EIA - 2010 International Energy Outlook
In the IEO2010 Reference casewhich reflects a scenario assuming that current
laws and policies remain unchanged throughout the projection periodworld
marketed energy consumption grows by 49 percent from 2007 to 2035. Total
world energy use rises from 495 quadrillion British thermal units (Btu)
in 2007 to 590 quadrillion Btu in 2020 and 739 quadrillion Btu in 2035
(Figure 1).
The global economic recession that began in 2007 and continued into 2009
has had a profound impact on world energy demand in the near term. Total
world marketed energy consumption contracted by 1.2 percent in 2008 and
by an estimated 2.2 percent in 2009, as manufacturing and consumer demand
for goods and services declined. Although the recession appears to have
ended, the pace of recovery has been uneven so far, with China and India
leading and Japan and the European Union member countries lagging. In the
Reference case, as the economic situation improves, most nations return
to the economic growth paths that were anticipated before the recession
began.
The most rapid growth in energy demand from 2007 to 2035 occurs in nations
outside the Organization for Economic Cooperation and Development1 (non-OECD
nations). Total non-OECD energy consumption increases by 84 percent in
the Reference case, compared with a 14-percent increase in energy use among
the OECD countries. Strong long-term growth in gross domestic product (GDP)
in the emerging economies of non-OECD countries drives the fast-paced growth
in energy demand. In all the non-OECD regions combined, economic activityas
measured by GDP in purchasing power parity termsincreases by 4.4 percent
per year on average, compared with an average of 2.0 percent per year for
OECD countries.
The IEO2010 Reference case projects increased world consumption of marketed
energy from all fuel sources over the 2007-2035 projection period (Figure
2). Fossil fuels (liquid fuels and other petroleum,2 natural gas, and coal)
are expected to continue supplying much of the energy used worldwide. Although
liquid fuels remain the largest source of energy, the liquids share of
world marketed energy consumption falls from 35 percent in 2007 to 30 percent
in 2035, as projected high world oil prices lead many energy users to switch
away from liquid fuels when feasible. In the Reference case, the use of
liquids grows modestly or declines in all end-use sectors except transportation,
where in the absence of significant technological advances liquids continue
to provide much of the energy consumed.
Average oil prices3 increased strongly from 2003 to mid-July 2008, when
prices collapsed as a result of concerns about the deepening recession.
In 2009, oil prices trended upward throughout the year, from about $42
per barrel in January to $74 per barrel in December. Oil prices have been
especially sensitive to demand expectations, with producers, consumers,
and traders continually looking for an indication of possible recovery
in world economic growth and a likely corresponding increase in oil demand.
On the supply side, OPECs above-average compliance to agreed-upon production
targets increased the groups spare capacity to roughly 5 million barrels
per day in 2009. Further, many of the non-OPEC projects that were delayed
during the price slump in the second half of 2008 have not yet been revived.
After 2 years of declining demand, world liquids consumption is expected
to increase in 2010 and strengthen thereafter as the world economies recover
fully from the effects of the recession. In the IEO2010 Reference case,
the price of light sweet crude oil in the United States (in real 2008 dollars)
rises from $79 per barrel in 2010 to $108 per barrel in 2020 and $133 per
barrel in 2035.
World energy markets by fuel type
Liquid fuels
Liquids remain the worlds largest energy source throughout the IEO2010 Reference case projection, given their importance in the transportation
and industrial end-use sectors. World use of liquids and other petroleum
grows from 86.1 million barrels per day in 2007 to 92.1 million barrels
per day in 2020, 103.9 million barrels per day in 2030, and 110.6 million
barrels per day in 2035. On a global basis, liquids consumption remains
flat in the buildings sector, increases modestly in the industrial sector,
but declines in the electric power sector as electricity generators react
to rising world oil prices by switching to alternative fuels whenever possible.
In the transportation sector, despite rising prices, use of liquid fuels
increases by an average of 1.3 percent per year, or 45 percent overall
from 2007 to 2035.
