In the New Policies Scenario, global demand for each fuel source increases, with fossil fuels accounting for over one‐half of the increase in total primary energy demand.
Rising fossil‐fuel prices to end users, resulting from upward price pressures on international markets and increasingly onerous carbon penalties, together with policies to encourage energy savings and switching to low‐carbon energy sources, help to restrain demand growth for all three fossil fuels. Oil remains the dominant fuel in the primary energy mix during the Outlook period, though its share of the primary fuel mix, which stood at 33% in 2008, drops to 28% as high prices and government measures to promote fuel efficiency lead to further switching away from oil in the industrial and power‐generation sectors, and new opportunities emerge to substitute other fuels for oil products in transport. Demand for coal rises through to around 2020 and starts to decline towards the end of the Outlook period. Growth in demand for natural gas far surpasses that for the other fossil fuels due to its more favourable environmental and practical attributes, and constraints on how quickly low‐carbon energy technologies can be deployed. The share of nuclear power increases from 6% in 2008 to 8% in 2035. The use of modern renewable energy — including hydro, wind, solar, geothermal, modern biomass and marine energy — triples over the course of the Outlook period, its share in total primary energy demand increasing from 7% to 14%. Consumption of traditional biomass rises slightly to 2020 and then falls back to just below current levels by 2035, with increased use of modern fuels by households in the developing world. Non‐OECD countries account for 93% of the projected increase in world primary energy demand in the New Policies Scenario, reflecting faster rates of growth of economic activity, industrial production, population and urbanisation. China, where demand has surged over the past decade, contributes 36% to the projected growth in global energy use, its demand rising by 75% between 2008 and 2035. By 2035, China accounts for 22% of world demand, up from 17% today. India is the second‐largest contributor to the increase in global demand to 2035, accounting for 18% of the rise, its energy consumption more than doubling over the Outlook period. Outside Asia, the Middle East experiences the fastest rate of increase, at 2% per year. Aggregate energy demand in OECD countries rises very slowly over the projection period. Nonetheless, by 2035, the United States is still the world’s second‐largest energy consumer behind China, well ahead of India (in a distant third place). It is hard to overstate the growing importance of China in global energy markets. Our preliminary data suggest that China overtook the United States in 2009 to become the world’s largest energy user. Strikingly, Chinese energy use was only half that of the United States in 2000. The increase in China’s energy consumption between 2000 and 2008 was more than four times greater than in the previous decade. Prospects for further growth remain strong, given that China’s per‐capita consumption level remains low, at only one‐third of the OECD average, and that it is the most populous nation on the planet, with more than 1.3 billion people. Consequently, the global energy projections in this Outlook remain highly sensitive to the underlying assumptions for the key variables that drive energy demand in China, including prospects for economic growth, changes in economic structure, developments in energy and environmental policies, and the rate of urbanisation. The country’s growing need to import fossil fuels to meet its rising domestic demand will have an increasingly large impact on international markets. Given the sheer scale of China’s domestic market, its push to increase the share of new low‐carbon energy technologies could play an important role in driving down their costs through faster rates of technology learning and economies of scale.