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Chapter 2 Energy Consumption by End-Use Sector In the IEO2007…
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Chapter 2
Energy Consumption by End-Use Sector
In the IEO2007 projections, end-use energy consumption depends on
resource endowment, economic growth, and other
political, social, and demographic factors.
One way of looking at the future of world energy mar- demand for personal travel in both the developing and
kets is to consider trends in energy consumption at the mature economies. Increases in urbanization and in per-
end-use sector level. With the exception of the transpor- sonal incomes have contributed to increases in air travel
tation sector, which is dominated by petroleum-based as well as increased motorization (i.e., more vehicles) in
liquids products at present, the mix of energy use in the the growing economies. Modal shifts in the transport of
residential, commercial, and industrial sectors varies goods are expected to result from strong GDP growth in
widely by region, depending on a combination of both OECD and non-OECD economies. For freight
regional factors, such as the availability of energy transportation, trucking is expected to lead the growth
resources, the level of economic development, and polit- in demand for transportation fuels. In addition, as trade
ical, social, and demographic factors. This chapter out- among countries increases, the volumes of freight trans-
lines IEO2007 reference case projections for delivered ported by air and marine vessels is expected to increase
energy consumption by end-use sector in the OECD and rapidly over the projection period [1].
non-OECD regions.
In the price environment of the past several years, alter-
native transportation fuels have received growing atten-
Transportation Sector tion worldwide. The United States, for instance, has
Energy use in the transportation sector includes the passed legislation to increase the amount of ethanol in
energy consumed in moving people and goods by road, the U.S. liquids mix and has increased funding for
rail, air, water, and pipeline. The road transport compo- research on cellulosic biofuels. In OECD Europe, there
nent includes light-duty vehicles, such as automobiles, has been a major push to increase the use of alternative
sport utility vehicles, minivans, small trucks, and motor- fuels for transportation, including natural gas. Alterna-
bikes, as well as heavy-duty vehicles, such as large tive fuels remain fairly expensive, however. Barring any
trucks used for moving freight and buses for passenger widespread increase in penetration of new technologies,
travel. Growth in economic activity and population whether driven by policy changes or other factors, the
growth are the key factors that determine transportation world's use of alternative fuels in the transportation sec-
sector energy demand. Economic growth spurs growth tor is expected to remain relatively modest through 2030
in industrial output, which requires the movement of in both OECD and non-OECD countries.
raw materials to manufacturing sites as well as move-
OECD Countries
ment of manufactured goods to end users. In developing
economies, increased economic activity expands per- Energy demand for transportation in the OECD econo-
capita income; and as standards of living rise, demand mies is projected to grow at an average annual rate of 0.9
for personal transportation increases. percent, from 57.9 quadrillion Btu in 2004 to 63.7 qua-
drillion Btu in 2015 and 73.4 quadrillion Btu in 2030
Over the next 25 years, demand for petroleum and other (Figure 25). As a whole, the OECD transportation sector
liquid fuels is expected to increase more rapidly in the can be characterized as fully established, with extensive
transportation sector than in any of the other end-use infrastructure that includes highways, airport facilities,
sectors. In the OECD countries, which are projected to and rail systems. Transportation uses are expected to
remain the greatest users of energy for transportation, account for nearly all the growth in demand for liquids
the transportation sector's share of total liquids demand in the OECD countries over the projection period.
is projected to rise from 58 percent in 2004 to 63 percent
in 2030. In the non-OECD countries, the transportation In the United States, the transportation sector contin-
sector is projected to account for a rising share of liquids ues to account for almost one-fourth of the country's
consumption, and the liquids share of transportation total energy consumption; and in the IEO2007 reference
energy use grows from 42 percent in 2004 to nearly 50 case, U.S. transportation energy demand is projected to
percent in 2030. grow from 27.9 quadrillion Btu in 2004 to 32.1 quadril-
lion Btu in 2015 and 39.3 quadrillion Btu in 2030. The
A primary factor contributing to the expected increase in United States is the largest user of transportation energy
energy demand for transportation is steadily increasing among the OECD nations and is projected to consume
Energy Information Administration / International Energy Outlook 2007 19
54 percent of the region's total for the transportation sec- transportation sector at an average rate of 2.3 percent
tor in 2030. Freight trucks are projected to be the fastest per year, from 1.8 quadrillion Btu in 2004 to 2.3 quadril-
growing mode of travel in the United States, with vehi- lion Btu in 2015, and 3.3 quadrillion Btu in 2030. The
cle miles traveled by freight trucks increasing at an aver- projected increase in transportation fuel use is based
age rate of 2.2 percent per year from 2004 to 2030, while on expected growth in trade with the United States
their energy use increases by 1.8 percent per year. U.S. and overall improvement in the country's standard of
air travel is projected to increase by an average of 1.7 living [3].