To meet the increase in world demand in the Reference case, liquids production
(including both conventional and unconventional liquid supplies) increases
by a total of 25.8 million barrels per day from 2007 to 2035. The Reference
case assumes that OPEC countries will invest in incremental production
capacity in order to maintain a share of approximately 40 percent of total
world liquids production through 2035, consistent with their share over
the past 15 years. Increasing volumes of conventional liquids (crude oil
and lease condensate, natural gas plant liquids, and refinery gain) from
OPEC producers contribute 11.5 million barrels per day to the total increase
in world liquids production, and conventional supplies from non-OPEC countries
add another 4.8 million barrels per day (Figure 3).
Unconventional resources (including oil sands, extra-heavy oil, biofuels,
coal-to-liquids, gas-to-liquids, and shale oil) from both OPEC and non-OPEC
sources grow on average by 4.9 percent per year over the projection period.
Sustained high oil prices allow unconventional resources to become economically
competitive, particularly when geopolitical or other above ground constraints4 limit access to prospective conventional resources. World production of
unconventional liquid fuels, which totaled only 3.4 million barrels per
day in 2007, increases to 12.9 million barrels per day and accounts for
12 percent of total world liquids supply in 2035. Oil sands from Canada
and biofuels, largely from Brazil and the United States, are the largest
components of future unconventional production in the IEO2010 Reference
case, providing a combined 70 percent of the increment in total unconventional
supply over the projection period.
Natural gas
Natural gas consumption worldwide increases by 44 percent in the Reference
case, from 108 trillion cubic feet in 2007 to 156 trillion cubic feet in
2035. In 2009, world natural gas consumption declined by an estimated 1.1
percent, and natural gas use in the industrial sector fell even more sharply,
by 6.0 percent, as demand for manufactured goods declined during the recession.
The industrial sector currently consumes more natural gas than any other
end-use sector, and in the projection it continues as the largest user
through 2035, when 39 percent of the worlds natural gas supply is consumed
for industrial purposes. Electricity generation is another important use
for natural gas throughout the projection, and its share of the worlds
total natural gas consumption increases from 33 percent in 2007 to 36 percent
in 2035.
To meet the projected growth in demand for natural gas, producers will
need to increase annual production in 2035 to a level that is 46 percent
higher than the 2007 total. In the near term, as world economies begin
to recover from the downturn, global demand for natural gas is expected
to rebound, with natural gas supplies from a variety of sources keeping
markets well supplied and prices relatively low. The largest projected
increase in natural gas production is for the non-OECD region (Figure 4),
with the major increments coming from the Middle East (an increase of 16
trillion cubic feet from 2007 to 2035), Africa (7 trillion cubic feet),
and Russia and the other countries of non-OECD Europe and Eurasia (6 trillion
cubic feet).
Although the extent of the worlds tight gas, shale gas, and coalbed methane
resource base has not yet been assessed fully, the IEO2010 Reference case
projects a substantial increase in those suppliesespecially from the United
States but also from Canada and China. In the United States, one of the
keys to increasing natural gas production has been advances in horizontal
drilling and hydraulic fracturing technologies, which have made it possible
to exploit the countrys vast shale gas resources. Rising estimates of
shale gas resources have helped to increase total U.S. natural gas reserves
by almost 50 percent over the past decade, and shale gas rises to 26 percent
of U.S. natural gas production in 2035 in the IEO2010 Reference case. Tight
gas, shale gas, and coalbed methane resources are even more important for
the future of domestic natural gas supplies in Canada and China, where
they account for 63 percent and 56 percent of total domestic production,
respectively, in 2035 in the Reference case.
World natural gas trade, both by pipeline and by shipment in the form of
liquefied natural gas (LNG), is poised to increase in the future. Most
of the projected increase in LNG supply comes from the Middle East and
Australia, where a number of new liquefaction projects are expected to
become operational within the next decade. In the IEO2010 Reference case,
world liquefaction capacity increases 2.4-fold, from about 8 trillion cubic
feet in 2007 to 19 trillion cubic feet in 2035. In addition, new pipelines
currently under construction or planned will increase natural gas exports
from Africa to European markets and from Eurasia to China.
Coal
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 132 quadrillion Btu in 2007 to 206 quadrillion
Btu in 2035, at an average annual rate of 1.6 percent. Much of the projected
increase in coal use occurs in non-OECD Asia, which accounts for 95 percent
of the total net increase in world coal use from 2007 to 2035 (Figure 5).
