*EPF412 05/01/2003
Text: Energy Dept. Projects Asia to Drive Increase in Energy Use
(Natural gas demand forecast to nearly double) (1220)

A significant increase in global energy consumption through 2025 is expected to be driven mostly by the emerging economies of Asia, with natural gas as the fastest growing component of the energy mix, the U.S. Energy Department says.

Much of the projected 58-percent growth in worldwide consumption of commercial energy is expected to occur in rapidly industrializing developing countries such as China, India and South Korea, says the Energy Information Administration (EIA), the independent statistical agency in the Energy Department.

The EIA lowered "substantially" its projection for a rise in energy demand in Latin America as a result of political and economic problems that emerged in the region in 2002, the agency said in a May 1 news release announcing publication of its International Energy Outlook 2003. The projections cover the period between 2001 and 2025.

With use of natural gas projected to grow nearly 100 percent over that time, the natural gas share of total energy consumption is expected to increase by 5 percentage points to 28 percent, according to EIA. By comparison, consumption of oil, the dominant fuel type, is forecast to increase by 55 percent and its share of the energy mix to remain at 38 percent, according to the EIA.

The IEA also highlighted the expected declining role of nuclear power, continued reliance on coal as an important source for electricity generation, the projected growth in renewable energy use, and continued rise of carbon dioxide emissions coming from the combustion of fossil fuels.

Following is the text of EIA's news release:

(begin text)

ENERGY INFORMATION ADMINISTRATION
U.S. DEPARTMENT OF ENERGY
MAY 1, 2003

Emerging Asia Drives World Energy Use in the International Energy Outlook 2003

Worldwide consumption of commercial energy is projected to grow by 58 percent over the next two and one-half decades, according to the reference case projection of the International Energy Outlook 2003 (IEO2003) released today by the Energy Information Administration (EIA). The IEO2003 expects much of the growth to occur in the developing world, with China, India, and South Korea leading the way, as their consumption increasingly resembles that of the industrialized world.

Expectations for growth in Central and South America have been lowered substantially from those reflected in past editions of the Outlook. Political and economic problems surfacing among the nations of the region in the past year have tempered the previous, more optimistic outlook for their development. Unrest in Venezuela, an Argentine economy that remains in crisis, and renewal of an aggressive campaign against insurgency groups by the Colombian government, all contribute to uncertainty about the region. These uncertainties have led to lower projections of the region's energy demand in this year's forecast. Whereas energy demand in Central and South America was projected to grow by 3.8 percent per year between 1999 and 2020 in last year's report, the IEO2003 reference case projects average annual growth of only 2.4 percent from 1999 to 2020.

Total world demand for oil is expected to rise by about 1.2 million barrels per day in 2003, as national economies begin to recover from the global economic slowdown in 2002. In the IEO2003 reference case projection, world oil consumption increases from 77 million barrels per day in 2001 to 119 million barrels per day in 2025, an annualized growth rate of 1.8 percent. The increases in worldwide oil use projected in the reference case would require an increase of 42 million barrels per day over current productive capacity. OPEC [Organization of Petroleum Exporting Countries] producers are expected to be the major source of increased production, but non-OPEC supply is expected to remain competitive, with major growth in offshore resources, especially in the Caspian Basin, Latin America, and deepwater West Africa.

Other report highlights include:

-- Natural gas remains the fastest growing component of primary world energy consumption. Over the IEO2003 forecast period, gas use is projected to nearly double in the reference case, reaching 176 trillion cubic feet in 2025. The natural gas share of total energy consumption is projected to increase from 23 percent in 2001 to 28 percent in 2025, and natural gas is expected to account for the largest increment in electricity generation (accounting for 53 percent of the total increase in energy use for electricity generation). Much of the projected growth in natural gas consumption is in response to rising demand for natural gas to fuel efficient new combined-cycle gas turbine power plants.

-- Carbon intensity -- the amount of carbon dioxide emitted per dollar of gross domestic product (GDP) -- is projected to improve throughout the world over the next two decades, although total carbon dioxide emissions are projected to increase by 59 percent between 2001 and 2025. Steep improvements in carbon intensity are projected for the transitional economies of Eastern Europe and the former Soviet Union (EE/FSU). In the FSU, economic recovery from the upheavals resulting from the dissolution of the Soviet Union is expected to continue throughout the forecast. The FSU nations are also expected to replace old and inefficient capital stock and increasingly use less carbon-intensive natural gas for electricity generation and other end uses in place of more carbon-intensive oil and coal.

-- Nuclear power accounted for 19 percent of the world's total electricity supply in 2001. The IEO2003 reference case projects a drop in the nuclear share of electricity, to 12 percent in 2025, as the current trend away from nuclear power in most countries is expected to continue. Despite its declining share of global electricity production, nuclear power will continue to be a significant source of electricity. Life extensions, higher capacity factors, and capacity upgrades are expected to offset some of the capacity losses resulting from retirements. Further, some nations, particularly in Asia, are expected to continue to build new nuclear units, with China, India, Japan, and South Korea projected to add a combined 45 gigawatts between 2001 and 2025.

-- Renewable energy use worldwide is expected to increase by 56 percent between 2001 and 2025, maintaining its 8 percent share of world commercial energy consumption throughout the forecast period. Because fossil fuel prices are expected to remain relatively low, renewables are not expected to be widely competitive, and its share of energy use does not increase. Much of the increase in renewable energy use is expected to be driven by new, large-scale hydroelectric projects, particularly in developing Asian countries.

-- World coal use has been in a period of generally slow growth since the 1980s, and this trend is expected to continue through the projection period. Substantial declines in coal use are projected for Western Europe, Eastern Europe, and the former Soviet Union, where natural gas is increasingly being used for electricity generation; however, large increases are projected for developing Asia, with China and India combined accounting for 75 percent of the world's increment in coal use over the forecast (on a Btu basis).

International Energy Outlook 2003 is available on EIA's Web Site at: http://www.eia.doe.gov/oiaf/ieo/index.html. Printed copies of the report will be available later this month from the U.S. Government Printing Office, 202/512-1800, or through EIA's National Energy Information Center, Room 1E-238, Forrestal Building, Washington, DC 20585, 202/586-8800.

(end text)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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