percent per year over the period; however, advanced
aircraft technologies are expected to improve the effi- Transportation energy demand in OECD Europe is pro-
ciency of air travel, and so fuel use for air travel grows by jected to increase by only 0.2 percent per year, from cur-
only 1.4 percent per year. rent usage of 18.5 quadrillion Btu in 2004 to 18.9
quadrillion Btu in 2015 and 19.6 quadrillion Btu in 2030.
Income growth and stable fuel prices are expected to The transportation share of total energy use in OECD
continue the demand for larger, more powerful vehicles Europe is projected to decline slightly, from 23 percent
in the United States; however, advanced technologies in 2004 to about 22 percent in 2030. Low population
and materials are expected to provide increased perfor- growth, high taxes on transportation fuels, and environ-
mance and size while improving new vehicle fuel econ- mental policies to discourage growth in transportation
omy. In March 2006, the National Highway Traffic energy use are expected to slow the growth of transpor-
Safety Administration finalized corporate average fuel tation demand in OECD Europe.
economy (CAFE) standards requiring higher fuel econ-
Non-OECD Countries
omy performance for light-duty trucks in model years
(MY) 2008 through 2011 [2]. The new CAFE standards The projected average growth rate of transportation
specify a continuous mathematical function that deter- energy use in the non-OECD countries from 2004 to
mines minimum fuel economy requirements by vehicle 2030, at 2.9 percent per year, is more than triple the pro-
footprint, defined as the wheelbase (the distance from jected rate for OECD countries, and their use of liquids
the center of the front axle to the center of the rear axle) in the transportation sector is expected to double over
times the average track width (the distance between the the period (Figure 25). Among the non-OECD countries,
center lines of the tires) of the vehicle in square feet. U.S. China, India, and the nations of Central and South
fuel economy standards for cars are assumed to remain America are expected to be significant contributors to
at the current (2004) level of 27.5 miles per gallon the growth in transportation sector energy consump-
through 2030. tion. China and India are expected to show the largest
increases among the non-OECD countries. The com-
In Mexico, strong GDP growth (3.6 percent per year) bined growth rate for transportation energy use in all the
is projected to increase energy consumption in the countries of Central and South American economies is
projected to be similar to that in India.
Figure 25. OECD and Non-OECD Transportation Historically, growth in transportation activity has been
Sector Delivered Energy Consumption, tied to income growth, indicating a strong relationship
2004-2030 between per-capita GDP and passenger car travel per
Quadrillion Btu capita in countries with developing economies [4]. In
80 many countries of OECD Asia, the availability of financ-
OECD Non-OECD
ing and an increase in the debt tolerance of middle class
families are contributing to increased vehicle purchases.
60
Total transportation energy demand in the non-OECD
countries is projected to grow from 29.8 quadrillion Btu
40 in 2004 to 42.7 quadrillion Btu in 2015 and 63.1 quadril-
lion Btu in 2030. The transportation sector is projected to
account for nearly 60 percent of the total increase in liq-
20 uids use in non-OECD countries from 2004 to 2030. The
growth in transportation energy use is expected to be led
by greater demand for aviation fuel. Expanding owner-
0
ship of private automobiles and an increasing role of
2004 2010 2015 2020 2025 2030 trucking in freight transportation also play a significant
Sources: 2004: Derived from Energy Information Adminis-
role in the expected increase in energy demand. In 2004,
tration (EIA), International Energy Annual 2004 (May-July the non-OECD economies accounted for about 34 per-
2006), web site www.eia.doe.gov/iea. Projections: EIA, Sys- cent of world energy use for transportation. In 2030,
tem for the Analysis of Global Energy Markets (2007). their share is projected to be 46 percent, as the gap
20 Energy Information Administration / International Energy Outlook 2007
between transportation energy consumption in the road construction and repair is underway in advance of
non-OECD and OECD economies narrows substantially the 2008 Olympic Games, with more than 40 main roads
over the projection period (Figure 25). being repaired and 27 new arteries and 9 expressways
under construction [9]. The country also has an ambi-
China's energy use for transportation is projected to tious plan to construct a 53,125-mile national express-
grow by an average of 4.9 percent per year, from 4.4 qua- way network to connect all its major transportation
drillion Btu in 2004 to 7.7 quadrillion Btu in 2015 and hubs, including railways, airports, and ports [10]. The
15.5 quadrillion Btu in 2030. Virtually all the growth in "7918 Network" will, upon completion in 2020, connect
transportation energy consumption in China is pro- Beijing with 7 major population centers or transporta-
jected to be in the form of liquids, mostly petroleum- tion hubs; 9 highways will connect the northern and
based. As the country's economy expands, its energy southern parts of the country; and 18 highways will pro-
use for air travel is expected to grow more rapidly than vide east-west connections. The need to expand road
energy use for road transport (see box on page 22). Per- infrastructure is also evident in China's rural areas. For
sonal travel in China has soared in the past two decades, example, the Xinjiang Uighur Autonomous Region has
with passenger miles traveled increasing fivefold [5]. announced plans to invest some $1.2 billion on road
Still, in 2005 there were 4.5 million automobiles in China works in 2007, to build more than 2,400 miles of new
[6], as compared with 130.8 million automobiles in the roadway [11].
