AT: Energy Information Agency Estimates

AT: Energy Information Agency Estimates

Paul Roberts, Journalist, Finalist for the National Magazine Award, ‘4

Willem Nel, Institute for Energy Studies at the University of Johannesburg, and Christopher Cooper, Institute for Energy Studies at the University of Johannesburg, March, ‘8

(A critical review of IEA's oil demand forecast for China, Energy Policy, Volume 36, Issue 3, p. Science Direct) [Bozman]
Energy projection models like the NEMS used by the Energy Information Administration (EIA, 2005, p. 44) and the WEM used by the International Energy Agency (IEA, 2004, pp. 532–533) use exogenous input assumptions for the price and availability of energy commodities. These models, however, neglect the role of energy as a factor of production, as has been proposed by the studies referred to above (Cleveland et al., 2000; Ayres and Warr, 2005; Ayres et al., 2007 R.U. Ayres, H. Turton and T. Casten, Energy efficiency. Sustainability and economic growth, Energy 32 (2007), pp. 634–648. Article | PDF (353 K) | View Record in Scopus | Cited By in Scopus (3)Ayres et al., 2007). The causal relationship between energy consumption and GDP growth is evident in the 2006 IEA report in which China and India have the greatest GDP growth and energy demand growth (IEA, 2006a, p. 59, 86). Despite increasing concerns over oil supply by Peak Oil study groups and forums, the IEA projects balanced oil markets to 2030 (IEA, 2006a). Concerns raised by the IEA over investment in the oil and gas industry ([IEA, 2006a] and [IEA, 2007]) suggest that the oil supply outlook in the reference scenario should be considered optimistic.
The E.I.A. ignores Chinese consumption-real figures are much lower.

Willem Nel, Institute for Energy Studies at the University of Johannesburg, and Christopher Cooper, Institute for Energy Studies at the University of Johannesburg, March, ‘8

(A critical review of IEA's oil demand forecast for China, Energy Policy, Volume 36, Issue 3, p. Science Direct) [Bozman]
The rapidly growing Chinese economy places high demands on oil supply, which is complicated by concerns about Peak Oil and resource scarcity. While some researchers consider the notion that energy consumption could decouple from economic growth, others have demonstrated that the perceived decoupling disappears if useful work is introduced as a factor of production. This implies that the apparent decoupling is caused by incremental energy-efficiency improvements. Earlier attempts to explain the decoupling focused on energy quality and noted that the decoupling is much weaker if energy aggregation is quality-adjusted. Researchers have demonstrated that quality-adjusted energy is a Granger cause for GDP growth in a causality test. Crude oil is an important energy source because it has been demonstrated in several studies that this is the highest quality primary energy source of all fossil fuels. Confirmation of the causality between energy consumption and GDP growth also serves to confirm the basis of historical energy consumption trends. Significant divergence from historical trends in the form of lower energy intensities would require fundamental structural changes in market conditions or technological breakthroughs that increase the useful work performed by energy supplied to the economy. Quantitative increases in primary energy consumption would serve the same purpose. The application of logistic curves to the lower-bound global historical data of GDP per capita in comparison to oil consumption per capita emphasizes the fact that the IEA forecasts for China diverge significantly from historical trends. Although potential contributing factors associated with the unique attributes of China could contribute to such divergence, the IEA projections are unprecedented in history.