Average world oil prices² increased each year between 2003 and 2008. Spot prices reached $147 per barrel (in nominal dollars) in mid-July 2008, when they were well above the historical inflation-adjusted record price for a barrel of oil, which was set in the early 1980s. After reaching the July 2008 high mark, however, prices fell sharply. As the world’s economies recover, world oil prices are assumed to rebound and rise in real terms through 2030. In the IEO2009 reference case, the price of light sweet crude oil in the United States (in real 2007 dollars) rises from $61 per barrel in 2009 to $110 per barrel in 2015 and $130 per barrel in 2030.  

World Energy Use by Fuel Type 

Liquids are expected to remain the world’s dominant energy source throughout the IEO2009 reference case projection, given their importance in the transportation and industrial end-use sectors. World use of liquids and other petroleum grows from 85 million barrels per day in 2006 to 91 million barrels per day in 2015 and 107 million barrels per day in 2030. Only in the transportation sector are liquids relatively unaffected by the projected high world oil prices. Although world oil prices in 2030 in the IEO2009 reference case are 80 percent higher than projected in IEO2008 (Figure 3), liquids consumption in the world transportation sector in 2030 is only 9 percent lower in this year’s outlook, reflecting the expectation that, absent significant technological advances, liquids will continue to be the primary energy source in the world’s transportation sector. 

To meet the increment in world liquids demand in the IEO2009 reference case, total supply in 2030 is projected to be 22.0 million barrels per day higher than the 2006 level of 84.6 million barrels per day. The reference case assumes that OPEC will maintain a share of approximately 40 percent of total world liquids production through 2030, consistent with recent trends. Increasing volumes of conventional liquids (crude oil and lease condensate, natural gas plant liquids, and refinery gain) from OPEC members contribute 8.3 million barrels per day to the total increase in world liquids production, and conventional liquids supplies from non-OPEC countries add another 3.4 million barrels per day (Figure 4). 

Unconventional resources (including oil sands, extra-heavy oil, biofuels, coal-to-liquids, and gas-to-liquids) from both OPEC and non-OPEC sources are expected to become increasingly competitive in the reference case. World production of unconventional resources, which totaled only 3.1 million barrels per day in 2006, increases to 13.4 million barrels per day and accounts for 13 percent of total world liquids supply in 2030. 

Biofuels, including ethanol and biodiesel, will be an increasingly important source of unconventional liquids supply, reaching 5.9 million barrels per day in 2030. Particularly strong growth in biofuels consumption is projected for the United States, where production of biofuels increases from 0.3 million barrels per day in 2006 to 1.9 million barrels per day in 2030, supported by legislation in the Energy Independence and Security Act of 2007 that mandates increased U.S. use of biofuels. Other regions with sizable projected increases in biofuels production include OECD Europe, non-OECD Asia, and Central and South America. Those regions, together with the United States, account for 75 percent of the world increase in biofuels production. 

Natural gas consumption worldwide increases in the IEO2009 reference case from 104 trillion cubic feet in 2006 to 153 trillion cubic feet in 2030. With world oil prices rebounding from their early 2009 level, as the world economy recovers from the current downturn, and then continuing to grow in real terms through the end of the projection period, consumers opt for comparatively less expensive natural gas for their energy needs whenever possible. As a result, natural gas remains a key energy source in the industrial sector and for electricity generation. The industrial sector currently consumes more natural gas than any other end-use sector, and this is expected to remain true in the reference case through 2030, when 40 percent of the world’s natural gas supply is used for industrial purposes. Electricity generation accounts for 35 percent of the world’s total natural gas consumption in 2030, up from 32 percent in 2006. 

To meet the projected growth in demand for natural gas, the world’s producers will need to increase annual production in 2030 to a level that is 49 trillion cubic feet higher than the 2006 total. Much of the increase in natural gas production is expected to come from the non-OECD countries. In the IEO2009 reference case, natural gas production in the non-OECD nations in 2030 is 41 trillion cubic feet higher than in 2006, accounting for about 84 percent of the total increase in world supply. By region, the Middle East, non-OECD Europe and Eurasia, and non-OECD Asia each supplies about 20 percent of the increase (Figure 5). Africa, which is an important source of new natural gas production, provides 15 percent of the total world increment. 

Natural gas production from the OECD nations is projected to increase by 7.8 trillion cubic feet from 2006 to 2030 in the reference case. The largest increase among the OECD nations is projected for the United States, at 5.3 trillion cubic feet. Unconventional natural gas is the largest contributor to the growth in U.S. production, as rising prices and improvements in drilling technology provide the economic incentives necessary for exploitation of more costly resources. Unconventional natural gas production-both from natural gas in tight sand formations and from shale formations-increases from 47 percent of the U.S. total in 2006 to 56 percent in 2030. 

