclearer view and a better understanding of the common outcomes and divergences between
the studies.

119

1.

World population

With a world population of slightly less than 7 billions in 2010 and around 7.5 billions in 2020, allfour studies reflect very similar population projections until this time horizon. For the 2030 horizon,
the downward revision of the World Population Prospects operated by the UN in recent years
translates into the fact that the WETO study shows a significantly lower projection (8.2 billions) thanthe IIASA-WEC study of 1998 (8.7 billions).

%/year%/year2000-10*

2010-20

2020-30

2000

2010

2020

2030

WETO

1.17%

0.98%

0.78%

6 102

6 855

7 558

8 164

US-DOE

1.21%

1.05%

6 882

7 642

IEA

1.10%

1.10%

6 807

7 594

WEC A2

1.34%

1.17%

6 974

7 834

Population

M

Millions

1.00%

8 657

10 0009 000
8 000

Millions

7 000
6 000
5 000
4 000
3 000
2 000
1 000
0
2000

2010
WETO

2020

US-DOE

IEA

2030

WEC A2

1999-2010 in %/year for US-DOE and 1997-2010 for IEA

2.

World GDP

According to three out of the four studies, world GDP will grow, in the next two decades, at a yearly
average rate between 3 and 3.5 %. This results in a world GDP of nearly 80 trillions € in 2020, i.e.
almost a doubling, as compared with the 2000 level. In the WETO scenario, the continuous slowdown
in the average growth rate translates into a linear-shaped GDP profile, with an increase of about 20
Trillions € per decade. As a result, world GDP overpasses 100 trillions € in 2030.

120

%/year%/year2000-10

2010-20

2020-30

2000

2010

2020

2030

WETO

3.49%

3.13%

2.62%

41 40758 35079 400102 788

US-DOE

3.17%

3.33%

56 56578 462

IEA

3.10%

3.10%

56 19176 252WEC A2

2.74%

2.59%

54 24070 016

GDP

Billions

2.67%

Billions 99Euros

91 088120 000

100 000

Billions 99€

80 00060 00040 000

20 000

0
2000

2010

WETO

3.

US-DOE

2020
IEA

2030

WEC A2

World oil price

After a ten years period during which world oil price stayed below 20 €/bl, in 2000 it reached a peakof 26.5 €/bl. The three studies elaborating price projections point to a lower oil price in 2010. In 2020
however, two out of three studies show a full recovery from the 2000 level. The WETO endogenous
projection of prices shows the highest profile with 29 and 35 €/bl, in 2020 and 2030 respectively.
These levels are deemed to be necessary - in the set of the WETO hypotheses and modelling
framework - to balance world demand and supply, including that of non-conventional oil resources.

Oil Price

95$ / bl = 99 € / $95/bl=€99/bl
bl
2000

2010

2020

2030

26.5

23.8

28.7

34.9

US-DOE

21.6

22.8

IEA

18.8

25.7

WETO

121

40.0
35.0
30.0

99€ / bl

25.0
20.0
15.0
10.0
5.0
0.0
2000

2010
WETO

4.

2020

US-DOE

2030

IEA

World energy consumption

World total energy consumption levels, as they stem from the harmonisation process used here, show
similar levels for the time-period considered, with a typical 12 Gtoe in 2010 and 14.5 in 2020 (onlyone study displays a significantly higher value, i.e. 15.5 Gtoe for that date) and 17 Gtoe in 2030.
However, this proximity in total energy forecasts hides more important differences in the projections
for individual energy sources, as analysed below.
%/year%/year2000-10

2010-20

2020-30

2000

2010

2020

2030

WETO

1.97%

1.88%

1.64%

9 927

12 06214 53617 100

US-DOE

2.34%

2.19%

12 51215 532

IEA

1.96%

1.79%

12 05414 396WEC A2

1.84%

1.81%

11 91514 250Primary Energy

Mtoe

1.82%

18 000
16 000
14 000Mtoe

12 000
10 000
8 000
6 000
4 000
2 000
0
2000

2010
WETO

US-DOE

2020
IEA

122

WEC A22030

17 064

5.

World CO2 emissions

As for the energy consumption, the total projected CO2 emissions from the combustion of fossil fuels
show a reasonable proximity with about 30 Gt CO2 in 2010 and 35 in 2020. For the last decade of the
projection, the difference between the IIASA-WEC and the WETO projections (40 and 45 Gt CO2 in
2030 respectively) turns out to be important. This reflects a much higher contribution of the
traditional biomass and new renewable energy sources in the former study.
%/year%/yearCO2

Mt CO2MtCO2

2000-10

2010-20

2020-30

2000

2010

2020

2030

WETO

2.14%

2.26%

1.93%

23 78129 37636 73844 498

US-DOE

2.39%

2.22%

30 13037 520

IEA

2.09%

2.00%

29 25135 666WEC A2

1.89%

1.65%

28 68733 792

1.66%

39 85850 00045 00040 00035 000MtCO2

30 00025 000
20 000
15 000
10 000
5 000
0
2000

2010
WETO

6.

US-DOE

2020
IEA

2030

WEC A2

World coal demand

All four scenarios point to an increase in world coal consumption over the next decades, with a total
consumption of about 3 Gtoe in 2010. For the longer term, the WETO and WEC-IIASA projections
show structurally higher coal consumption than the IEA and DOE projections for 2020 and the rise ofcoal continues in the 2020-2030 decade, with average growth rates higher than 2 %/year. In bothcases, coal consumption reaches a level of more than 4.5 Gtoe in 2030, corresponding to a doublingfrom current level. This reflects the assumptions used in these two studies for oil and gas resources
and the fact that, in the long run, coal remains the only abundant and cheap fossil source, provided
that environmental considerations do not dominate the scenario framework.

123%/year%/year

Coal

Mtoe

Mtoe

2000-10

2010-20

2020-30

2000

2010

2020

2030

WETO

2.07%

2.42%

2.48%

2 389

2 931

3 723

4 757

US-DOE

1.88%

1.50%

2 878

3 340

IEA

1.74%

1.74%

2 837

3 370

WEC A2

2.13%

2.31%

2 949

3 707

2.22%

4 616

5 000
4 500
4 000
3 500

Mtoe

3 000
2 500
2 000
1 500
1 000
500
0
2000

2010
WETO

7.

US-DOE

2020
IEA

2030

WEC A2

World oil demand

World oil demand exceeds 4 Gtoe in 2010 in the four studies, and 5 Gtoe in 2020 in three of them.
The corresponding growth rates are however at a relatively low level, between 1.5 and 2 %/year. The
DOE forecast shows the highest level of world oil demand in 2020 and this is consistent, on the
demand side, with the fact that this study also has the lowest oil price for that horizon (23 $/bl).
Oil%/year%/yearMtoe

Mtoe

2000-10

2010-20

2020-30

2000

2010

2020

2030

WETO

1.91%

1.84%

1.43%

3 517

4 250

5 099

5 878

US-DOE

2.28%

2.14%

4 407

5 445

IEA

2.01%

1.82%

4 293

5 139

WEC A2

1.44%

0.97%

4 057

4 470

0.81%

124

4 846

7 000
6 000
5 000

Mtoe

4 000
3 000
2 000
1 000
0
2000

2010
WETO

8.

US-DOE

2020
IEA

2030

WEC A2

World gas demand

The natural gas projections show the same differences and similarities than those observed foroil. World gas demand is in a range of 2.8-3 Gtoe in 2010 and 3.5-4 Gtoe in 2020. The
average growth rates are however much higher than for oil, with values between 2.5 and morethan 3 %/year at least until 2020. This is a clear indication of the strong dynamics that has tobe expected for natural gas in the next twenty years.

