Comparisons with IEA's World Energy Outlook 2010

The International Energy Agency (IEA) in its World Energy Outlook 2010 provides projections comparable with those in IEO2011. In both reports, the latest historical year of data upon which the projections are based is 2008, and the projections extend to 2035. As a result, two time periods can be compared—2008 to 2020 and 2020 to 2035.

IEA's World Energy Outlook 2010 presents three scenario cases: Current Policies Scenario (formerly the Reference Scenario), New Policies Scenario, and 450 Scenario. Much of the text of the report concentrates on the New Policies Scenario, which "takes account of the broad policy commitments and plans that have been announced by countries around the world, including the national pledges to reduce greenhouse gas emissions and plans to phase out fossil-energy subsidies even where the measures to implement these commitments have yet to be identified or announced."⁴⁰ The IEO2011 Reference case is most directly comparable with the World Energy Outlook 2010 Current Policies Scenario.

The IEA Current Policies Scenario has a world oil price trajectory similar to that in the IEO2011 Reference case, with the IEA oil price projections for 2035 about 8 percent higher than those in the IEO2011 Reference case. The resulting projections of demand for liquid fuels are similar in the two outlooks. In the IEO2011 Reference case, projected demand for liquid fuels in 2035 is 107.5 million barrels per day (plus another 4.7 million barrels per day of biofuels), compared with the IEA Current Policies Scenario projection of 107.4 million barrels per day of liquids in 2035 in (plus another 5.3 million barrels per day of biofuels).⁴¹

One noteworthy difference between the two cases is in their projections for the natural gas market in North America and, in particular, the United States. In the IEO2011 Reference case, the average price for U.S. imports of natural gas is relatively flat from 2009 to 2018 and increases slowly thereafter to $6.83 per million Btu (real 2009 dollars) in 2035. In the IEA Current Policies Scenario, however, the price for U.S. imports of natural gas increases by 70 percent from 2009 to 2015 and then rises to $11.20 per million Btu in 2035. This could explain why U.S. natural gas consumption in the IEO2011 Reference case increases by an average of 0.5 percent per year from 2008 to 2035, but in the IEA Current Policies Scenario it does not increase at all over the same period.

For the period from 2008 to 2020, world energy consumption in the IEA Current Policies Scenario increases by an average of 1.5 percent per year, compared with 1.7 percent per year in the IEO2011 Reference case (Table I1). The slower near-term growth in IEO2011 may reflect, in part, the different release dates for IEO2011 and IEA's World Energy Outlook 2010. The IEO2011 projections were prepared when preliminary assessments of the global recession were becoming available (specifically, as reflected in the near-term estimates of gross domestic product [GDP] in IHS Global Insight's November 2010 release), whereas the World Energy Outlook 2010 was released in November 2010, and its projections were formulated several months in advance of the report's release date. Thus, the IEA report may not have fully anticipated the faster-than-expected economic recovery in many key non-OECD countries. In fact, IEO2011 projects faster demand growth than IEA over the 2008 to 2020 period in both China and India, which are the two economies least affected by the economic downturn of 2008-2009.

By OECD region, the largest differences between the IEO2011 and IEA projections are for Europe and the United States. IEA projects a 0.1-percent average yearly increase in OECD Europe's total energy consumption from 2008 to 2020, compared with a 0.5-percent average increase in the IEO2011 Reference case. For the United States, IEA also projects a 0.1-percent average yearly increase from 2008 to 2020, compared with a 0.4-percent average increase over the same period in the IEO2011 Reference case.

In some of the near-term projections for the non-OECD regions, there is wider variation between the IEA and IEO2011 reports. For the entire group of non-OECD countries, the IEA projections for total energy consumption are the same as those in the IEO2011 Reference case, with total energy consumption growing by 2.7 percent per year from 2008 to 2020. On a regional basis, projected growth rates in the IEA report exceed those in IEO2011 for non-OECD Europe and Eurasia, the Middle East, and Central and South America. For non-OECD Europe and Eurasia, IEA projects annual increases in energy consumption averaging 0.9 percent per year from 2008 to 2020, whereas IEO2011 projects average increases of 0.3 percent per year. For the Middle East, IEA projects a 2.8-percent average annual increase in total energy use, compared with 2.4 percent in IEO2011. For non-OECD Central and South America, IEA and IEO2011 project average increases of 2.2 percent and 1.8 percent, respectively; however, IEO2011 includes Chile in OECD Americas, whereas IEA includes Chile in non-OECD Central and South America.