In the absence of national policies and/or binding international agreements that would limit or reduce greenhouse gas emissions, world coal consumption is projected to increase from 127 quadrillion Btu in 2006 to 190 quadrillion Btu in 2030, an average annual rate of 1.7 percent. Much of the projected increase in coal use occurs in the non-OECD Asia region, which accounts for nearly 90 percent of the total world increase in coal use from 2006 to 2030.

In fact, much of the region’s increase in energy demand is expected to be met by coal, particularly in the electric power and industrial sectors. For example, installed coal-fired generating capacity in China is projected to nearly triple from 2006 to 2030, and coal use in China’s industrial sector grows by nearly 60 percent. The development of China’s electric power and industrial sectors will require not only large-scale infrastructure investments but also substantial investment in both coal mining and coal transportation infrastructure. 

World net electricity generation increases by 77 percent in the reference case, from 18.0 trillion kilowatthours in 2006 to 23.2 trillion kilowatthours in 2015 and 31.8 trillion kilowatthours in 2030. Although the current economic downturn is expected to dampen electricity demand in the near term, the IEO2009 reference case assumes that growth in electricity demand will return to trend after 2010. In general, the growth in OECD countries, where electricity markets are well established and consuming patterns are mature, is slower than in the non-OECD countries, where a large amount of potential demand remains unsatisfied. In the reference case, total net generation in the non-OECD countries increases by an average of 3.5 percent per year, compared with an average of 1.2 percent per year in the OECD nations. 

The rapid increase in world energy prices from 2003 to 2008, combined with concerns about the environmental consequences of greenhouse gas emissions, has led to renewed interest in the development of alternatives to fossil fuels. With high world oil prices expected to return and growth in demand for liquids and other energy expected to resume when economies begin to recover from the current global downturn, renewable energy is the fastest-growing source of world electricity generation in the IEO2009 reference case, supported both by the expected high prices for fossil fuels and by government incentives for the development of alternative energy sources. 

From 2006 to 2030, world renewable energy use for electricity generation grows by an average of 2.9 percent per year (Figure 6), and the renewable share of world electricity generation increases from 19 percent in 2006 to 21 percent in 2030.³ Natural gas and coal are the second and third fastest-growing energy sources for electricity generation in the projection; however, the outlook for coal, in particular, could be altered substantially by any future legislation that would reduce or limit the growth of greenhouse gas emissions.

Much of the world increase in renewable electricity supply is fueled by hydropower and wind power. Of the 3.3 trillion kilowatthours of new renewable generation added over the projection period, 1.8 trillion kilowatthours (54 percent) is attributed to hydropower and 1.1 trillion kilowatthours (33 percent) to wind. Except for those two sources, most renewable energy technologies are not economically competitive with fossil fuels over the projection period, outside a limited number of niche markets. Solar power, for instance, typically is uneconomical but can be economical where electricity prices are high and government incentives are available. In fact, government incentives or policies typically provide the primary support for construction of any renewable generation facilities. 

The mix of renewable fuels consumed differs between the OECD and non-OECD regions in the IEO2009 reference case projection. In the OECD nations, the majority of economically exploitable hydroelectric resources already have been used, and there are few large-scale hydroelectric power projects planned for the future (Figure 7). As a result, most of the growth in renewable energy use in the OECD countries is expected for other sources, led by wind and biomass. In the non-OECD nations, hydropower is the predominant source of renewable energy growth, with mid- to large-scale hydroelectric plants expected to be completed in China, India, Brazil, and a number of nations in Southeast Asia, including Vietnam and Laos. Wind-powered electricity generation also is expected to grow significantly in the non-OECD countries, including substantial additions of wind electricity to the grid in China.  

Electricity generation from nuclear power is projected to increase from about 2.7 trillion kilowatthours in 2006 to 3.8 trillion kilowatthours in 2030, as concerns about rising fossil fuel prices, energy security, and greenhouse gas emissions support the development of new nuclear generation capacity. Higher fossil fuel prices allow nuclear power to become economically competitive with generation from coal, natural gas, and liquids despite the relatively high capital and maintenance costs associated with nuclear power plants. Moreover, higher capacity utilization rates have been reported for many existing nuclear facilities, and it is anticipated that most of the older nuclear power plants in the OECD countries and non-OECD Eurasia will be granted extensions to their operating lives. 