%/year%/yearNatural Gas

Mtoe

Mtoe

2000-10

2010-20

2020-30

2000

2010

2020

2030

WETO

3.00%

2.59%

1.63%

2 129

2 860

3 693

4 340

US-DOE

3.19%

3.12%

2 916

3 965

IEA

2.76%

2.69%

2 797

3 646

WEC A2

2.72%

2.12%

2 784

3 434

2.02%

5 000
4 500
4 000
3 500

Mtoe

3 000
2 500
2 000
1 500
1 000
500
0
2000

WETO

2010

US-DOE2020

IEA

WEC A2

125

2030

4 193

9.

World nuclear electricity production

The prospects for nuclear electricity development in the next thirty years appear to be quite limited in
the four projections. This is explained by the marked slowdown or even the halt in new plant orders
since the 1980s. The WETO scenario however projects some increase in the nuclear power production
for the next decade, due partly to the additions of new capacities and partly to improvements inexisting plants management and load factors. Between 2010 and 2020 the production is expected tostabilise in the WETO projection before a modest growth recovery between 2020 and 2030, while the
IEA outlook points for a rapid retirement of the so called “second generation” plants after 2010. In allcases the contribution of nuclear energy seems to be limited to less than 0.8 Gtoe before 2020 and lessthan 0.9 Gtoe before 2030.

%/year%/yearNuclear

Mtoe

Mtoe

2000-10

2010-20

2020-30

2000

2010

2020

2030

WETO

1.89%

-0.09%

0.96%

663

799

792

872

US-DOE

0.78%

0.22%

717

732

IEA

0.77%

-1.10%

716

641

WEC A2

0.52%

1.05%

699

776

1.73%

920

1 200

1 000

Mtoe

800

600

400

200

0
2000

2010
WETO

10.

US-DOE

2020
IEA

2030

WEC A2

World hydro-electricity production

World hydro power production is expected to rise relatively regularly over the period, with for the
WETO and the IEA studies average rates of 2 %/year between 2000 and 2010 and 1.6 % p.a. between
2010 and 2020. If the same conversion factors were used for hydro power and for nuclear, then thecontribution of hydro power to world energy supply would exceed 1Gtoe in 2020 and 1.4 Gtoe in
2030 according to the WETO projection.

126

%/year%/yearLarge Hydro

Mtoe

Mtoe

2000-10

2010-20

2020-30

2000

2010

2020

2030

WETO

1.98%

1.65%

1.40%

238

290

342

392

IEA

2.05%

1.57%

292

341

WEC A2

1.24%

1.31%

270

307

1.36%

351

450
400
350

Mtoe

300
250
200
150
100
50
0
2000

2010
WETO

11.

2020
IEA

2030

WEC A2

World biomass production

By definition, the contribution of biomass to world energy supply is difficult to measure. It is alsodifficult to model as the proper dynamics of the corresponding energy sources as well as their links in terms of substitution processes - with commercial fuels have hardly been explored, and only infield-studies. The three projections providing estimates for this category of fuels indeed show very
contrasted profiles, with stability in the IIASA-WEC projection, an increase in the IEA outlook and acontinuous decrease, based on the hypothesis of growing urbanisation, in the WETO projection.

Biomass(non comm.)%/year%/yearMtoe

Mtoe

2000-10

2010-20

2020-30

2000

2010

2020

2030

WETO

-1.83%-1.79%-1.75%

820

682

569

477

IEA

0.98%

0.87%

904

986

WEC A20.16%-0.23%

833

814

0.01%

127

815

1 200

1 000

Mtoe

800

600

400

200

0
2000

2010
WETO

12.

2020
IEA

2030

WEC A2

World other renewable production

The category of other renewable used for this comparison includes different energy sources fromcommercial biofuels to micro-hydro systems, wind and photovoltaic. Altogether, they represent not
more than 0.17 Gtoe in 2000, with a clear predominance of commercial biofuels. The expected
average growth rate is relatively high, i.e. above 3 %/year, for the first 2000-2010 decade. It thenslows down in the WETO and IEA projections, while it increases significantly in the IIASA-WEC
projection. In the two former studies, the Reference cases do not incorporate any particular emphasison environmentally friendly policies.
%/year%/yearOther
Renewable

Mtoe

Mtoe

2000-10

2010-20

2020-30

2000

2010

2020

2030

WETO

3.87%

2.49%

1.87%

171

250

319

384

IEA

3.03%

2.61%

230

298

WEC A2

3.53%

5.47%

242

412

4.70%

700
600
500

Mtoe

400
300
200
100
0
2000

2010
WETO

2020

IEA

WEC A2

128

2030

652

ANNEX 2
WETO PROJECTIONS BY REGIONSWorld%/ year
1990

2000

2010

2020

2030

1990/00 2000/10 2010/30

Overall indicators
Population (Million)
GDP (G € 99 ppp)
Per capita GDP (1000 € 99/cap)
Gross Inland Cons/GDP (toe/1000 € 99)
Gross Inland Cons per capita (toe/cap)% renewables in gross inland consumption
Electr. Consumption per capita (kWh/cap)
CO2 Emissions per capita (t of CO2/cap)
Transport fuels per capita (toe/cap)

5248
30793
5,9
281
1,7
13%
1,8
4,0
0,26

6102
41407
6,8
241
1,6
13%
2,1
3,9
0,28

6855
58350
8,5
206
1,8
11%
2,4
4,3
0,30

7558
79400
10,5
183
1,9
9%
3,0
4,9
0,32

8164
102788
12,6
166
2,1
8%
3,7
5,5
0,34

1,5%
3,0%
1,5%
-1,5%
-0,1%
-0,2%
1,1%
-0,2%
0,9%

1,2%
3,5%
2,3%
-1,5%
0,7%
-1,8%
1,7%
1,0%
0,5%

0,9%
2,9%
2,0%
-1,1%
0,9%
-1,4%
2,1%
1,2%
0,7%

Primary Production (Mtoe)
Coal, lignite
Oil
Natural gas
NuclearHydro,geothermal
Wood and wastes
Wind, solar, small hydro

8530
1901
3258
1754
509
193
904
11

9953
2389
3517
2129
663
238
1002
15

12110
2931
4250
2860
799
290
949
30

14611
3723
5099
3693
792
342
908
54

17213
4757
5878
4340
872
392
900
73

1,6%
2,3%
0,8%
2,0%
2,7%
2,1%
1,0%
3,3%

2,0%
2,1%
1,9%
3,0%
1,9%
2,0%
-0,5%
7,1%

1,8%
2,5%
1,6%
2,1%
0,4%
1,5%
-0,3%
4,6%

Gross Inland Consumption (Mtoe)
Coal, lignite
Oil
Natural gas
Primary electricity
Wood and wastes

8668
2168
3104
1747
746
904

9980
2371
3591
2127
890
1002

12043
2913
4250
2859
1072
949

14514
3704
5099
3689
1114
908

17065
4739
5878
4323
1225
900

1,4%
0,9%
1,5%
2,0%
1,8%
1,0%

1,9%
2,1%
1,7%
3,0%
1,9%
-0,5%

1,8%
2,5%
1,6%
2,1%
0,7%
-0,3%

Electricity Generation (TWh)Thermalof which:
Conventional coal, lignite
Advanced coal technology
Gas
Biomass
NuclearHydro+Geoth
Solar
Wind
Small Hydro

