Slide 4 of 10
Notes:
- One way to quantify the uncertainty surrounding a long-term forecast is to consider the relationship between energy and gross domestic product (GDP) over time. Economic growth and energy demand are linked, but the strength of that link varies among regions and stages of economic development. In the industrialized countries, history shows the link to be a relatively weak one. That is, energy demand lags behind economic growth. In developing countries, demand and economic growth have, in the past, been more closely correlated, with energy demand growth tending to track the rate of economic expansion.
- In the IEO2000 forecast, energy intensity in the industrialized countries is expected to improve (decrease) by 1.1 percent per year between 1997 and 2020, slightly slower than the 1.3-percent annual improvement for the region from 1970 to 1997. Energy intensity is also expected to improve in the developing countries—by 1.0 percent per year—as their economies begin to behave more like those of the industrialized countries as a result of improving standards of living that accompany the projected economic expansion.
- Eastern Europe and the former Soviet Union (EE/FSU) have always maintained a much higher level of energy intensity than either the industrialized or the developing countries. In the FSU, energy consumption grew more quickly than GDP until 1990, when the collapse of the Soviet Union created a situation in which both income and energy use were declining. GDP fell more rapidly than energy use, however, and as a result energy intensity increased. Over the forecast horizon, energy intensity is projected to improve in the EE/FSU in concert with expected recovery from economic and social declines of the 1990s, but it is still expected to be twice as high as in the developing world and five times as high as in the industrialized world.
- Changing growth patterns of energy intensity could have dramatic impacts on energy consumption, particularly among the developing countries. For instance, if energy intensities are assumed to decline in the developing countries by 60 percent—equal to the most rapid annual rate of decline observed between 1990 and 1997—energy consumption in the developing world is projected to be 140 quadrillion Btu in 2020, about 132 quadrillion Btu less than in the reference case estimate of 272 quadrillion Btu. If energy intensities in the developing world are assumed to increase by 136 percent—the most rapid annual rate of increase observed between 1990 and 1997—energy consumption in the developing world is projected to be 812 quadrillion Btu in 2020, nearly three times the reference case projection.