Despite the growing worldwide interest in nuclear power development, there is considerable uncertainty associated with this energy source. Issues that could slow the expansion of nuclear power in the future include plant safety, radioactive waste disposal, and concerns that weapons-grade uranium may be produced from facilities installed to enrich uranium for civilian nuclear power programs. These issues continue to raise public concerns in many countries and may hinder the development of new nuclear power reactors. Nevertheless, the IEO2009 reference case incorporates the improved prospects for world nuclear power. The IEO2009 projection for nuclear electricity generation in 2025 is 25 percent higher than the projection published in IEO2004 only 5 years ago.

On a regional basis, the IEO2009 reference case projects the strongest growth in nuclear power for the countries of non-OECD Asia, where nuclear power generation is projected to grow at an average rate of 7.8 percent per year from 2006 to 2030. Nuclear generation is projected to increase by 8.9 percent per year in China and by 9.9 percent per year in India. Outside Asia, the largest increase in installed nuclear capacity among the non-OECD nations is projected for Russia, with increases in nuclear power generation averaging 3.5 percent per year. In contrast, OECD Europe-where some national governments, including Germany and Belgium, still have plans in place to phase out nuclear programs entirely-is expected to see a small decline in nuclear power generation.

World Delivered Energy Use by Sector 

The industrial sector uses more energy than any other end-use sector, currently consuming about one-half of the world’s total delivered energy. Energy is consumed in the industrial sector by a diverse group of industries-including manufacturing, agriculture, mining, and construction-and for a wide range of activities, such as processing and assembly, space conditioning, and lighting. Worldwide, industrial energy consumption is expected to grow from 175.0 quadrillion Btu in 2006 to 245.6 quadrillion Btu in 2030. 

Industrial energy demand varies across regions and countries of the world, based on levels and mixes of economic activity and technological development, among other factors. About 94 percent of the world increase in industrial sector energy consumption is projected to occur in the non-OECD economies, where-driven by rapid economic growth-industrial energy consumption grows at an average annual rate of 2.1 percent in the reference case. The key engines of non-OECD growth in the projection are the so-called “BRIC” countries (Brazil, Russia, India, and China), which account for more than two-thirds of the growth in non-OECD industrial energy use through 2030 (Figure 8). Because the OECD nations have been undergoing a transition from manufacturing economies to service economies in recent decades and have relatively slow projected growth in economic output, industrial energy use in the OECD region as a whole grows by an average of only 0.2 percent per year from 2006 to 2030. 

The transportation is second only to the industrial sector in terms of world energy use, and it is of particular importance given the role of liquid fuels in meeting transportation demand. The transportation share of total liquids consumption increases from 51 percent in 2006 to 56 percent in 2030 in the IEO2009 reference case, accounting for nearly 80 percent of the total increase in world liquids consumption. Much of the growth in transportation energy use is projected for the non-OECD nations, where rapidly expanding economies are expected to see strong growth in liquids consumption as transportation systems become motorized and rising per-capita incomes increase the demand for personal motor vehicle ownership. Non-OECD transportation energy use increases by an average of 2.7 percent per year from 2006 to 2030. 

Major urban areas in the non-OECD nations are expected to address transportation congestion and strains on infrastructure with a variety of solutions, including development of mass transit (bus and/or rail) and urban design that reduces vehicle-miles traveled, among other improvements in transportation networks. In non- OECD Asia, for example, the reference case projects that energy use for personal motor vehicles (light-duty cars and trucks, as well as two- and three-wheel vehicles) will increase by 3.6 percent per year from 2006 to 2030, while energy use for public passenger travel (rail and bus) also shows robust growth in energy use, averaging 2.9 percent per year. 

In the OECD nations, transportation energy consumption grows by a relatively modest average of 0.3 percent per year over the projection period. Transportation infrastructure in the OECD countries generally is well established. Roads and highways connect most population centers, and motorization levels (vehicles per 1,000 people), which already are high, probably will reach saturation by 2030. As the OECD economies have become more service-oriented, the link between income and the transportation of goods has weakened, and their relatively slow rates of GDP growth and population growth in the IEO2009 reference case lead to the expectation that total transportation energy demand in the OECD countries will increase only modestly from 2006 to 2030. 

 World Carbon Dioxide Emissions 

World carbon dioxide emissions are projected to rise from 29.0 billion metric tons in 2006 to 33.1 billion metric tons in 2015 and 40.4 billion metric tons in 2030-an increase of 39 percent over the projection period. With strong economic growth and continued heavy reliance on fossil fuels expected for most of the non-OECD economies, much of the increase in carbon dioxide emissions  is projected to occur among the developing, non-OECD nations. In 2006, non-OECD emissions exceeded OECD emissions by 14 percent. In 2030, however, non-OECD emissions are projected to exceed OECD emissions by 77 percent (Figure 9).