11945
7561

14865
9299

19339
12464

26122
18382

34716
25803

2,2%
2,1%

2,7%
3,0%

2,9%
3,7%

4412
0
1688
132
2013
2246
1
4
120

5516
0
2418
197
2622
2771
2
23
149

5532
1582
4054
260
3161
3371
24
117
203

5154
5573
6209
335
3137
3971
44
342
245

4325
11331
8542
423
3498
4562
51
544
258

2,3%

0,0%

3,7%
4,1%
2,7%
2,1%
6,6%
19,4%
2,1%

5,3%
2,8%
1,9%
2,0%
31,4%
17,5%
3,2%

-1,2%
10,3%
3,8%
2,5%
0,5%
1,5%
3,8%
8,0%
1,2%

CHP

519

586

1055

1510

1568

1,2%

6,1%

2,0%

Final Energy Consumption (Mtoe)
Coal, lignite
Oil
Gas
Heat
Electricity
Wood and wastes

6270
882
2540
960
179
832
865

7124
762
2998
1102
234
1083
945

8682
1100
3609
1423
235
1442
872

10425
1371
4339
1704
236
1974
800

12132
1626
5041
1859
238
2621
748

1,3%
-1,5%
1,7%
1,4%
2,7%
2,7%
0,9%

2,0%
3,7%
1,9%
2,6%
0,0%
2,9%
-0,8%

1,7%
2,0%
1,7%
1,3%
0,1%
3,0%
-0,8%

Industry
Transport
Household, Service, Agriculture

2411
1459
2437

2524
1733
2867

3190
2056
3437

3800
2413
4213

4289
2796
5047

0,5%
1,7%
1,6%

2,4%
1,7%
1,8%

1,5%
1,5%
1,9%

CO2 Emissions (Mt of CO2), of which:Electricity generation
Industry
Transport
Household, Service, Agriculture

20843
6943
4752
4228
3249

23781
8261
4390
5125
3748

29376
9393
5674
6096
5353

36738
12191
6665
7163
7110

44498
15809
7302
8306
8665

1,3%
1,7%
-0,8%
1,9%
1,4%

2,1%
1,3%
2,9%
1,8%
3,4%

2,1%
2,6%
1,3%
1,6%
2,4%

130

Western Europe%/ year
1990

2000

2010

2020

2030

1990/00 2000/10 2010/30

Overall indicators
Population (Million)
GDP (G € 99 ppp)
Per capita GDP (1000 € 99/cap)
Gross Inland Cons/GDP (toe/1000 € 99)
Gross Inland Cons per capita (toe/cap)% renewables in gross inland consumption
Electr. Consumption per capita (kWh/cap)
CO2 Emissions per capita (t of CO2/cap)
Transport fuels per capita (toe/cap)

434
7536
17,4
190
3,3
6%
4,7
7,8
0,64

456
9225
20,2
174
3,5
6%
5,4
7,9
0,71

467
11517
24,7
148
3,7
7%
6,1
8,0
0,73

470
14226
30,2
129
3,9
7%
7,2
8,8
0,77

468
16706
35,7
116
4,1
7%
8,4
9,3
0,79

0,5%
2,0%
1,5%
-0,9%
0,6%
0,3%
1,4%
0,1%
1,0%

0,2%
2,2%
2,0%
-1,6%
0,4%
1,0%
1,2%
0,2%
0,4%

0,0%
1,9%
1,9%
-1,2%
0,6%
0,6%
1,6%
0,8%
0,4%

Primary Production (Mtoe)
Coal, lignite
Oil
Natural gas
NuclearHydro,geothermal
Wood and wastes
Wind, solar, small hydro

863
224
212
156
188
40
41
3

1045
134
339
252
223
44
48
5

926
107
217
261
227
48
54
11

809
108
129
220
218
51
65
18

752
110
82
178
238
54
71
20

1,9%
-5,0%
4,8%
4,9%
1,7%
1,0%
1,5%
7,2%

-1,2%
-2,2%
-4,4%
0,4%
0,2%
0,9%
1,3%
8,1%

-1,0%
0,1%
-4,7%
-1,9%
0,2%
0,6%
1,4%
2,9%

Gross Inland Consumption (Mtoe)
Coal, lignite
Oil
Natural gas
Primary electricity
Wood and wastes

1430
320
615
227
227
41

1604
246
667
379
264
48

1705
224
688
464
274
54

1839
269
716
521
269
65

1936
315
722
537
291
71

1,2%
-2,6%
0,8%
5,2%
1,5%
1,5%

0,6%
-0,9%
0,3%
2,0%
0,4%
1,3%

0,6%
1,7%
0,2%
0,7%
0,3%
1,4%

Electricity Generation (TWh)Thermalof which:
Conventional coal, lignite
Advanced coal technology
Gas
Biomass
NuclearHydro+Geoth
Solar
Wind
Small Hydro

2420
1187

2762
1313

3118
1537

3707
2044

4279
2470

1,3%
1,0%

1,2%
1,6%

1,5%
2,4%

783
0
183
15
744
459
0,0
1
29

675
0
433
35
882
507
0,1
16
43

551
114
649
48
899
552
0,2
67
61

544
378
882
70
863
593
0,5
139
67

492
726
1021
80
959
623
0,8
157
69

-1,5%
9,0%
8,9%
1,7%
1,0%
19,6%
34,0%
4,2%

-2,0%
228,7%
4,1%
3,1%
0,2%
0,9%
9,5%
15,8%
3,6%

-0,6%
9,7%
2,3%
2,6%
0,3%
0,6%
7,9%
4,3%
0,6%

CHP

103

191

258

285

269

6,4%

3,1%

0,2%

Final Energy Consumption (Mtoe)
Coal, lignite
Oil
Gas
Heat
Electricity
Wood and wastes

1027
99
517
180
18
174
35

1164
56
587
251
24
210
36

1257
57
604
290
25
243
38

1354
67
629
301
26
291
41

1409
75
637
289
26
338
44

1,3%
-5,5%
1,3%
3,4%
2,9%
1,9%
0,4%

0,8%
0,2%
0,3%
1,4%
0,3%
1,5%
0,5%

0,6%
1,4%
0,3%
0,0%
0,4%
1,7%
0,7%

Industry
Transport
Household, Service, Agriculture

372
295
374

402
329
433

434
350
472

463
369
522

471
380
558

0,8%
1,1%
1,5%

0,8%
0,6%
0,9%

0,4%
0,4%
0,8%

CO2 Emissions (Mt of CO2), of which:Electricity generation
Industry
Transport
Household, Service, Agriculture

3565
1047
624
843
691

3599
1026
623
966
720

3751
1013
641
1029
765

4129
1236
645
1083
813

4374
1429
616
1117
819

0,6%
-0,4%
-0,5%
1,4%
0,4%

0,4%
-0,1%
0,3%
0,6%
0,6%

0,8%
1,7%
-0,2%
0,4%
0,3%

131

CIS, CEEC%/ year
1990

2000

2010

2020

2030

1990/00 2000/10 2010/30

Overall indicators
Population (Million)
GDP (G € 99 ppp)
Per capita GDP (1000 € 99/cap)
Gross Inland Cons/GDP (toe/1000 € 99)
Gross Inland Cons per capita (toe/cap)% renewables in gross inland consumption
Electr. Consumption per capita (kWh/cap)
CO2 Emissions per capita (t of CO2/cap)
Transport fuels per capita (toe/cap)

410
3423
8,4
493
4,1
3%
3,9
11,0
0,37

425
2457
5,8
478
2,8
5%
3,2
6,7
0,20

428
3495
8,2
379
3,1
5%
4,0
7,2
0,24

427
4910
11,5
331
3,8
5%
5,5
9,1
0,28

422
6400
15,2
290
4,4
4%
7,1
10,6
0,32

0,4%
-3,3%
-3,6%
-0,3%
-3,9%
4,2%
-2,0%
-4,8%
-5,8%

0,1%
3,6%
3,5%
-2,3%
1,1%
0,0%
2,3%
0,6%
1,6%

-0,1%
3,1%
3,1%
-1,3%
1,8%
-0,8%
2,9%
2,0%
1,5%

Primary Production (Mtoe)
Coal, lignite
Oil
Natural gas
NuclearHydro,geothermal
Wood and wastes
Wind, solar, small hydro