For non-OECD Asia and Africa, IEO2011 projects more rapid growth in energy consumption than IEA over the 2008-2020. In the IEO2011 Reference case, China's energy use increases by 4.2 percent per year over, compared with 3.7 percent per year in the IEA projection. Similarly, IEO2011 projects 3.8-percent average annual growth in India's energy consumption, compared with 3.5 percent in the IEA projection; and for Africa, IEO2011 projects 1.9-percent average annual growth in energy use, compared with 1.6 percent in the IEA projection.

For the period from 2020 to 2035, the overall differences between the IEO2011 and IEA projections narrow, with worldwide energy demand growing by 1.5 percent per year in both outlooks (Table I2). At the regional level, however, there are some substantial differences between the outlooks. For example, total OECD energy demand increases more than twice as fast in the IEO2011 Reference case, with the largest differences for the OECD Americas and OECD Asia regions. Again, the difference for OECD Americas may be explained in part by the inclusion of Chile in the OECD Americas region in IEO2011, as well as much stronger demand growth in the United States—by far the region's largest energy consumer—toward the end of the projection. In IEO2011, energy demand in the OECD Americas region increase by 0.8 percent per year on average from 2020 to 2035, with U.S. energy consumption growing by 0.6 percent per year. In contrast, IEA's Current Policies Scenario shows U.S. energy use rising by an anemic 0.2 percent per year and OECD North America's energy use rising by only 0.3 percent per year.

In the projections for non-OECD energy consumption, the largest differences are for India, Africa, and Central and South America. The IEO2011 Reference case projects annual growth rates of energy consumption averaging 2.7 percent for India, 1.9 percent for Africa, and 2.3 percent for Central and South America from 2020 to 2035. In comparison, IEA projects average annual growth rates of 3.4 percent for India, 1.2 percent for Africa, and 1.4 percent for Central and South America. In each case, the likely explanation is different GDP growth assumptions. IEA assumes that India's GDP will expand by 5.6 percent per year on average from 2020 to 2035, whereas the IEO2011 Reference case assumes a 4.3-percent average. On the other hand, the IEO2011 Reference case assumes that Africa's GDP will expand by 3.3 percent per year, compared with 2.8 percent per year in the IEA Current Policies Scenario; and IEO2011 assumes GDP growth averaging 3.6 percent per year in Central and South America, compared with IEA's assumption of 2.7 percent per year.

The projections vary not only with respect to levels of energy demand but also with respect to the mix of primary energy inputs. For the 2008-2020 period, IEA expects much faster growth in the use of coal and slower growth in the use of nuclear and renewable energy sources than does IEO2011 (Table I3). The IEA projection shows world coal consumption increasing by an annual average of 2.2 percent from 2008 to 2020, compared with 1.4 percent in the IEO2011 Reference case. The IEA renewables projections were adjusted for this comparison by removing biofuels from the totals; but there are still other differences between the projections for consumption of renewables, because IEA includes an estimate for traditional, nonmarketed biomass in its renewable energy projections, whereas the IEO2011 projections do not attempt to estimate the use of nonmarketed renewable fuels (which, in fact, is not likely to expand significantly, because developing countries tend to move away from traditional fuels to commercial fuels as their energy infrastructures and standards of living increase). Still, consumption of traditional fuels in some developing countries is estimated to be quite large, with effects on total renewable energy use that would tend to mask any growth in the consumption of energy from marketed, commercial renewable sources—particularly, wind and other nonhydroelectric renewables.

