Economic Report 2013

8. Energy Policy and Security of Supply

The world’s energy landscape continues to spring its surprises. Just a few years ago, who would have considered that North America may well return to self-sufficiency in oil by the end of the current decade or shortly thereafter, just as ten years ago who foresaw its coming self-sufficiency in gas, with the likelihood of future exports of LNG rather than imports? These dramatic changes in one of the world’s largest markets, driven entirely by technical advances, have turned many assumptions about energy policy on their head. Instead of ever rising prices for fossil fuels, as often assumed, the price of gas has been low for the past four years in North America and this, in turn, has driven down the price of coal around the world, as surplus American coal has been exported.

In Europe and Germany in particular, this has led to a significant increase in coal consumption for power generation purposes, thus threatening the EU’s projected reductions in greenhouse gas (GHG) emissions, at least in the short term. Elsewhere, coal’s use in power generation has meant that almost half of the rise in energy demand worldwide over the past ten years has been met by coal, expanding faster than all renewable energies combined, with China king of the coal consumers and India following on a similar trajectory, but from a lower starting point. In end use terms, electricity demand is growing the fastest, hence the increase in coal consumption, and this is likely to continue as non-OECD countries continue to develop rapidly. The contrast between the energy requirements of OECD and non-OECD countries is illustrated vividly in Figure 42.

Figure 42: A Tale of Two Worlds – Energy Demand in OECD and Non-OECD Countries

Non OECD Quadrillion British Thermal Units

Quadrillion British Thermal Units OECD

500

500

Other Renewables

400

400

Coal

300

300

200

200

Gas

100

100

Oil

0

0

2000

2020

2040

2000

2020

2040

Source: ExxonMobil 2013 Outlook for Energy Source: ExxonMobil 3 Outlo k fo Energy

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ECONOMIC REPORT 2013