1627
167
586
747
68
24
35
0,3

1375
261
355
606
92
25
36
0,4

1480
214
331
746
120
29
39
0,9

1889
268
340
1102
103
32
41
2,8

2405
312
388
1529
94
34
42
6,6

-1,7%
4,6%
-4,9%
-2,1%
3,1%
0,7%
0,4%
2,4%

0,7%
-2,0%
-0,7%
2,1%
2,7%
1,4%
0,9%
8,9%

2,5%
1,9%
0,8%
3,7%
-1,2%
0,8%
0,3%
10,3%

Gross Inland Consumption (Mtoe)
Coal, lignite
Oil
Natural gas
Primary electricity
Wood and wastes

1688
446
496
628
83
35

1173
235
264
531
108
36

1323
187
312
650
134
39

1625
234
368
862
119
41

1853
271
390
1035
115
42

-3,6%
-6,2%
-6,1%
-1,7%
2,7%
0,4%

1,2%
-2,2%
1,7%
2,0%
2,2%
0,9%

1,7%
1,9%
1,1%
2,4%
-0,8%
0,3%

Electricity Generation (TWh)Thermalof which:
Conventional coal, lignite
Advanced coal technology
Gas
Biomass
NuclearHydro+Geoth
Solar
Wind
Small Hydro

2168
1619

1756
1091

2165
1341

2978
2168

3766
2917

-2,1%
-3,9%

2,1%
2,1%

2,7%
4,0%

690
0
625
34
269
276
0,0
0
4

469
0
457
45
365
296
0,0
0
5

377
65
700
63
474
340
0,0
2
9

449
259
1213
70
407
371
0,1
15
17

407
519
1758
68
372
400
1,0
50
26

-3,8%
-3,1%
3,0%
3,1%
0,7%
17,7%
64,8%
2,1%

-2,2%
197,2%
4,4%
3,3%
2,7%
1,4%
26,7%
31,3%
6,8%

0,4%
10,9%
4,7%
0,4%
-1,2%
0,8%
39,4%
17,1%
5,5%

CHP

198

95

127

155

177

-7,1%

3,0%

1,7%

Final Energy Consumption (Mtoe)
Coal, lignite
Oil
Gas
Heat
Electricity
Wood and wastes

1192
194
370
320
143
138
24

809
86
178
230
177
116
22

929
69
212
306
177
146
18

1123
72
249
407
177
202
17

1280
82
277
471
177
257
17

-3,8%
-7,8%
-7,1%
-3,2%
2,1%
-1,7%
-0,8%

1,4%
-2,1%
1,8%
2,9%
0,0%
2,3%
-1,9%

1,6%
0,8%
1,3%
2,2%
0,0%
2,9%
-0,4%

Industry
Transport
Household, Service, Agriculture

609
143
422

315
91
402

377
107
445

437
126
560

473
142
665

-6,4%
-4,4%
-0,5%

1,8%
1,6%
1,0%

1,2%
1,4%
2,0%

CO2 Emissions (Mt of CO2), of which:Electricity generation
Industry
Transport
Household, Service, Agriculture

4377
1675
913
424
800

2857
997
510
261
600

3058
929
593
308
663

3877
1264
670
365
873

4476
1495
715
411
1056

-4,5%
-5,1%
-5,7%
-4,8%
-2,8%

0,7%
-0,7%
2,5%
1,7%
1,0%

1,9%
2,4%
0,9%
1,4%
2,4%

132

North America%/ year
1990

2000

2010

2020

2030

1990/00 2000/10 2010/30

Overall indicators
Population (Million)
GDP (G € 99 ppp)
Per capita GDP (1000 € 99/cap)
Gross Inland Cons/GDP (toe/1000 € 99)
Gross Inland Cons per capita (toe/cap)% renewables in gross inland consumption
Electr. Consumption per capita (kWh/cap)
CO2 Emissions per capita (t of CO2/cap)
Transport fuels per capita (toe/cap)

277
7293
26,3
302
8,0
5%
11,0
19,2
1,92

304
9943
32,7
255
8,3
6%
12,6
21,0
2,12

327
12632
38,7
217
8,4
5%
14,1
21,0
2,09

348
15330
44,1
191
8,4
5%
16,0
21,4
2,02

365
18096
49,6
170
8,4
6%
18,1
21,8
1,96

0,9%
3,1%
2,2%
-1,7%
0,5%
2,2%
1,4%
0,9%
1,0%

0,7%
2,4%
1,7%
-1,6%
0,1%
-0,4%
1,1%
0,0%
-0,1%

0,6%
1,8%
1,3%
-1,2%
0,0%
0,2%
1,3%
0,2%
-0,3%

Primary Production (Mtoe)
Coal, lignite
Oil
Natural gas
NuclearHydro,geothermal
Wood and wastes
Wind, solar, small hydro

1914
582
559
500
173
52
47
2

2164
694
533
589
205
62
79
2

2410
721
575
754
212
63
80
4

2623
828
603
830
203
65
84
10

2849
1011
651
789
225
66
89
17

1,2%
1,8%
-0,5%
1,6%
1,7%
1,8%
5,5%
3,0%

1,1%
0,4%
0,8%
2,5%
0,3%
0,3%
0,2%
6,9%

0,8%
1,7%
0,6%
0,2%
0,3%
0,2%
0,5%
7,0%

Gross Inland Consumption (Mtoe)
Coal, lignite
Oil
Natural gas
Primary electricity
Wood and wastes

2203
484
850
571
252
47

2532
613
994
588
258
79

2744
637
988
773
267
80

2934
717
1000
871
264
84

3082
859
1004
836
294
89

1,4%
2,4%
1,6%
0,3%
0,2%
5,5%

0,8%
0,4%
-0,1%
2,8%
0,3%
0,2%

0,6%
1,5%
0,1%
0,4%
0,5%
0,5%

Electricity Generation (TWh)Thermalof which:
Conventional coal, lignite
Advanced coal technology
Gas
Biomass
NuclearHydro+Geoth
Solar
Wind
Small Hydro

3681
2375

4348
2791

5032
3404

6083
4408

7412
5539

1,7%
1,6%

1,5%
2,0%

1,7%
2,5%

1783
0
392
53
684
602
0,7
3
16

2126
0
428
76
812
719
1,0
5
20

1998
442
845
93
838
738
1,5
21
29

1739
1415
1127
95
805
754
7,1
77
32

1445
2738
1227
87
909
765
8,4
158
32

1,8%
0,9%
3,6%
1,7%
1,8%
3,4%
4,9%
2,5%

-0,6%
108,7%
7,0%
2,1%
0,3%
0,3%
4,0%
15,2%
3,6%

-1,6%
9,5%
1,9%
-0,3%
0,4%
0,2%
9,2%
10,7%
0,5%

CHP

169

202

364

429

348

1,8%

6,1%

-0,2%

Final Energy Consumption (Mtoe)
Coal, lignite
Oil
Gas
Heat
Electricity
Wood and wastes

1458
65
774
325
2,2
262
31

1693
35
896
365
8,4
331
58

1854
36
923
436
8,5
395
57

1987
39
930
474
8,6
477
59

2068
39
936
451
8,7
566
66

1,5%
-6,0%
1,5%
1,2%
14,4%
2,3%
6,6%

0,9%
0,2%
0,3%
1,8%
0,1%
1,8%
-0,2%

0,5%
0,4%
0,1%
0,2%
0,1%
1,8%
0,8%

Industry
Transport
Household, Service, Agriculture

476
535
449

534
646
513

589
686
579

620
704
664

613
719
736

1,2%
1,9%
1,3%

1,0%
0,6%
1,2%

0,2%
0,2%
1,2%

CO2 Emissions (Mt of CO2), of which:Electricity generation
Industry
Transport
Household, Service, Agriculture