Differences between the IEA and IEO2011 projections for nuclear energy are explained in part by different expectations for the OECD region, which accounted for 84 percent of the world's total nuclear power use in 2008. Neither the IEA or IEO2011 projections reflect consideration of policy responses to Japan's Fukushima Daiichi nuclear disaster on nuclear generation from existing or new facilities. Although the IEA Current Policies Scenario projects more rapid growth for nuclear power in the OECD Asia region than is projected in the IEO2011 Reference case, it also projects a decline in OECD Europe's nuclear power demand. In contrast, in the IEO2011 Reference case, nuclear power use in OECD Europe rises by 1.4 percent per year through 2020. Because OECD Europe consumes twice as much nuclear electricity as OECD Asia, the 1.4-percent per year decline projected by IEA for OECD Europe offsets the projected increases for other OECD regions that are larger than those in the IEO2011 Reference case.

IEO2011 also projects higher growth in non-OECD nuclear power demand than does the IEA Current Policies Scenario over the 2008-2020 period. In this case, the IEO2011 nuclear growth projections are higher than the IEA projections for every region except China and Central and South America. However, IEA's higher growth rates for nuclear power in China and Central and South America are not sufficient to offset the more robust growth rates for the rest of the non-OECD regions in the IEO2011 projections.

For the period from 2020 to 2035, the most noticeable differences between the IEO2011 Reference case and IEA projections are for nuclear power and renewable energy sources (Table I4). In the IEA projection, the average annual growth rate for world nuclear electricity consumption slows from 2.1 percent in the 2008-2020 period to 1.1 percent in the 2020-2035 period; IEO2011 projects average annual increases of 2.2 percent from 2008 to 2020 and 2.1 percent from 2020 to 2035. In the IEA Current Policies Scenario, renewable energy use increases by 2.0 percent per year over the 2008-2020 period and by 1.5 percent per year from 2020 to 2035; in the IEO2011 Reference case, renewable energy use increases by 4.0 percent per year from 2008 to 2020 and 1.9 percent per year from 2020 to 2035.

Comparisons with IEO2010

The IEO2011 outlook for total energy consumption in 2020 is 29 quadrillion Btu (about 5 percent) higher than the outlook that was published in IEO2010. A faster economic recovery from the global downturn in 2008 and 2009 resulted in faster than expected growth in the developing world, particularly China and India. As a result, total marketed energy consumption in 2020 in the IEO2011 Reference case is 619 quadrillion Btu, as compared with 590 quadrillion Btu in IEO2010 (Table I5). China accounts for 19 quadrillion Btu (or about 65 percent) of the net difference in world energy use between the two outlooks in 2020, and India adds another 5 quadrillion Btu (17 percent).

The near-term differences between the IEO2011 and IEO2010 projections continue throughout the projection. IEO2011 projects total world energy use in 2035 that is 31 quadrillion Btu (about 4 percent) higher than the IEO2010 projection for 2035. Again, higher demand in China and India explains much of the difference, with the two countries accounting for the largest upward revisions in IEO2011 relative to last year's report. The two countries combined account for about 70 percent of the net difference between the two outlooks for 2035, with most of the remainder attributed to OECD Europe. Projections for marketed energy use in every other region are nearly the same in IEO2011 and IEO2010.

Along with regional differences between the IEO2011 and IEO2010 projections, there are some differences in the projected mix of energy resources consumed (Table I6). The largest difference is in the 2020 projection for world coal consumption, which in the IEO2011 Reference case is 12 quadrillion Btu higher than projected in IEO2010. In 2020, demand for every type of energy except natural gas is higher in IEO2011 than in IEO2010, reflecting somewhat lower oil prices, increased demand for coal in China, and additional plans to increase the use of energy sources that do not emit greenhouse gases—notably, nuclear power and renewables.

In 2035, demand for all energy sources is higher in IEO2011 than in IEO2010, but the largest increases relative to last year's report are for natural gas and renewable energy. The upward revision of natural gas use in IEO2011 reflects the expectation that, in the long term, new sources of unconventional natural gas worldwide will keep markets well supplied and prices economically competitive with other fuel sources. The increase in renewable energy use relative to IEO2010 is for the most part a continuation of the mid-term upward revision in 2020, carried through the end of the projection period.