United States [7].
The Middle East has a relatively small population and is
After China, India is expected to experience the fastest not a major energy consumer but rather an exporter;
expansion in transportation sector energy use in the however, rapid population growth in the region is
world. India's transportation energy use is projected to expected to result in increased demand for transporta-
grow at an average rate of 3.3 percent per year in the tion. The region's energy demand for transportation is
IEO2007 reference case, compared with the world aver- projected to grow from 4.5 quadrillion Btu in 2004 to 6.9
age of 1.7 percent per year. In comparison with other quadrillion Btu in 2015 and 9.0 quadrillion Btu in 2030.
countries in the emerging, non-OECD Asia region,
India's transportation infrastructure is well developed Residential Sector
and used effectively by a large section of the population.
Its railways are particularly established--although Energy use in the residential sector, which accounted for
many rural areas still are largely inaccessible by rail. The about 11 percent of worldwide delivered energy con-
IEO2007 reference case anticipates that India will con- sumption in 2004, is defined as the energy consumed by
tinue to expand its public transportation networks over households, excluding transportation uses. For residen-
the projection period, allowing robust increases in both tial buildings, the physical size of the structures is one
road and rail transport and resulting in a more than dou- key indicator of the amount of energy used by their
bling of transportation energy use between 2004 and occupants. Larger homes require more energy to pro-
2030. vide heating, air conditioning, and lighting, and they
tend to include more energy-using appliances, such as
The pace and extent of transportation infrastructure televisions and laundry equipment. Smaller structures
improvements in China and India will influence the require less energy, because they contain less space to be
pace of growth in their transportation energy use. Inter- heated or cooled, produce less heat transfer with the out-
connecting cities with major ports will allow goods and door environment, and typically have fewer occupants.
people to flow more quickly, making motorized road
travel--for both freight transport and personal motor The type and amount of energy used by households
vehicles--more attractive. India launched its National vary from country to country, depending on income lev-
Highways Development Project (NHDP) in 1998 to els, natural resources, climate, and available energy
modernize its major highways [8]. The first phase of the infrastructure. In general, typical households in the
project--the "Golden Quadrilateral," a 3,625-mile multi- OECD use more energy than those in non-OECD
lane highway system that connects Delhi, Mumbai, nations, in part because higher income levels allow
Chennai, and Calcutta--was completed at the end of OECD households to purchase more energy-using
2006. The second phase--the North-South and East- equipment. Consequently, residential sector energy use
West national highways that will connect the outermost in the OECD countries accounts for about 60 percent of
points of the country--will comprise more than 4,200 the world's residential delivered energy use, although
miles of highway, with a scheduled completion date of the OECD nations account for only 18 percent of the
December 2007. Additional NHDP projects are sched- world's population.
uled beyond that.