5314
2106
827
1601
695

6387
2642
675
1931
757

6863
2729
747
2054
845

7441
3128
765
2107
920

7955
3686
682
2150
908

1,9%
2,3%
-2,0%
1,9%
0,9%

0,7%
0,3%
1,0%
0,6%
1,1%

0,7%
1,5%
-0,5%
0,2%
0,4%

133

Japan, Pacific%/ year
1990

2000

2010

2020

2030

1990/00 2000/10 2010/30

Overall indicators
Population (Million)
GDP (G € 99 ppp)
Per capita GDP (1000 € 99/cap)
Gross Inland Cons/GDP (toe/1000 € 99)
Gross Inland Cons per capita (toe/cap)% renewables in gross inland consumption
Electr. Consumption per capita (kWh/cap)
CO2 Emissions per capita (t of CO2/cap)
Transport fuels per capita (toe/cap)

150
3168
21,1
170
3,6
5%
6,1
9,1
0,66

158
3699
23,5
172
4,0
5%
7,1
9,5
0,80

162
4356
26,9
157
4,2
5%
8,0
9,4
0,83

162
5287
32,6
141
4,6
6%
9,6
10,1
0,88

159
6302
39,5
129
5,1
6%
11,6
11,3
0,94

0,5%
1,6%
1,0%
0,1%
1,2%
0,1%
1,6%
0,4%
1,9%

0,3%
1,6%
1,4%
-0,9%
0,5%
1,0%
1,2%
-0,2%
0,3%

-0,1%
1,9%
1,9%
-1,0%
0,9%
0,3%
1,9%
1,0%
0,6%

Primary Production (Mtoe)
Coal, lignite
Oil
Natural gas
NuclearHydro,geothermal
Wood and wastes
Wind, solar, small hydro

248
113
36
23
51
12
12
1,5

346
152
38
37
90
13
15
2,0

437
161
66
57
118
13
19
2,8

522
219
70
67
125
14
23
4,7

615
313
41
80
135
14
25
5,8

3,4%
3,0%
0,6%
4,9%
5,8%
0,7%
2,6%
2,4%

2,4%
0,6%
5,7%
4,4%
2,8%
0,3%
2,5%
3,7%

1,7%
3,4%
-2,3%
1,8%
0,7%
0,2%
1,4%
3,6%

Gross Inland Consumption (Mtoe)
Coal, lignite
Oil
Natural gas
Primary electricity
Wood and wastes

537
111
291
61
63
12

635
128
297
94
101
15

684
121
278
138
128
19

744
131
290
165
135
23

812
160
291
188
147
25

1,7%
1,4%
0,2%
4,4%
4,9%
2,6%

0,7%
-0,5%
-0,7%
3,9%
2,4%
2,5%

0,9%
1,4%
0,2%
1,6%
0,7%
1,4%

Electricity Generation (TWh)Thermalof which:
Conventional coal, lignite
Advanced coal technology
Gas
Biomass
NuclearHydro+Geoth
Solar
Wind
Small Hydro

1062
703

1279
752

1464
810

1674
968

1888
1121

1,9%
0,7%

1,4%
0,7%

1,4%
1,6%

208
0
221
17
202
139
0,1
0,0
18

277
0
342
18
355
150
0,2
0,1
22

172
67
531
30
467
154
3,1
1,1
28

140
228
559
36
493
158
19,9
4,3
30

112
383
582
40
539
161
28,5
7,9
30

2,9%

-4,7%

4,5%
0,9%
5,8%
0,7%
12,9%
36,9%
2,3%

4,5%
5,0%
2,8%
0,3%
29,9%
29,8%
2,4%

-2,1%
9,1%
0,5%
1,5%
0,7%
0,2%
11,7%
10,3%
0,3%

CHP

39

71

78

109

117

6,2%

1,0%

2,0%

Final Energy Consumption (Mtoe)
Coal, lignite
Oil
Gas
Heat
Electricity
Wood and wastes

385
47
219
25
0,6
79
9

443
45
256
35
1,1
97
10

487
58
259
47
1,3
111
10

525
53
271
53
1,5
134
12

564
53
280
57
1,8
159
13

1,4%
-0,5%
1,5%
3,4%
7,4%
2,1%
0,5%

0,9%
2,6%
0,1%
2,9%
1,3%
1,4%
0,3%

0,7%
-0,5%
0,4%
1,0%
1,6%
1,8%
1,5%

Industry
Transport
Household, Service, Agriculture

182
107
102

191
128
124

210
136
141

218
144
162

231
152
181

0,5%
1,8%
2,0%

0,9%
0,6%
1,3%

0,5%
0,6%
1,3%

CO2 Emissions (Mt of CO2), of which:Electricity generation
Industry
Transport
Household, Service, Agriculture

1364
442
338
300
174

1496
472
323
379
189

1512
396
370
401
208

1640
481
359
427
236

1806
561
369
450
257

0,9%
0,0%
-0,4%
2,4%
0,8%

0,1%
-1,7%
1,3%
0,6%
1,0%

0,9%
1,8%
0,0%
0,6%
1,0%

134

Africa, Middle East%/ year
1990

2000

2010

2020

2030

1990/00 2000/10 2010/30

Overall indicators
Population (Million)
GDP (G € 99 ppp)
Per capita GDP (1000 € 99/cap)
Gross Inland Cons/GDP (toe/1000 € 99)
Gross Inland Cons per capita (toe/cap)% renewables in gross inland consumption
Electr. Consumption per capita (kWh/cap)
CO2 Emissions per capita (t of CO2/cap)
Transport fuels per capita (toe/cap)

751
1707
2,3
363
0,83
30%
0,9
0,00
0,05

984
2313
2,4
363
0,85
26%
0,9
0,00
0,12

1225
3335
2,7
310
0,84
19%
1,1
0,00
0,12

1490
4745
3,2
286
0,91
13%
1,4
0,00
0,13

1755
6553
3,7
269
1,00
10%
1,8
0,00
0,14

2,7%
3,1%
0,3%
0,0%
0,3%
-1,5%
0,4%
0,7%
9,8%

2,2%
3,7%
1,5%
-1,6%
-0,1%
-3,3%
2,0%
1,0%
0,0%

1,8%
3,4%
1,6%
-0,7%
0,9%
-3,3%
2,6%
1,6%
0,6%

Primary Production (Mtoe)
Coal, lignite
Oil
Natural gas
NuclearHydro,geothermal
Wood and wastes
Wind, solar, small hydro

1628
107
1188
143
2,1
6,2
181
0,3

2009
125
1386
275
3,4
8,2
211
0,4

2717
185
1923
409
8,8
11,5
178
3,3

3823
297
2587
758
7,1
15,4
155
5,1

4740
475
3105
986
5,9
20,4
143
6,0

2,1%
1,6%
1,6%
6,7%
4,9%
2,8%
1,5%
3,5%

3,1%
4,0%
3,3%
4,0%
9,9%
3,3%
-1,7%
23,2%

2,8%
4,8%
2,4%
4,5%
-2,0%
2,9%
-1,1%
3,0%

Gross Inland Consumption (Mtoe)
Coal, lignite
Oil
Natural gas
Primary electricity
Wood and wastes

620
78
241
110
10
181

840
82
326
210
12
211

1034
137
425
273
22
178

1358
227
553
398
24
155

1762
378
690
526
25
143

3,1%
0,5%
3,1%
6,7%
2,0%
1,5%

2,1%
5,2%
2,7%
2,6%
6,4%
-1,7%

2,7%
5,2%
2,5%
3,3%
0,8%
-1,1%

Electricity Generation (TWh)Thermalof which:
Conventional coal, lignite
Advanced coal technology
Gas
Biomass
NuclearHydro+Geoth
Solar
Wind
Small Hydro

