Avoiding a catastrophe

The emergence of China and India on the world economy still unfolds. Lifestyles are evolving fast, and that means more demand, more energy consumption and more greenhouse gas emissions. But what of the impact on climate change?
China is now the world’s second largest energy market, and its CO2 emissions level has more than doubled since 1985. With more economic expansion ahead, the government is acting to curb energy intensity. However, given current policies, the International Energy Agency sees China’s primary energy demand nonetheless rising, from 1,742 Mtoe (million tonnes of oil equivalent) in 2005 to 3,819 Mtoe in 2030.The IEA’s World Energy Outlook 2007 also sees slowing in industrial use of energy from 2015, with a shift towards electricity from coal. There is little doubt that stricter enforcement of existing policies, as well as some new ones, would improve the picture even more, the IEA says, reducing demand for oil and coal, though boosting it for nuclear energy, renewables and natural gas. With more efficiency, the benefits to China would be economic as well as environmental, and given the country’s weight in the world, the planet would win out too.As for India, its energy demand was also rising by some 3.2% per year in 2000- 2005, and in 2005 stood at the level of Japan–about 537 Mtoe. The IEA’s business-as-usual scenario sees industrial energy demand accelerating to 4.7% per year in 2005-15, fuelled by infrastructure needs. Transport demand also surges. India would become the largest CO2 emitter in the world by 2015. Again, as with China, this picture could change if new policies under consideration were implemented, with coal savings being particularly high, and savings in investment costs as well.Given the IEA’s base scenarios, the hope must clearly be that China and India will implement new policies, especially as the report’s authors emphasise that continued development “need not be incompatible” with environmental goals.

But what if China’s and India’s economies grew even faster than expected? Indeed, what if they caught up in GDP per capita with the OECD?This scenario, the report says, would require a level of energy use beyond the world’s energy resource endowment to provide. It would also be unsustainable without new policies, outstripping the planet’s absorptive capacity. Take oil. If per capita oil demand in China and India were to rise to current US levels, under present policies the combined increase in their oil demand would be almost twice the level of current world oil demand. Without major changes, total world demand would deplete proven oil reserves in 15 years. And if their per capita CO2 emissions reached US levels, world emissions would be three times higher than today. In other words, without new policies, more co-operation and different development paths, for the IEA, the effect on climate change would simply be “catastrophic”. RJC
IEA (2007), World Energy Outlook 2007: China and India Insights, Paris. ISBN 9789264027305

©OECD Observer No. 264/265, December 2007-January 2008

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