Whereas households in the OECD nations used more
Transportation infrastructure investments are also energy in 2004 in total than did the non-OECD nations,
occurring in China. In Beijing, a considerable amount of more rapid growth of residential energy consumption is
Energy Information Administration / International Energy Outlook 2007 21
China's Transportation Sector: Recent Developments and Long-Term Projections
What happens in China in terms of liquids demand can In China, most of the growth in transportation energy
have a substantial impact on world oil markets. China, consumption is expected to be for road use (see figure
with a rapidly expanding transportation sector, is the below). Total transportation energy use is projected to
world's fastest-growing oil consumer. In the past 2 increase by more than 11 quadrillion Btu from 2004 to
years, China alone accounted for more than 30 percent 2030, and road vehicles are projected to account for
of the world's incremental consumption of liquid nearly 70 percent of the increase. Air, rail, and marine
fuels.a China's strong growth in consumption helped transportation modes account for 14, 12, and 5 percent
to support high world oil prices in 2005 and 2006. of the projected increase, respectively. Factors affecting
the projections for transportation energy use by mode
Transportation use is likely to define much of the include urbanization and expansion of the middle
growth in China's liquids consumption. An under- class, efficiency improvements, consumer preferences,
standing of potential developments in China's trans- costs, and lag times associated with infrastructure
portation energy use over the coming decades is development.
important, because it can allow analysts to consider
how China's liquids markets will evolve and their Transportation Energy Use in China by Mode,
potential impacts on world oil markets. 2004-2030
Economic growth, rapid urbanization, and the emer- Quadrillion Btu
20
gence of a modern transportation system all have con-
tributed to the recent increase in China's liquids Water
consumption. In the IEO2007 reference case, total liq- Air
15
uids consumption in China is projected to average 3.5- Rail
percent growth annually--higher than the growth rate Road
for any other country in the world--and to reach 32
10
quadrillion Btu (about 16 million barrels oil equivalent
per day) in 2030. In comparison, U.S. liquids consump-
tion grows at an average rate of 1.0 percent per year
5
over the projection period, to more than 52 quadrillion
Btu in 2030. China is projected to account for 28 percent
of the total increase in world liquids consumption from
0
2004 to 2030 and for 14 percent of the world's total con- 2004 2010 2015 2020 2025 2030
sumption in 2030, nearly double its share in 2004.
Sources: 2004: Derived from Energy Information Adminis-
In the IEO2007 projections, China's energy use for tration (EIA), International Energy Annual 2004 (May-July
transportation grows at a rate that is only about 20 per- 2006), web site www.eia.doe.gov/iea. Projections: EIA, Sys-
tem for the Analysis of Global Energy Markets (2007).
cent less than its GDP growth rate, and the transporta-
tion share of its total liquids use increases from 32
In the projections by travel mode, China's energy use
percent in 2004 to 47 percent by 2030. Similar trends
for air travel has the highest growth rate, consistently
have characterized other developing economies in the
exceeding the growth rate for GDP despite the expecta-
past, both in the west and in Asian countries, including
tion of significant improvements in fuel efficiency for
South Korea and Japan. High rates of economic growth
air travel (see top figure on page 23). Similarly, Boeing
in developing economies (particularly if growth is
Commercial Airplanes has estimated that revenue pas-
linked to manufacturing) typically require increased
senger-miles in China will grow about 20 percent faster
transportation services to connect production facilities
than GDP from 2005 to 2025.b Energy use for rail trans-
with raw materials and energy sources, and to trans-
portation (both passenger and freight) increases more
port manufactured goods to consumer markets in
slowly, at about 75 percent the rate of GDP growth on
growing urban areas. In addition, rising per-capita
average from 2004 to 2030.c
incomes historically have been associated with rapid
increases in personal travel by road and air. (continued on page 23)
aEnergy Information Administration, International Petroleum Monthly (February 7, 2007), web site www.eia.doe.gov/ipm; and Short-
Term Energy Outlook (February 2007), web site www.eia.doe.gov/emeu/steo.
bBoeing Commercial Airplanes, Current Market Outlook 2006 (Seattle, WA), p. 24, web site www.boeing.com/commercial/cmo/pdf/
CMO_06.pdf.
cThe energy use projection incorporates an estimated 15-percent efficiency improvement over the forecast.
22 Energy Information Administration / International Energy Outlook 2007
China's Transportation Sector: Recent Developments and Long-Term Projections (Continued)
Average Annual Growth in China's GDP and The projections for road transportation assume that the
Transportation Energy Use by Mode, 2004-2030 ongoing development of China's road infrastructure
Percent per Year
will keep pace with increases in vehicle use. From 1994
12 to 2004, the country's total highway length grew at
GDP Road Rail Air Water an average annual rate of 5.3 percent,d and similar
10 increases will be needed annually from 2004 to 2030. If
the pace of infrastructure construction cannot be main-
8 tained, China's transportation energy use could grow
more slowly than projected.