559
476

803
691

1207
1017

1881
1631

2846
2527

3,7%
3,8%

4,2%
3,9%

4,4%
4,7%

174
0
137
0
8
72
0
0
1,8

221
0
268
0
14
96
0
0
2,4

247
37
465
2
35
133
13
4
4,4

250
209
867
5
28
179
13
24
6,4

222
532
1372
16
23
238
10
41
7,1

2,4%
NA
7,0%
8,2%
4,9%
2,8%
22,4%
42,8%
2,9%

1,1%
126,2%
5,7%
13,2%
9,9%
3,3%
60,1%
48,9%
6,4%

-0,5%
14,3%
5,6%
12,0%
-2,0%
2,9%
-1,5%
11,9%
2,5%

CHP

2

4

10

19

19

4,6%

10,2%

3,2%

Final Energy Consumption (Mtoe)
Coal, lignite
Oil
Gas
Heat
Electricity
Wood and wastes

457
20
181
36
0,4
40
181

598
25
232
73
0,5
58
210

731
68
303
94
0,5
88
177

943
128
402
121
0,5
138
153

1192
195
508
143
0,5
210
136

2,7%
2,0%
2,5%
7,4%
3,7%
3,8%
1,5%

2,0%
10,8%
2,7%
2,5%
0,0%
4,3%
-1,7%

2,5%
5,4%
2,6%
2,1%
0,0%
4,5%
-1,3%

Industry
Transport
Household, Service, Agriculture

142
99
257

171
122
341

211
151
416

282
193
535

371
244
671

1,8%
2,1%
2,9%

2,1%
2,2%
2,0%

2,9%
2,4%
2,4%

CO2 Emissions (Mt of CO2), of which:Electricity generation
Industry
Transport
Household, Service, Agriculture

1217
379
201
275
163

1708
536
242
365
283

2358
684
270
454
598

3373
978
335
578
998

4652
1413
402
732
1398

3,4%
3,5%
-1,5%
2,9%
5,7%

3,3%
2,5%
1,1%
2,2%
7,8%

3,5%
3,7%
2,0%
2,4%
4,3%

135

Latin America%/ year
1990

2000

2010

2020

2030

1990/00 2000/10 2010/30

Overall indicators
Population (Million)
GDP (G € 99 ppp)
Per capita GDP (1000 € 99/cap)
Gross Inland Cons/GDP (toe/1000 € 99)
Gross Inland Cons per capita (toe/cap)% renewables in gross inland consumption
Electr. Consumption per capita (kWh/cap)
CO2 Emissions per capita (t of CO2/cap)
Transport fuels per capita (toe/cap)

435
2498
5,7
182
1,0
22%
1,1
2,1
0,25

514
3455
6,7
178
1,2
21%
1,6
2,5
0,29

589
4940
8,4
160
1,3
22%
2,0
2,8
0,34

658
6783
10,3
151
1,6
20%
2,6
3,3
0,40

717
8840
12,3
142
1,7
19%
3,3
3,8
0,46

1,7%
3,3%
1,6%
-0,2%
1,3%
-0,2%
3,4%
1,8%
1,7%

1,4%
3,6%
2,2%
-1,1%
1,1%
0,4%
2,5%
0,9%
1,6%

1,0%
3,0%
1,9%
-0,6%
1,3%
-0,9%
2,4%
1,6%
1,4%

Primary Production (Mtoe)
Coal, lignite
Oil
Natural gas
NuclearHydro,geothermal
Wood and wastes
Wind, solar, small hydro

577
21
378
75
3,2
34
65
0,5

808
24
542
103
6,3
48
83
0,6

1217
24
815
192
9,0
63
112
1,1

1662
29
1100
320
8,8
79
124
1,7

2142
38
1407
451
14,1
96
133
2,8

3,4%
1,3%
3,7%
3,2%
7,2%
3,5%
2,5%
1,3%

4,2%
-0,3%
4,2%
6,4%
3,5%
2,8%
3,0%
5,4%

2,9%
2,3%
2,8%
4,3%
2,3%
2,1%
0,9%
5,0%

Gross Inland Consumption (Mtoe)
Coal, lignite
Oil
Natural gas
Primary electricity
Wood and wastes

454
20
239
76
53
65

614
31
334
103
63
83

788
30
398
172
76
112

1024
37
499
274
90
124

1251
58
605
345
110
133

3,1%
4,2%
3,4%
3,1%
1,6%
2,5%

2,5%
-0,3%
1,8%
5,2%
2,0%
3,0%

2,3%
3,4%
2,1%
3,6%
1,9%
0,9%

Electricity Generation (TWh)Thermalof which:
Conventional coal, lignite
Advanced coal technology
Gas
Biomass
NuclearHydro+Geoth
Solar
Wind
Small Hydro

608
198

974
386

1355
573

1895
922

2561
1358

4,8%
6,9%

3,4%
4,0%

3,4%
4,4%

21
0
57
6
12
392
0
0
6,3

49
0
138
11
25
555
0,1
0,1
7,0

50
15
354
13
35
734
2,2
1,2
8,8

47
61
657
15
35
918
1,5
6,5
11,2

50
184
950
18
58
1113
0,8
19,5
11,9

8,5%

0,4%

9,3%
6,0%
7,2%
3,5%
30,6%
34,8%
1,1%

9,8%
1,9%
3,5%
2,8%
38,4%
27,5%
2,3%

-0,1%
13,3%
5,1%
1,7%
2,5%
2,1%
-4,9%
15,1%
1,5%

CHP

4

7

56

114

124

6,9%

22,3%

4,1%

Final Energy Consumption (Mtoe)
Coal, lignite
Oil
Gas
Heat
Electricity
Wood and wastes

346
13
188
39
0
42
64

469
15
254
50
0
70
81

612
14
321
66
0
103
109

786
17
406
94
0
148
120

950
19
492
110
0
201
128

3,1%
1,1%
3,1%
2,5%
14,9%
5,1%
2,4%

2,7%
-0,7%
2,4%
2,9%
0,0%
3,9%
3,1%

2,2%
1,6%
2,2%
2,6%
0,0%
3,4%
0,8%

Industry
Transport
Household, Service, Agriculture

137
115
102

189
150
129

248
202
162

315
264
207

365
327
257

3,3%
2,7%
2,4%

2,7%
3,0%
2,3%

2,0%
2,4%
2,4%

CO2 Emissions (Mt of CO2), of which:Electricity generation
Industry
Transport
Household, Service, Agriculture

919
157
166
321
86

1296
283
220
423
107

1629
311
272
594
141

2176
433
349
784
180

2722
620
383
979
212

3,5%
6,1%
2,9%
2,8%
2,2%

2,3%
0,9%
2,1%
3,5%
2,8%

2,6%
3,5%
1,7%
2,5%
2,1%

136

Asia
%/ year
1990

2000

2010

2020

2030

1990/00 2000/10 2010/30

Overall indicators
Population (Million)
GDP (G € 99 ppp)
Per capita GDP (1000 € 99/cap)
Gross Inland Cons/GDP (toe/1000 € 99)
Gross Inland Cons per capita (toe/cap)% renewables in gross inland consumption
Electr. Consumption per capita (kWh/cap)
CO2 Emissions per capita (t of CO2/cap)
Transport fuels per capita (toe/cap)