Increasing demand for energy to fuel electricity generation and industrial
production in the region is expected to be met in large part by coal. For
example, installed coal-fired generating capacity in China more than doubles
in the Reference case from 2007 to 2035, and coal use in Chinas industrial
sector grows by 55 percent. The development of Chinas 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.
Electricity
World net electricity generation increases by 87 percent in the Reference
case, from 18.8 trillion kilowatthours in 2007 to 25.0 trillion kilowatthours
in 2020 and 35.2 trillion kilowatthours in 2035. Although the recession
slowed the rate of growth in electricity demand in 2008 and 2009, its growth
returns to pre-recession rates by 2015 in the Reference case. In general,
in OECD countries, where electricity markets are well established and consumption
patterns are mature, the growth of electricity demand is slower than in
non-OECD countries, where a large amount of potential demand remains unmet.
In the Reference case, total net generation in non-OECD countries increases
by 3.3 percent per year on average, as compared with 1.1 percent per year
in 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 alternatives to fossil fuelsparticularly,
nuclear power and renewable resources. As a result, long-term prospects
continue to improve for generation from both nuclear and renewable energy
sourcessupported by government incentives and by higher fossil fuel prices.
From 2007 to 2035, world renewable energy use for electricity generation
grows by an average of 3.0 percent per year (Figure 6), and the renewable
share of world electricity generation increases from 18 percent in 2007
to 23 percent in 2035. Coal-fired generation increases by an annual average
of 2.3 percent in the Reference case, making coal the second fastest-growing
source for electricity generation in the projection. The outlook for coal
could be altered substantially, however, by any future legislation that
would reduce or limit the growth of greenhouse gas emissions. Generation
from natural gas and nuclear powerwhich produce relatively low levels of
greenhouse gas emissions (natural gas) or none (nuclear)increase by 2.1
and 2.0 percent per year, respectively, in the Reference case.
Much of the world increase in renewable electricity supply is fueled by
hydropower and wind power. Of the 4.5 trillion kilowatthours of increased
renewable generation over the projection period, 2.4 trillion kilowatthours
(54 percent) is attributed to hydroelectric power and 1.2 trillion kilowatthours
(26 percent) to wind. Except for those two sources, most renewable generation
technologies are not economically competitive with fossil fuels over the
projection period, outside a limited number of niche markets. Typically,
government incentives or policies provide the primary support for construction
of renewable generation facilities. Although they remain a small part of
total renewable generation, renewables other than hydroelectricity and
wind including solar, geothermal, biomass, waste, and tidal/ wave/oceanic
energydo increase at a rapid rate over the projection period (Figure 7).
Electricity generation from nuclear power increases from about 2.6 trillion
kilowatthours in 2007 to a projected 3.6 trillion kilowatthours in 2020
and then to 4.5 trillion kilowatthours in 2035. Higher future prices for
fossil fuels make nuclear power economically competitive with generation
from coal, natural gas, and liquid fuels, despite the relatively high capital
costs of nuclear power plants. Moreover, higher capacity utilization rates
have been reported for many existing nuclear facilities, and the projection
anticipates that most of the older nuclear power plants in the OECD countries
and non-OECD Eurasia will be granted extensions to their operating lives.
Around the world, nuclear generation is attracting new interest as countries
seek to increase the diversity of their energy supplies, improve energy
security, and provide a low-carbon alternative to fossil fuels. Still,
there is considerable uncertainty associated with nuclear power projections.
Issues that could slow the expansion of nuclear power in the future include
plant safety, radioactive waste disposal, rising construction costs and
investment risk, and nuclear material proliferation concerns. Those issues
continue to raise public concern in many countries and may hinder the development
of new nuclear power reactors. Nevertheless, the IEO2010 Reference case
incorporates improved prospects for world nuclear power. The projection
for nuclear electricity generation in 2030 is 9 percent higher than the
projection published in last years IEO.
