Principal Research Results

The World Energy Supply and Demand Projections to 2050

BackgroundAnalyzing the future trend of global energy supply and demand is important for Japan because it depends on energy resourcefrom foreign countries. There are concerns that the energy demand increase in Asia especially in China may accelerate the global
warming and the depletion of fossil fuel resource such as oil. Quantitative approach to these points is indispensable to propose Japan’s
energy supply and demand strategy and preventive measures to global warming.

Objectives
Our purpose of this study is to obtain the future trend of world energy supply and demand and energy prices, and evaluate
the possibility of resource depletion such as oil in the next five decades. In order to get the quantitative forecasts, we use CRIEPIs’
World Energy Prices Model(WEPM) which enables us to get the projections by regions such as Asian NIES, ASEAN, China, otherAsia, G7 nations and the other developed and non-developed countries.

Principal Results
One of the most characterized features of WEPM is that international fossil fuel prices are endogenously determined fromthe demand and supply balances of world markets. Endogenous price determination enables us to forecast the energy prices that adjusted to the trend of world energy supply and demand. Table 1 shows the main results using WEPM.
(1) The primary energy demand: In the forecast period, from 2000 to 2050, both the annual growth rate of GDP and primary energy
demand will decrease to 1.7% and 1.0% respectively. A relatively high expansion of primary energy demand continues in Asia 2.4% annually - , while the growth becomes duller in G7 nations, 0.5% annually, because of the progress of energy conservation.
(2) The primary energy supply: In the Asian countries especially in China and India, the primary energy supply will be still highly dependent on coal in the forecasting period, while substitution from oil to the natural gas advances in G7 nations. In the entire world,
the oil and coal share of the primary energy decreases from the current state by 4-5 points, resulting 34.4% and 21.9% respectively
in 2050. On the other hand, the natural gas share expands from 24.4% in 2000 to 34.0% in 2050. According to WEPM, oil resources will not be depleted in the next five decades because the demand simulated by WEPM will be smaller than remaining conventional oil reserves.
(3) Energy prices: Using WEPM, we calculated the international oil price that balances the above-mentioned supply and demand. Theoil price (2002 US dollar in real term) goes without major change until 2025. From 2025 the oil price rises as supply of the conventional type oil is stringent and OPEC share expands, leading to 36.8 dollar per barrel in 2050. The LNG price of Asia is slightly
higher than that of oil prices. Moreover, the coal price will decrease in real term after the latter half of the projection period, because of fuel shifts to the natural gas etc.
(4) The amount of the CO2 emission: CO2 emission originated from energy consumption increases to 1.7 times in 2050 compared tothat in 2000, and becomes 38.4 billion tons (CO2 conversion). 70 percent of this increment is due to Asia and this region’s share of
the emission of the world goes up from 24% in 2000 to 42% in 2050.

Future Developments
We are going to update periodically above world energy supply and demand projections. Moreover, we will analyze the impacts of different preventive measures taken by governments to global warming.
Main Researcher: Yuko Hoshino,
Research Economist, Energy and Environment Policy Sector, Socio-economic Research Center
Reference Hoshino, Yuko and Norihisa Sakurai, 2004, “The world energy supply and demand projections to 2050”, CRIEPI Y03027

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1. Socio-economy - Clarification of management environments

Table 1 Main Projection Results
Actualyear
World Primary Energy Demand (MTOE)
G7 countries
Other OECD countriest
Asian countries
China
Other Non-OECD countries
World Crude oil Production (Mt)
OPEC
Non-OPECWorld Primary Energy Prices
Crude Oila (US$/bbl)
Cude Oil (2002US$/bbl)
Steam Coalb (US$/t)
Steam Coal (2002US$/t)
Asian LNGc (US$/MBtu )Asian LNG (2002US$/MBtu)
World CO2 Emission (100MtCO2)
Asia (include China, India)

2000
8,667
3,500
1,185
1,575
723
2,407
3,550
1,453
2,097

2025
11710
4045
1242
3626
1868
2796
4961
3455
1505

30.4
31.6
36.0
37.5
4.7
4.9
220
52

40.5
23.6
67.8
39.5
7.5
4.3
330
117

growth Notea Crude oil: WTI spot price,
rate
2050
00-50 b Steam Coal :North West Europe market price,c Asian LNG: LNG import CIF price of Japan,
14087
1.0%
4407
0.5%
1282
0.2%
5157
2.4%
2672
2.6%
3241
0.6%
5326
0.8%
4662
2.4%
664
- 2.3%
103.1
36.8
81.0
28.9
18.6
6.7
384
161

2.5%
0.3%
1.6%
- 0.5%
2.8%
0.6%
1.1%
2.3%

Fig.1 Possibility of oil depletion
Considering the accumulated oil production for the projection period, oil depletion doesn't seem tohappen by 2050 if remaining reserves can be used (in shadowed part).

Fig.2 Outlook of primary energy priceFig.3 Outlook of primary energy price(US dollar in real term)(2002 US dollar in nominal term)

International crude oil price in real term rises due tostringent supply and demand of the conventional type oil
after about 2025.
Note) The recent short-term price fluctuation is ignored
because this projection is based on the long-term supplydemand.

International crude oil price in nominal term rises 2.5%
annually (average during 2000-2050). Coal price decreases
because of the fuel shift to the natural gas after the year
2040.
Note) The recent short-term price fluctuation is ignored
because this projection is based on the long-term supplydemand.

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