2793
5168
1,9
336
0,6
32%
0,4
1,5
0,05

3261
10317
3,2
250
0,8
22%
0,7
2,0
0,08

3658
18076
4,9
208
1,0
14%
1,1
2,8
0,11

4003
28120
7,0
177
1,2
10%
1,7
3,5
0,15

4278
39890
9,3
160
1,5
8%
2,4
4,3
0,19

1,6%
7,2%
5,5%
-2,9%
2,4%
-3,6%
5,8%
3,0%
4,7%

1,2%
5,8%
4,6%
-1,8%
2,7%
-4,4%
4,7%
3,5%
3,5%

0,8%
4,0%
3,2%
-1,3%
1,9%
-2,7%
3,9%
2,2%
2,6%

Primary Production (Mtoe)
Coal, lignite
Oil
Natural gas
NuclearHydro,geothermal
Wood and wastes
Wind, solar, small hydro

1673
688
300
109
23
26
523
4

2204
998
324
267
43
39
530
4

2921
1520
323
441
104
62
466
7

3269
1974
271
396
128
86
416
14

3668
2499
202
328
160
109
396
17

NA
3,8%
0,8%
9,4%
6,3%
3,9%
0,1%
1,0%

2,9%
4,3%
0,0%
5,1%
9,3%
4,8%
-1,3%
5,3%

1,1%
2,5%
-2,3%
-1,5%
2,2%
2,9%
-0,8%
4,1%

Gross Inland Consumption (Mtoe)
Coal, lignite
Oil
Natural gas
Primary electricity
Wood and wastes

1736
709
371
74
59
523

2581
1036
710
221
84
530

3765
1577
1161
390
171
466

4989
2089
1672
598
213
416

6369
2698
2175
856
243
396

4,0%
3,9%
6,7%
11,6%
3,6%
0,1%

3,8%
4,3%
5,0%
5,9%
7,3%
-1,3%

2,7%
2,7%
3,2%
4,0%
1,8%
-0,8%

Electricity Generation (TWh)Thermalof which:
Conventional coal, lignite
Advanced coal technology
Gas
Biomass
NuclearHydro+Geoth
Solar
Wind
Small Hydro

1447
1002

2944
2274

4998
3782

7905
6239

11964
9871

7,4%
8,5%

5,4%
5,2%

5,1%
4,9%

752
0
73
6
92
306
0
0
46

1699
0
352
11
170
449
0,1
2
49

2136
841
510
12
413
718
3,6
20
62

1985
3023
906
44
506
998
2,6
77
81

1598
6250
1632
114
637
1263
1,4
110
82

8,5%

2,3%

17,1%
5,3%
6,3%
3,9%
16,4%
105,5%
0,5%

3,8%
1,0%
9,3%
4,8%
48,5%
24,1%
2,4%

-1,4%
10,5%
6,0%
12,0%
2,2%
2,9%
-4,5%
8,8%
1,4%

4

15

161

400

513

13,4%

26,8%

6,0%

Final Energy Consumption (Mtoe)
Coal, lignite
Oil
Gas
Heat
Electricity
Wood and wastes

1405
444
292
35
15
98
522

1948
501
596
98
24
201
528

2812
798
987
185
24
357
462

3708
996
1451
254
24
585
398

4669
1164
1910
337
24
890
344

3,3%
1,2%
7,4%
10,7%
4,8%
7,5%
0,1%

3,7%
4,8%
5,2%
6,5%
0,0%
5,9%
-1,3%

2,6%
1,9%
3,4%
3,1%
0,0%
4,7%
-1,5%

Industry
Transport
Household, Service, Agriculture

530
166
730

756
268
924

1168
423
1222

1533
613
1562

1858
832
1979

3,6%
4,9%
2,4%

4,5%
4,7%
2,8%

2,3%
3,4%
2,4%

CO2 Emissions (Mt of CO2), of which:Electricity generation
Industry
Transport
Household, Service, Agriculture

4086
1108
1602
463
640

6438
2305
1797
800
1092

10204
3331
2782
1256
2133

14103
4671
3542
1818
3089

18512
6606
4135
2468
4016

4,7%
7,6%
1,7%
5,6%
5,5%

4,7%
3,7%
4,8%
4,6%
6,7%

3,0%
3,5%
2,0%
3,4%
3,2%

CHP

137

European Commission
EUR 20366 — World energy, technology and climate policy outlook 2030 — WETO
Luxembourg: Office for Official Publications of the European Communities
2003 — VI, 137 pp. — 21 x 29.7 cm
ISBN 92-894-4186-0
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B-1000 Bruxelles/Brussel
Tél. (32-2) 552 22 11
Fax (32-2) 511 01 84
E-mail: eusales@just.fgov.be
DANMARKJ. H. Schultz Information A/S
Herstedvang 12
DK-2620 Albertslund
Tlf. (45) 43 63 23 00
Fax (45) 43 63 19 69
E-mail: schultz@schultz.dk
URL: http://www.schultz.dk
DEUTSCHLAND
Bundesanzeiger Verlag GmbH
Vertriebsabteilung
Amsterdamer Straße 192
D-50735 Köln
Tel. (49-221) 97 66 80
Fax (49-221) 97 66 82 78
E-Mail: vertrieb@bundesanzeiger.de
URL: http://www.bundesanzeiger.de
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G. C. Eleftheroudakis SA
International Bookstore
Panepistimiou 17
GR-10564 Athina
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Fax (30-1) 325 84 99
E-mail: elebooks@netor.gr
URL: elebooks@hellasnet.grESPAÑA
Boletín Oficial del Estado
Trafalgar, 27
E-28071 Madrid
Tel. (34) 915 38 21 11 (libros)
Tel. (34) 913 84 17 15 (suscripción)
Fax (34) 915 38 21 21 (libros),
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E-mail: clientes@com.boe.es
URL: http://www.boe.es
Mundi Prensa Libros, SA
Castelló, 37
E-28001 Madrid
Tel. (34) 914 36 37 00
Fax (34) 915 75 39 98
E-mail: libreria@mundiprensa.es
URL: http://www.mundiprensa.com
FRANCE
Journal officiel
Service des publications des CE
26, rue Desaix
F-75727 Paris Cedex 15
Tél. (33) 140 58 77 31
Fax (33) 140 58 77 00
E-mail: europublications@journal-officiel.gouv.fr
URL: http://www.journal-officiel.gouv.fr
IRELAND

Photograph of Thalys on cover page by courtesy of Thalys International‘Energy, environment and sustainable development’ programme
European Commission
Directorate-General for ResearchContact: Domenico Rossetti di Valdalbero
Tel. (32-2) 29-62811
Fax (32-2) 29-94991
E-mail: domenico.rossetti-di-valdalbero@cec.eu.int

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Distribuidora de Livros Bertrand Ld.ª
Grupo Bertrand, SA
Rua das Terras dos Vales, 4-A
Apartado 60037
P-2700 Amadora
Tel. (351) 214 95 87 87
Fax (351) 214 96 02 55
E-mail: dlb@ip.pt
Imprensa Nacional-Casa da Moeda, SA
Sector de Publicações Oficiais
Rua da Escola Politécnica, 135
P-1250-100 Lisboa Codex
Tel. (351) 213 94 57 00
Fax (351) 213 94 57 50
E-mail: spoce@incm.pt
URL: http://www.incm.pt

Euro Info Service
Szt. István krt.12
III emelet 1/A
PO Box 1039
H-1137 Budapest
Tel. (36-1) 329 21 70
Fax (36-1) 349 20 53
E-mail: euroinfo@euroinfo.hu
URL: http://www.euroinfo.hu
MALTA
Miller Distributors Ltd
Malta International Airport
PO Box 25
Luqa LQA 05
Tel. (356) 66 44 88
Fax (356) 67 67 99
E-mail: gwirth@usa.net
NORGE