6
Consumption of all transportation fuels in China (with
4 the exception of coal used in older steam locomotives)
increases in the projections (see figure below). Total
2 liquids consumption for transportation in 2030 is pro-
jected to be 11.2 quadrillion Btu more than the 2004
0 total. Diesel fuel, gasoline, and jet fuel account for 46
2004-2010 2010-2020 2020-2030 2004-2030 percent, 36 percent, and 14 percent of the increase,
respectively; and diesel fuel and gasoline together
Sources: 2004: Derived from Energy Information Adminis-
tration (EIA), International Energy Annual 2004 (May-July account for 80 percent of China's total projected energy
2006), web site www.eia.doe.gov/iea. Projections: EIA, Sys- use for transportation in 2030. Consumption of diesel
tem for the Analysis of Global Energy Markets (2007). fuel is expected to increase more rapidly than gasoline
use, however, because it is the primary rail fuel and a
As China's per-capita income rises, cars are expected to major fuel for marine transport, and because die-
be the mode of choice for an increasing share of passen- sel-fueled trucks are projected to account for an
ger travel, as has been observed in other developing increasing share of total fuel use by large trucks. Fol-
economies. Buses and two- and three-wheeled vehi- lowing historical trends, coal use in China's transporta-
cles, which accounted for 42 percent of road energy use tion sector is projected to decline steadily, as diesel
in China in 2004, are projected to decline to a 26- locomotives replace older railroad equipment.
percent share in 2030, while the share represented by
cars and light trucks increases from 18 percent in 2004 China's Transportation Energy Use by Fuel Type,
to 33 percent in 2030 (see figure below). 2004-2030
Quadrillion Btu
China's Energy Use for Road Transportation by 20
Vehicle Type, 2004-2030
Other
Percent of Total
Heavy Fuel Oil
Large Trucks Cars/Light Trucks 15
Jet Fuel
Buses Two-/Three-Wheel Vehicles
100 Diesel
10 Gasoline
75
5
50
25 0
2004 2010 2015 2020 2025 2030
Sources: 2004: Derived from Energy Information Adminis-
0 tration (EIA), International Energy Annual 2004 (May-July
2004 2010 2015 2020 2025 2030
2006), web site www.eia.doe.gov/iea. Projections: EIA, Sys-
Sources: 2004: Derived from Energy Information Adminis- tem for the Analysis of Global Energy Markets (2007).
tration (EIA), International Energy Annual 2004 (May-July
2006), web site www.eia.doe.gov/iea. Projections: EIA, Sys-
tem for the Analysis of Global Energy Markets (2007).
dNational Bureau of Statistics of China, China Statistical Yearbook 2005 (Beijing, People's Republic of China: China Statistics Press), web
site www.stats.gov.cn/tjsj/ndsj/2005/indexeh.htm.
Energy Information Administration / International Energy Outlook 2007 23
projected for the non-OECD than for the OECD coun- Non-OECD Countries
tries, and in 2020 non-OECD residential energy use is Household energy use is projected to increase more rap-
expected to exceed OECD residential energy use (Figure idly in the non-OECD countries than in the OECD coun-
26). Worldwide, the projected increase in residential tries over the coming decades (Figure 27). In China and
electricity demand accounts for nearly 60 percent of the India, population growth, rising income levels, and
growth in overall residential energy demand from 2004 urbanization are expected to produce large increases in
through 2030. By 2025, electricity overtakes natural gas demand for residential energy services. For the non-
as the world's largest source of energy for household OECD region as a whole, real GDP is projected to grow
use. by more than 5 percent per year on average from 2004
through 2030, population is projected to grow by more
OECD Countries than 1 percent per year, and household energy use is
Households in OECD nations use energy more inten- projected to grow at a robust rate of 2.4 percent per year,
sively than those in non-OECD nations, primarily as higher incomes foster increased use of energy-using
because of their higher income levels. The United States appliances. As a result, households in the non-OECD
and OECD Europe together consumed nearly one-half nations are projected to consume about 10 percent more
(49 percent) of the world's delivered residential energy energy than households in the OECD nations in 2030,
in 2004; however, their share is expected to fall to 38 per- requiring more than 86 percent more energy in 2030 than
cent in 2030 as a result of increasing efficiency and was consumed in the region in 2004. China and India are
slower growth in residential energy use than projected expected to account for more than 40 percent of the
for the non-OECD countries. increase in residential energy use in the non-OECD
countries through 2030, as their economies continue to
Growth in electricity use in the OECD countries grow rapidly over the projection period.
