Page 3 - Driving Force for Energy Demand
P. 3
ving Forces for Energy Demand 2010
1. Introduction
The future of energy is directly linked to the future well-being and prosperity of
the world’s people. (ExxonMobil, 2009). The growth in demand for energy is
closely linked to economic growth and the efficient use of energy. The sharp
increase in energy demand seen from about 2000 can be attributed to the rapid
growth of China, India and other emerging economies (Benthem & Romani,
2009). This energy demand growth has been a side effect of large populations,
better living conditions and improved qualities of life in particular in Asia. At the
same time, there are still 1.5 billion people, a quarter of the world’s population,
who lack access to electricity (ExxonMobil, 2009). By providing reliable and
affordable energy, policy makers can help spur economic growth to help lift
people out of extreme poverty.
As a result of increased efficiency in the use of energy as an economy reaches a
certain level of development, energy demand generally grows according to an S-
shaped curve (Benthem & Romani, 2009) For policymakers, it is essential that the
decrease in energy intensity (per unit of GDP) that creates the top part of the s-
slope starts as early as possible to reduce pressure on energy supplies.
The increasingly controversial nature of CO2 emissions creates a range of
implications for policymakers. On the one hand fossil fuels are a source of
reliable and fairly cheap energy, on the other hand, the combustion of fossil fuels
leads to emissions of CO2 and a range of pollutants that are harmful to the
environment. Also, while it has been shown that demand is sensitive to price in
the long term, it is even more sensitive to income, so that to be able to reduce
CO2 emissions in the developed world while allowing for economic development
in the developing world, policy with regards to pricing and energy efficiency will
have to be highly differentiated. Such a differentiation may have consequences
for the economies in the developed world with negative effects on employment
rates and economic growth. Such negative effects are unlikely to be tolerated by
voters in the long term.
Posted by Etree Project Consultants Pvt Ltd only for knowledge sharing purpose. Page 3
1. Introduction
The future of energy is directly linked to the future well-being and prosperity of
the world’s people. (ExxonMobil, 2009). The growth in demand for energy is
closely linked to economic growth and the efficient use of energy. The sharp
increase in energy demand seen from about 2000 can be attributed to the rapid
growth of China, India and other emerging economies (Benthem & Romani,
2009). This energy demand growth has been a side effect of large populations,
better living conditions and improved qualities of life in particular in Asia. At the
same time, there are still 1.5 billion people, a quarter of the world’s population,
who lack access to electricity (ExxonMobil, 2009). By providing reliable and
affordable energy, policy makers can help spur economic growth to help lift
people out of extreme poverty.
As a result of increased efficiency in the use of energy as an economy reaches a
certain level of development, energy demand generally grows according to an S-
shaped curve (Benthem & Romani, 2009) For policymakers, it is essential that the
decrease in energy intensity (per unit of GDP) that creates the top part of the s-
slope starts as early as possible to reduce pressure on energy supplies.
The increasingly controversial nature of CO2 emissions creates a range of
implications for policymakers. On the one hand fossil fuels are a source of
reliable and fairly cheap energy, on the other hand, the combustion of fossil fuels
leads to emissions of CO2 and a range of pollutants that are harmful to the
environment. Also, while it has been shown that demand is sensitive to price in
the long term, it is even more sensitive to income, so that to be able to reduce
CO2 emissions in the developed world while allowing for economic development
in the developing world, policy with regards to pricing and energy efficiency will
have to be highly differentiated. Such a differentiation may have consequences
for the economies in the developed world with negative effects on employment
rates and economic growth. Such negative effects are unlikely to be tolerated by
voters in the long term.
Posted by Etree Project Consultants Pvt Ltd only for knowledge sharing purpose. Page 3
