Contrary to popular belief, more energy demand does not necessarily mean supplies will be exhausted any sooner.
In the short-term, increased demand from 2.4 billion people in China and India – without taking into account other emerging economies in Asia – could push up prices and open new sources.
"I don’t think energy is a zero-sum game," said Kaustav Mukherjee, of international consultancy AT Kearney. "The industry doesn’t work that way."
At current growth rates and without price increases, the existing supplies could be exhausted in 15 years.
In the three decades to 2004, the percentage of the world’s energy supply consumed by China doubled from 7.2% to 14.7%. The rest of Asia also increased its consumption from 6.2% to 11.7%. Meanwhile, the share consumed by Organization for Economic Cooperation and Development (OECD) countries declined from 62.3% to 49.8%. This does not mean that OECD countries are using up less energy. Rather, total world supply almost doubled from 6,035 millions of tons oil equivalent to 11,059 million tons.
In the years ahead, demand from India and China will increase faster. Per capita energy use in both countries is still much lower than in the West but the gap will close as incomes rise and people can afford more energy-demanding lifestyles. Already, the Organization of Petroleum Exporting Countries (OPEC) supplies more oil to Asia than to all the other regions of the world combined.
"Going forward, Asia is expected to see the largest energy and oil demand growth rates of any region in the world," wrote Abdalla El-Badri, secretary general of OPEC.
Its thirst for energy has led China to some dubious deals around the world. It has supported ethically dubious regimes in Sudan, Nigeria, Cameroon and Myanmar in return for natural resources.
At the same time, energy producers are constantly looking for new energy sources be it clean energy or simply new reserves of old and dirty sources like coal and oil.
China, for example, which relies on coal for 70% of its energy, has set the ambitious target of meeting 15% of its energy needs from renewable resources by 2020. Considerable investments are being made in areas such as hydroelectric and nuclear energy.
Meanwhile, India, with the world’s fourth largest reserves of coal but little else, struggles to keep the lights on.
"We are dependent on imports for 70% of our oil demand," said Ajay Dua, India’s secretary for industrial policy and promotion. "The electricity situation is improving… Our GDP could be growing 1-1.5% faster if we could provide enough electricity."
How India and China proceed on energy policy is likely to have an enormous impact on global energy flows.
"Unless we maintain a good understanding of what is happening in Asia we have no chance of making an accurate assessment of global trends," wrote Claude Mandil, executive director of the International Energy Agency.
You must log in to post a comment.
Yes, I would like to receive emails from China Economic Review. (You can unsubscribe anytime)
Copyright © 2018 SinoMedia Group Limited All rights reserved