accounts for about 81 percent of the total projected
growth in OECD residential energy demand (Figure 27), In many non-OECD countries today, households still
which will require additional power plants and corre- use traditional, non-marketed energy sources, including
sponding increases in fuel use for electricity generation. wood and waste, for heating and cooking. Regional eco-
Mexico's residential energy use is projected to show the nomic development should displace some of that use as
highest rate of increase among the OECD nations, as its incomes rise and marketed fuels, such as propane and
real GDP grows at a projected rate that is 44 percent electricity, become more widely accessible.
higher than the OECD average. In OECD Asia, residen-
tial (and total) energy demand is projected to grow very Commercial Sector
little, because little or no growth is expected in the The commercial sector--often referred to as the services
region's total population. sector or the services and institutional sector--consists
Figure 26. OECD and Non-OECD Residential Figure 27. Growth in OECD and Non-OECD
Sector Delivered Energy Consumption, Residential Sector Delivered Energy
2004-2030 Consumption by Fuel, 2004-2030
Quadrillion Btu Average Annual Percent Change
50 6
OECD Non-OECD OECD Non-OECD
40 4
30 2
20 0
10
-2
Liquids Natural Coal Electricity Total
0 Gas Delivered
2004 2010 2015 2020 2025 2030 Energy
Sources: 2004: Derived from Energy Information Adminis- Sources: 2004: Derived from Energy Information Adminis-
tration (EIA), International Energy Annual 2004 (May-July tration (EIA), International Energy Annual 2004 (May-July
2006), web site www.eia.doe.gov/iea. Projections: EIA, Sys- 2006), web site www.eia.doe.gov/iea. Projections: EIA, Sys-
tem for the Analysis of Global Energy Markets (2007). tem for the Analysis of Global Energy Markets (2007).
24 Energy Information Administration / International Energy Outlook 2007
of businesses, institutions, and organizations that pro- commercial energy demand in the IEO2007 projections
vide services. The sector encompasses many different than has been seen in the past. In addition, continued
types of buildings and a wide range of activities and efficiency improvements are expected to moderate the
energy-related services. Examples of commercial sector growth of energy demand over time, as energy-using
facilities include schools, stores, correctional institu- equipment is replaced with newer, more efficient stock.
tions, restaurants, hotels, hospitals, museums, office Conversely, strong economic growth is expected to
buildings, banks, and even stadiums that hold sporting include continued growth in business activity, with its
events. Most commercial energy use occurs in buildings associated energy use, in areas such as retail and whole-
or structures, supplying services such as space heating, sale trade and business, financial, and leisure services.
water heating, lighting, cooking, and cooling. Energy The combination of these factors causes commercial
consumed for services not associated with buildings, delivered energy consumption in the OECD countries to
such as for traffic lights and city water and sewer ser- increase by an average of 1.2 percent per year from 2004
vices, is also categorized as commercial sector energy to 2030 in the reference case (Figure 28). Although the
use. fastest growth in commercial energy demand among the
OECD economies is expected to be in the countries with
Economic and population growth trends drive commer- the fastest economic growth (Mexico and South Korea),
cial sector activity and the resulting energy use. The the United States remains the largest consumer of com-
need for services (health, education, financial, govern- mercial delivered energy in the OECD, accounting for
ment) increases as populations increase. The degree to one-half of the 24.6 quadrillion Btu of commercial
which these additional needs are met depends in large energy use in the OECD as a whole in 2030.
measure on economic resources--whether from domes-
tic or foreign sources--and economic growth. Economic Commercial electricity demand in the OECD nations is
growth also determines the degree to which additional projected to grow by 1.7 percent per year from 2004 to
commercial sector activities are offered and utilized. 2030, with continued advances in technology and the
Higher levels of economic activity and disposable introduction of new electronic appliances and equip-
income lead to increased demand for hotels and restau- ment (Figure 29). Electricity delivered to commercial
rants to meet business and leisure requirements; for consumers in the OECD countries, which totaled 8.6
office and retail space to house and service new and quadrillion Btu in 2004, is projected to reach 10.8 qua-
expanding businesses; and for cultural and leisure space drillion Btu in 2015 and 13.5 quadrillion Btu in 2030, sur-
such as theaters, galleries, and arenas. passing projected OECD residential electricity use of
12.9 quadrillion Btu by the end of the projection period.
OECD Countries Natural gas continues to displace petroleum products
Slow population growth in most of the OECD nations and coal as the preferred heating fuel in the OECD
contributes to a slower rate of increase in the region's region.