On a regional basis, the 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 7.7 percent per year from 2007
to 2035, including projected increases averaging 8.4 percent per year in
China and 9.5 percent per year in India. Outside Asia, the largest projected
increase in installed nuclear capacity is in Central and South America,
with increases in nuclear power generation averaging 4.3 percent per year.
Prospects for nuclear generation in OECD Europe have undergone a significant
revision from last years outlook, because a number of countries in the
region are reversing policies that require the retirement of nuclear power
plants and moratoria on new construction. In the IEO2010 Reference case,
nuclear generation in OECD Europe increases on average by 0.8 percent per
year, as compared with the small decline projected in IEO2009.
World delivered energy use by sector
Industry
The industrial sector uses more energy globally than any other end-use sector,
currently consuming about 50 percent of the worlds total delivered energy.
Energy is consumed in the industrial sector by a diverse group of industriesincluding
manufacturing, agriculture, mining, and constructionand for a wide range
of activities, such as processing and assembly, space conditioning, and
lighting. Worldwide, projected industrial energy consumption grows from
184 quadrillion Btu in 2007 to 262 quadrillion Btu in 2035. The industrial
sector accounted for most of the reduction in energy use during the recession,
primarily as a result of substantial cutbacks in manufacturing that had
more pronounced impacts on total fuel consumption than did the marginal
reductions in energy use in other sectors. In the Reference case, national
economic growth rates and energy consumption patterns return to historical
trends.
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. The non-OECD economies account for about 95 percent
of the world increase in industrial sector energy consumption in the Reference
case. Rapid economic growth is projected for the non-OECD countries, accompanied
by rapid growth in their combined total industrial energy consumption,
averaging 1.8 percent per year from 2007 to 2035 (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 2007 to 2035
(as compared with an average increase of 0.9 percent per year in commercial
sector energy use).
A new addition to the energy analysis in IEO2010 is the incorporation of
historical time series and projections for worldwide consumption of marketed
industrial renewable energy.5 Renewable energy use (excluding consumption
of electricity generated from renewable energy sources) constitutes a substantial
portion of the worlds industrial sector energy consumption. In 2007, the
industrial sector consumed 13 quadrillion Btu of non-electricity renewables,
or about 7 percent of the sectors total delivered energy use. From 2007
to 2035, renewable energy use in the industrial sector worldwide increases
by an average of 1.8 percent per year, and the renewable share of total
delivered energy use in the industrial sector increases to 8 percent in
2035. Biomass for heat and power production currently provides the vast
majority of renewable energy consumed in the industrial sector (90 percent),
and it is expected to remain the largest component of the industrial sectors
renewable energy mix through the projection period.
Transportation
Energy use in the transportation sector includes the energy consumed in
moving people and goods by road, rail, air, water, and pipeline. The transportation
sector is second only to the industrial sector in terms of total end-use
energy consumption. Almost 30 percent of the worlds total delivered energy
is used for transportation, most of it in the form of liquid fuels. The
transportation share of world total liquids consumption increases from
53 percent in 2007 to 61 percent in 2035 in the IEO2010 Reference case,
accounting for 87 percent of the total increase in world liquids consumption.
Thus, understanding the development of transportation energy use is the
most important factor in assessing future trends in demand for liquid fuels.
World oil prices reached historically high levels in 2008, in part because
of a strong increase in demand for transportation fuels, particularly in
emerging non-OECD economies (Figure 9). Non-OECD energy use for transportation
increased by 4.5 percent in 2007 and 7.3 percent in 2008, before the impact
of the 2007-2009 global economic recession resulted in a slowdown in transportation
sector activity. Even in 2009, non-OECD transportation energy use grew
by an estimated 3.2 percent, in part because many of the non-OECD countries
(in particular, but not limited to, the oil-rich nations) provide fuel
subsidies to their citizens. With robust economic recovery expected to
continue in China, India, and other non-OECD nations, growing demand for
raw materials, manufactured goods, and business and personal travel is
projected to support fast-paced growth in energy use for transportation
both in the short term and over the long term. In the IEO2010 Reference
case, non-OECD transportation energy use grows by 2.6 percent per year
from 2007 to 2035.