SUOMI/FINLAND
Akateeminen Kirjakauppa/
Akademiska Bokhandeln
Keskuskatu 1/Centralgatan 1
PL/PB 128
FIN-00101 Helsinki/Helsingfors
P./tfn (358-9) 121 44 18
F./fax (358-9) 121 44 35
Sähköposti: sps@akateeminen.com
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SVERIGEBTJ AB
Traktorvägen 11-13
S-221 82 Lund
Tlf. (46-46) 18 00 00
Fax (46-46) 30 79 47
E-post: btjeu-pub@btj.se
URL: http://www.btj.se
UNITED KINGDOMThe Stationery Office Ltd
Customer Services
PO Box 29
Norwich NR3 1GN
Tel. (44) 870 60 05-522
Fax (44) 870 60 05-533
E-mail: book.orders@theso.co.uk
URL: http://www.itsofficial.net
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Bokabud Larusar Blöndal
Skólavördustig, 2IS-101 Reykjavik
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SCHWEIZ/SUISSE/SVIZZERAEuro Info Center Schweiz
c/o OSEC Business Network Switzerland
Stampfenbachstraße 85
PF 492
CH-8035 Zürich
Tel. (41-1) 365 53 15
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Swets Blackwell AS
Hans Nielsen Hauges gt. 39
Boks 4901 Nydalen
N-0423 OsloTel. (47) 23 40 00 00
Fax (47) 23 40 00 01
E-mail: info@no.swetsblackwell.com
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POLSKA
Ars Polona
Krakowskie Przedmiescie 7
Skr. pocztowa 1001
PL-00-950 Warszawa
Tel. (48-22) 826 12 01
Fax (48-22) 826 62 40
E-mail: books119@arspolona.com.pl

Europress Euromedia Ltd
59, blvd Vitosha
BG-1000 Sofia
Tel. (359-2) 980 37 66
Fax (359-2) 980 42 30
E-mail: Milena@mbox.cit.bg
URL: http://www.europress.bg

ITALIACYPRUS

Licosa SpA
Via Duca di Calabria, 1/1
Casella postale 552
I-50125 Firenze
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Fax (39) 055 64 12 57
E-mail: licosa@licosa.com
URL: http://www.licosa.com

Cyprus Chamber of Commerce and Industry
PO Box 21455
CY-1509 Nicosia
Tel. (357-2) 88 97 52
Fax (357-2) 66 10 44
E-mail: demetrap@ccci.org.cy

Euromedia
Str.Dionisie Lupu nr. 65, sector 1
RO-70184 Bucuresti
Tel. (40-1) 315 44 03
Fax (40-1) 312 96 46
E-mail: euromedia@mailcity.com

EGYPT
The Middle East Observer
41 Sherif Street
Cairo
Tel. (20-2) 392 69 19
Fax (20-2) 393 97 32
E-mail: inquiry@meobserver.com
URL: http://www.meobserver.com.eg
MALAYSIAEBIC Malaysia
Suite 45.02, Level 45
Plaza MBf (Letter Box 45)
8 Jalan Yap Kwan Seng
50450 Kuala Lumpur
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Fax (60-3) 21 62 61 98
E-mail: ebic@tm.net.my
MÉXICO
Mundi Prensa México, SA de CV
Río Pánuco, 141
Colonia Cuauhtémoc
MX-06500 México, DF
Tel. (52-5) 533 56 58
Fax (52-5) 514 67 99
E-mail: 101545.2361@compuserve.com

Eurochamber of Commerce in South Africa
PO Box 781738
2146 Sandton
Tel. (27-11) 884 39 52
Fax (27-11) 883 55 73
E-mail: info@eurochamber.co.za
SOUTH KOREASLOVAKIA
Centrum VTI SR
Nám. Slobody, 19
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Tel. (421-7) 54 41 83 64
Fax (421-7) 54 41 83 64
E-mail: europ@tbb1.sltk.stuba.sk
URL: http://www.sltk.stuba.sk

The European Union Chamber ofCommerce in Korea
5th FI, The Shilla Hotel
202, Jangchung-dong 2 Ga, Chung-ku
Seoul 100-392
Tel. (82-2) 22 53-5631/4
Fax (82-2) 22 53-5635/6
E-mail: eucck@eucck.org
URL: http://www.eucck.org

SLOVENIJA
GV Zalozba
Dunajska cesta 5
SLO-1000 Ljubljana
Tel. (386) 613 09 1804
Fax (386) 613 09 1805
E-mail: europ@gvestnik.si
URL: http://www.gvzalozba.siTÜRKIYE
Dünya Infotel AS
100, Yil Mahallessi 34440
TR-80050 Bagcilar-Istanbul
Tel. (90-212) 629 46 89
Fax (90-212) 629 46 27
E-mail: aktuel.info@dunya.com
ARGENTINAWorld Publications SA
Av. Cordoba 1877
C1120 AAA Buenos Aires
Tel. (54-11) 48 15 81 56
Fax (54-11) 48 15 81 56
E-mail: wpbooks@infovia.com.ar
URL: http://www.wpbooks.com.ar
AUSTRALIA
Hunter Publications
PO Box 404
Abbotsford, Victoria 3067
Tel. (61-3) 94 17 53 61
Fax (61-3) 94 19 71 54
E-mail: jpdavies@ozemail.com.au

EESTI

BRESIL

Eesti Kaubandus-Tööstuskoda(Estonian Chamber of Commerce and Industry)Toom-Kooli 17
EE-10130 Tallinn
Tel. (372) 646 02 44
Fax (372) 646 02 45
E-mail: einfo@koda.ee
URL: http://www.koda.ee

Livraria Camões
Rua Bittencourt da Silva, 12 C
CEP
20043-900 Rio de Janeiro
Tel. (55-21) 262 47 76
Fax (55-21) 262 47 76
E-mail: livraria.camoes@incm.com.br
URL: http://www.incm.com.br

LUXEMBOURG

Renouf Publishing Co. Ltd
5369 Chemin Canotek Road, Unit 1
Ottawa, Ontario K1J 9J3
Tel. (1-613) 745 26 65
Fax (1-613) 745 76 60
E-mail: order.dept@renoufbooks.com
URL: http://www.renoufbooks.com

SOUTH AFRICA
ROMÂNIA

B@LGARIJA

Alan Hanna’s Bookshop
270 Lower Rathmines Road
Dublin 6
Tel. (353-1) 496 73 98
Fax (353-1) 496 02 28
E-mail: hannas@iol.ie

Messageries du livre SARL
5, rue Raiffeisen
L-2411 Luxembourg
Tél. (352) 40 10 20
Fax (352) 49 06 61
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MAGYARORSZÁG

SRI LANKA
EBIC Sri Lanka
Trans Asia Hotel
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A. Gardiner Mawatha
Colombo 2
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T’AI-WAN
Tycoon Information Inc
PO Box 81-466
105 Taipei
Tel. (886-2) 87 12 88 86
Fax (886-2) 87 12 47 47
E-mail: euitupe@ms21.hinet.net
UNITED STATES OF AMERICA
Bernan Associates
4611-F Assembly Drive
Lanham MD 20706-4391
Tel. (1-800) 274 44 47 (toll free telephone)
Fax (1-800) 865 34 50 (toll free fax)
E-mail: query@bernan.com
URL: http://www.bernan.com
ANDERE LÄNDER
OTHER COUNTRIESAUTRES PAYS
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Wahl/Please contact the sales office ofyour choice/Veuillez vous adresser aubureau de vente de votre choix
Office for Official Publications of the European
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E-mail: info-info-opoce@cec.eu.int
URL: publications.eu.int
2/2002

European

Two major policy issues are addressed: (1) the outlook of the European Union gas market
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The world energy, technology and climate policy outlook (WETO) positions Europe in a
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World energy, technology and climate policy outlook

WETO

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OF THE EUROPEAN COMMUNITIESEUR 20366