Figure 28. OECD and Non-OECD Commercial Figure 29. Growth in OECD and Non-OECD
Sector Delivered Energy Consumption, Commercial Sector Delivered Energy
2004-2030 Consumption by Fuel, 2004-2030
Quadrillion Btu Average Annual Percent Change
40 5
OECD Non-OECD OECD Non-OECD
4
30 3
2
20
1
0
10
-1
Liquids Natural Coal Electricity Total
0 Gas Delivered
2004 2010 2015 2020 2025 2030 Energy
Sources: 2004: Derived from Energy Information Adminis- Sources: 2004: Derived from Energy Information Adminis-
tration (EIA), International Energy Annual 2004 (May-July tration (EIA), International Energy Annual 2004 (May-July
2006), web site www.eia.doe.gov/iea. Projections: EIA, Sys- 2006), web site www.eia.doe.gov/iea. Projections: EIA, Sys-
tem for the Analysis of Global Energy Markets (2007). tem for the Analysis of Global Energy Markets (2007).
Energy Information Administration / International Energy Outlook 2007 25
Non-OECD Countries varies across regions and countries of the world, based
Economic growth and commerce are expected to on the level and mix of economic activity, technological
increase rapidly in the non-OECD nations, fueling addi- development, and population, among other factors.
tional energy demand in the services sector. Faster pop-
The industrial sector is the largest of the end-use sectors,
ulation growth is also expected, relative to that in the
consuming more than 50 percent of the delivered energy
OECD countries, portending increases in the need for
worldwide in 2004. Worldwide, energy consumption in
education, health care, and social services and the
the industrial sector is projected to increase by an aver-
energy required to provide them. Under these circum-
age of 1.8 percent per year from 2004 through 2030, as
stances, commercial delivered energy use in non-OECD
compared with 1.0-percent average annual growth in
countries is projected to double between 2004 and 2020,
the global population. Industrial energy consumption is
to 12.5 quadrillion Btu, and to continue growing to
expected to increase in all countries and regions; how-
16.1 quadrillion Btu in 2030. Over the 2004 to 2030
ever, much slower growth in industrial sector energy
period, commercial energy use in the non-OECD region
use is projected for the OECD region than for the
increases at an average annual rate of 3.7 percent.
non-OECD region, with annual average increases of
Electricity demand for commercial applications is pro- 0.6 percent and 2.5 percent, respectively (Figure 30).
jected to grow rapidly in the non-OECD nations as more
OECD Countries
clinics, schools, and businesses gain access to electricity.
Annual growth in commercial delivered electricity Industrial sector energy use among the OECD nations
use averages 4.9 percent through 2030 (Figure 29), with increases by 0.6 percent per year in the IEO2007 refer-
projected consumption of 6.1 quadrillion Btu in 2015 ence case, from 72.4 quadrillion Btu in 2004 to 84.9 qua-
and 10.5 quadrillion Btu in 2030. The largest increases drillion Btu in 2030. The United States accounts for more
in commercial electricity demand are projected for than one-third of the OECD's total industrial energy
nations with rapidly growing economies, particularly consumption in 2030, and OECD Europe accounts for
China and India, as their burgeoning economies foster approximately another one-third of the OECD total, just
increases in demand for services. as they did in 2004.
In the IEO2007 projections, commercial demand for nat- The OECD economies generally have more energy-
ural gas grows by 3.6 percent per year from 2004 to 2015 efficient industrial operations and a mix of industrial
and by 2.7 percent from 2004 to 2030, as several countries output that is more heavily weighted toward non-
focus on expanding the infrastructure necessary for energy-intensive sectors than do the non-OECD coun-
delivery of the fuel. Commercial sector liquids con- tries. Also, in the United States, the manufacturing share
sumption is projected to increase from 1.6 quadrillion of total economic output has declined steadily over the
Btu in 2004 to 2.2 quadrillion Btu in 2015 and 2.5 quadril- past two decades, while the output share for service
lion Btu in 2030 in the non-OECD region, increasing
more rapidly in areas where the availability of natural
gas is limited. Commercial sector coal use in the non- Figure 30. OECD and Non-OECD Industrial Sector
OECD countries increases from 0.5 quadrillion Btu in Delivered Energy Consumption,
2004 to 0.8 quadrillion Btu in 2030, with most of the 2004-2030
growth occurring between 2004 and 2015. Coal remains Quadrillion Btu
200
an economically attractive choice for commercial water OECD Non-OECD
heating, space heating, and cooking in non-OECD coun-
tries in the projections, especially in China and India,
150
which together account for around 80 percent of non-
OECD commercial coal use from 2004 through 2030.