In comparison with the non-OECD economies, high oil prices and economic
recession had more profound impacts on the OECD economies. OECD energy
use for transportation declined by an estimated 1.3 percent in 2008, followed
by a further decrease estimated at 2.0 percent in 2009. Indications are
that a return to growth in transportation energy use in the OECD nations
will not begin before late 2010, given the relatively slow recovery from
the global recession anticipated for many of the key OECD nations. Moreover,
the United States and some of the other OECD countries have instituted
a number of new policy measures to increase the fuel efficiency of their
vehicle fleets, as well as fuel taxation regimes to encourage fuel conservation.
Thus, OECD transportation energy use, growing by only 0.3 percent per year
over the entire projection period, does not return to its 2007 level until
after 2020.
In the long term, for both the non-OECD and OECD economies, steadily increasing
demand for personal travel is a primary factor underlying projected increases
in energy demand for transportation. Increases in urbanization and in personal
incomes have contributed to increases in air travel and motorization (more
vehicles per capita) in the growing economies. Increases in the transport
of goods are expected to result from continued economic growth in both
OECD and non-OECD economies. For freight transportation, trucking is expected
to lead the growth in demand for transportation fuels. In addition, as
trade among countries increases, the volume of freight transported by air
and marine vessels is expected to increase rapidly.
Residential and commercial buildings
The buildings sectorcomprising residential and commercial consumersaccounts
for about one-fifth of the worlds total delivered energy consumption.
In the residential sector, energy use is defined as the energy consumed
by households, excluding transportation uses. The type and amount of energy
used by households vary from country to country, depending on income levels,
natural resources, climate, and available energy infrastructure. Typical
households in OECD nations use more energy than those in non-OECD nations,
in part because higher income levels in the OECD nations support purchases
of larger homes and more energy-using equipment.
For residential buildings, the physical size of a structure is one key
indicator of the amount of energy used by its occupants, although income
level and a number of other factors, such as weather, also can affect the
amount of energy consumed per household. Controlling for those factors,
larger homes generally require more energy to provide heating, air conditioning,
and lighting, and they tend to include more energy-using appliances, such
as televisions and laundry equipment. Smaller structures usually require
less energy, because they contain less space to be heated or cooled, produce
less heat transfer with the outdoor environment, and typically have fewer
occupants.
In the IEO2010 Reference case, world residential energy use increases by
1.1 percent per year over the projection period, from 50 quadrillion Btu
in 2007 to 69 quadrillion Btu in 2035. Much of the growth in residential
energy consumption occurs in the non-OECD nations, where robust economic
growth improves standards of living and fuels demand for residential energy.
Non-OECD residential energy consumption rises by 1.9 percent per year,
compared with the much slower rate of 0.4 percent per year for the OECD
countries, where patterns of residential energy use already are well established,
and slower population growth and aging populations translate to smaller
increases in energy demand.
The commercial sectoroften referred to as the services sector or the services
and institutional sectorconsists of businesses, institutions, and organizations
that provide services. The sector encompasses many different types of buildings
and a wide range of activities and energy-related services. Examples of
commercial facilities include schools, stores, correctional institutions,
restaurants, hotels, hospitals, museums, office buildings, banks, and sports
arenas. Most commercial energy use occurs in buildings or structures, supplying
services such as space heating, water heating, lighting, cooking, and cooling.
Energy consumed for services not associated with buildings, such as for
traffic lights and city water and sewer services, is also categorized as
commercial energy use. Economic trends and population growth drive activity
in the commercial sector and the resulting energy use.
The need for services (health, education, financial, and government) increases
as populations grow. The degree to which additional needs are met depends
in large measure on economic resourceswhether from domestic or foreign
sourcesand economic growth. Economic growth also determines the degree
to which additional activities are offered and used in the commercial sector.
Higher levels of economic activity and disposable income lead to increased
demand for hotels and restaurants to meet business and leisure requirements;
for office and retail space to house and service new and expanding businesses;
and for cultural and leisure space, such as theaters, galleries, and arenas.
OECD commercial energy use expands by 0.9 percent per year in the IEO2010 Reference case. Slow expansion of GDP and low or declining population growth
in many OECD nations contribute to slower anticipated rates of increase
in commercial energy demand. In addition, continued efficiency improvements
moderate the growth of energy demand over time, as energy-using equipment
is replaced with newer, more efficient stock. Conversely, continued economic
growth is expected to include growth in business activity, with its associated
energy use, in areas such as retail and wholesale trade and business, financial
services, and leisure services.
