World Energy Outlook 1998

Paris, France: International Energy Agency, 1998. — 475 p. — ISBN: 9789264161856.
This Outlook aims to identify and discuss the main issues and uncertainties affecting world energy demand and supply over the period to 2020. It does so in the framework of a “business as usual” projection which assumes energy policies existing before the Kyoto Conference of December 1997 remain in place and that no new policies are adopted to reduce energy-related greenhouse gases.
The Outlook projects world energy demand to grow by 65% and CO₂ emissions by 70% between 1995 and 2020 unless such new policies are put in place. It assumes a rate of world economic growth of 3.1% p.a. (1990 US dollars and purchasing power parity), close to the actual rate since 1971. Two-thirds of the increase in energy demand over the period 1995-2020 comes from China and other developing countries.
Fossil fuels are expected to meet 95% of additional global energy demand from 1995 to 2020. Oil is used increasingly to fuel rapidly growing demands for road and air transport. Coal remains important in power generation because of its low cost, when used near to producing areas, in both developed and developing countries. Where pipelines exist, or can be put in place, natural gas is the preferred fuel for many applications, especially for new power stations. Restructuring and facilitating the international transit of natural gas will need to be extended to allow the further use of gas worldwide. Reserves of both oil and natural gas will need to be further developed worldwide. This is especially the case in Russia and the Caspian Basin, where major opportunities will arise to supply European and Asian markets.
The oil-importing countries dependence on supplies from the Middle East will increase until liquid fuels from unconventional sources (shale oil, tar sands and conversion from coal, biomass or gas) begin to play an increasingly important role as 2020 approaches. Oil prices could rise during the course of this shift. With increased reliance on Middle East oil and the expected transition to the use of non-conventional liquid fuels, the probability of supply disruptions and price shocks could rise.
The Outlook shows the substantial reductions in CO₂ emissions that will be necessary to meet the commitments made at the Kyoto Conference. The commitments adopted there will affect the future growth and pattern of world energy demand. The challenge now is to identify policies that will ensure that these commitments are in fact met.
New policies will be required if the use of nuclear power and renewable energy sources is to help reduce fossil fuel consumption and greenhouse gas emissions. These policies would encourage the development of new designs for less costly nuclear power plants and find acceptable long-term solutions for radioactive wastes. Unit costs of renewable energy must be reduced and, in some cases, environmental problems posed by the renewables must be solved.
Energy intensity (energy use per unit of economic activity) will continue to fall, as in the past, through the introduction of new technologies, economic and industrial restructuring and the substitution of commercial for non-commercial fuels. These processes have already been taken into account in the projection. In the past, energy trends have been remarkably stable and so major new policies will be required to reduce energy intensity in order to stop the growth in CO₂ emissions. Some of these policies will tap the no-regret potential for reducing CO₂ emissions. All of these policies will need to take account of economic, social and political constraints.
Rapidly growing electricity demand and the need for climate-friendly technologies in non-OECD countries will require foreign investment as well as financing from domestic sources. This, in turn, may require restructuring, privatisation and regulatory changes in the electricity industries in these countries. The Kyoto Protocol and its further developments will encourage sustainable development projects that seek out the lowest cost means of abating CO₂ emissions in developing countries.