Industrial Sector 100
Energy is consumed in the industrial sector by a diverse
group of industries--including manufacturing, agricul- 50
ture, mining, and construction--and for a wide range of
activities, such as process and assembly uses, space con-
ditioning, and lighting. Inputs that typically are consid- 0
ered energy products are included in industrial sector 2004 2010 2015 2020 2025 2030
energy use. For example, natural gas and petroleum Sources: 2004: Derived from Energy Information Adminis-
products used as feedstocks to produce non-energy tration (EIA), International Energy Annual 2004 (May-July
products, such as plastics, are counted as energy used in 2006), web site www.eia.doe.gov/iea. Projections: EIA, Sys-
the industrial sector. Industrial sector energy demand tem for the Analysis of Global Energy Markets (2007).
26 Energy Information Administration / International Energy Outlook 2007
industries (included in the commercial sector) has in- Of the non-OECD economies, China, India, and the
creased. These general trends are projected to continue. other Asian nations are expected to have the most rapid
increases in industrial sector energy consumption
Similar developments are expected for the other OECD between 2004 and 2030. Whereas the economies of the
economies, as increasing international trade fosters a OECD countries have largely moved away from heavy,
shift toward a less energy-intensive mix of industrial energy-intensive industries (such as steel and cement)
activity. For example, many of Japan's heavy industries toward a greater emphasis on light manufacturing and
are reducing their output as demand for energy- service activities, the economies of many of the non-
intensive materials increasingly is met by imports from OECD countries and regions have growing energy-
China and other Asian countries. In the projections, the intensive, heavy manufacturing sectors.
industrial sector in Mexico has the fastest energy con-
sumption growth among the OECD countries, at nearly Although electricity is expected to become an increas-
2.2 percent per year. In Germany, a decline in industrial ingly important component of industrial sector deliv-
energy intensity in the early 1990s was largely the result ered energy demand in the non-OECD economies, oil,
of closures of heavy industries in the former East Ger- coal, and natural gas were the most heavily used fuels in
many after reunification. Much of the inefficient, 2004, and they are projected to remain so in 2030.
energy-intensive capacity in the eastern part of Ger- Liquids use in the non-OECD industrial sector increases
many has already been shut down, but further improve- at a slower rate than natural gas or coal use (Figure 31).
ments are projected as capital stock is replaced and The continued importance of coal in the non-OECD
modernized. industrial sector is largely attributable to China, which
accounts for 70 percent of industrial coal use in the
Electricity accounted for about 16 percent of OECD non-OECD economies in 2030.
industrial energy use in 2004, and its share increases
slightly over the projection period. Oil and natural gas
were the most heavily used fuels in the OECD countries' Figure 31. Growth in OECD and Non-OECD
Industrial Sector Delivered Energy
industrial sectors in 2004, together accounting for
Consumption by Fuel, 2004-2030
two-thirds of the energy consumed in the sector. The
Average Annual Percent Change
two energy sources are projected to maintain their over- 4
all share in 2030, but consumption of natural gas is pro- OECD Non-OECD
jected to grow almost five times as rapidly as that of
liquids (Figure 31). Electricity and coal make up the bulk 3
of the remaining projected energy consumption, while
renewables remain a minor energy source for the sector.
2
Non-OECD Countries
Industrial sector energy consumption is projected to 1
increase by 2.5 percent per year in the non-OECD coun-
tries between 2004 and 2030 (Figure 30). The non-OECD
0
economies generally have higher industrial sector
Liquids Natural Coal Electricity Total
energy consumption relative to GDP than do the OECD Gas Delivered
countries. On average, the ratio is almost 40 percent Energy
higher in the non-OECD countries. This is particularly
Sources: 2004: Derived from Energy Information Adminis-
true of Russia and the Eastern European countries which
tration (EIA), International Energy Annual 2004 (May-July
still have energy-inefficient capital remaining from the 2006), web site www.eia.doe.gov/iea. Projections: EIA, Sys-
days of central planning. Per dollar of GDP, Russia's tem for the Analysis of Global Energy Markets (2007).
industrial sector consumed almost 8,000 Btu of deliv-
ered energy in 2004, and the non-OECD European and
other Eurasian countries averaged 5,500 Btu, as com-
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28 Energy Information Administration / International Energy Outlook 2007