In non-OECD nations, economic activity and commerce increase rapidly over
the 2007-2035 projection period, fueling additional demand for energy in
the service sectors. Population growth also is expected to be more rapid
than in the OECD countries, portending increases in the need for education,
health care, and social services and the energy required to provide them.
In addition, as developing nations mature, they are expected to transition
to more service-related enterprises, which will increase demand for energy
in the commercial sector. The energy needed to fuel growth in commercial
buildings will be substantial, with total delivered commercial energy use
among the non-OECD nations projected to grow by 2.7 percent per year from
2007 to 2035.
World Carbon Dioxide Emissions
World energy-related carbon dioxide emissions rise from 29.7 billion metric
tons in 2007 to 33.8 billion metric tons in 2020 and 42.4 billion metric
tons in 2035an increase of 43 percent over the projection period. With
strong economic growth and continued heavy reliance on fossil fuels expected
for most of the non-OECD economies under current policies, much of the
projected increase in carbon dioxide emissions occurs among the developing
non-OECD nations. In 2007, non-OECD emissions exceeded OECD emissions by
17 percent; in 2035, they are projected to be double the OECD emissions
(Figure 10).
A significant degree of uncertainty surrounds any long-term projection
of energy-related carbon dioxide emissions. Major sources of uncertainty
include estimates of energy consumption in total and by fuel source. The
Kaya Identity provides an intuitive approach to the interpretation of historical
trends and future projections of carbon dioxide emissions. It is a mathematical
expression that is used to describe the relationship among the factors
that influence trends in emissions: carbon intensity of energy (the amount
of energy-related carbon dioxide emissions emitted per unit of energy produced),
energy intensity of the economy (energy consumed per dollar of GDP), output
per capita (GDP per person), and population.
Of the four Kaya components, policymakers are most actively concerned with
the energy intensity of the economy and carbon intensity of energy, which are more readily affected
by the policy levers available to them for reducing greenhouse gas emissions.
In the IEO2010 Reference case, assuming no new climate policies, worldwide
increases in output per capita and relatively moderate population growth
overwhelm projected improvements in energy intensity and carbon intensity
(Figure 11)
Footnotes
1
Current OECD member countries (as of March 10, 2010) are the United States,
Canada, Mexico, Austria, Belgium, Czech Republic, Denmark, Finland, France,
Germany, Greece, Hungary, Iceland, Ireland, Italy, Luxembourg, the Netherlands,
Norway, Poland, Portugal, Slovakia, Spain, Sweden, Switzerland, Turkey,
the United Kingdom, Japan, South Korea, Australia, and New Zealand. Chile
became a member on May 7, 2010, but its membership is not reflected in IEO2010.
2 Liquid fuels and other petroleum include petroleum-derived fuels and non-petroleum-derived
liquid fuels, such as ethanol and biodiesel, coal-to-liquids, and gas-to-liquids.
Petroleum coke, which is a solid, is included. Also included are natural
gas liquids, crude oil consumed as a fuel, and liquid hydrogen.
3 The oil price reported in IEO2010 is for light sweet crude oil delivered
to Cushing, Oklahoma. The price series is consistent with spot prices for
light sweet crude oil reported on the New York Mercantile Exchange (NYMEX).
All oil prices are in real 2008 dollars per barrel, unless otherwise noted.
4 Above-ground constraints refer to those nongeological factors that might
affect supply, including: government policies that limit access to resources;
conflict; terrorist activity; lack of technological advances or access
to technology; price constraints on the economical development of resources;
labor shortages; materials shortages; weather; environmental protection
actions; and other short- and long-term geopolitical considerations.
5 It is important to note that marketed (commercial) industrial renewable
energy in the United States, including both historical data and projections
from the Annual Energy Outlook, has always been reported in the IEO. The
incorporation of data series on industrial sector renewable energy use
outside the United States means that all data series are now presented
in the IEO on a consistent basis worldwide.
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