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p. 4 of 30 BACK | NEXT Introduction Regional Energy Context Region's Diversity Commercial Energy Past Bank Assistance Capital Requirements for Expansion Energy Policy Issues Conclusions and Recommendations

Bank Policy Initiatives for the Energy Sector : Regional Energy Context

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Commercial Energy

3. The share of commercial energy as a percentage of total energy requirements in DMCs varies from about 5 percent in Nepal to about 90 percent in Malaysia. As a group, the DMCs are net importers of energy. During 1982-1992 primary commercial energy use by DMCs increased from 641 million tons of oil equivalent (toe) to 1,419 million toe at 8.3 percent per year and electricity consumption increased from 439 terawatt-hour (TWh) to 1,147 TWh at 10.1 percent per year. However, with 51 percent of global population, the DMCs used only 17 percent of the world's primary commercial energy. The DMCs' average per capita primary commercial energy use of about 510 kilograms of oil equivalent (kgoe) is therefore quite modest.

4. Energy intensity indicates the consumption of primary energy in an economy per unit value of economic output. Reckoned in terms of toe/million 1980 United States dollars of GDP, the average energy intensity of the DMCs declined by about seven percent from 857 toe/million US$ in 1980 to 793 toe/million US$ in 1990; the PRC’s 1990 energy intensity was 1,236 toe/million US$ in 1990. These energy intensity figures appear high in comparison to 590 toe/million US$ in Canada and US, and 370 toe/million US$ in Western Europe. However, the difference would not be so marked if the economic output is assessed in terms of GDP in purchasing power parity US dollars. It is historically true that OECD countries which showed high energy intensities in the early phases of their industrialization gradually reduced these intensities through changes in industrial structure, energy conservation policies, and adoption of energy efficient technologies. The DMCs need not traverse the same path and could conceivably leapfrog to energy efficient technologies through policies which facilitate their adoption. A further decline of about 10 percent in their energy intensity is feasible by the year 2000 with added emphasis on end-use efficiency.

5. The DMCs are relatively well endowed with primary energy resources, but the mix and geographical spread of these resources are uneven. The proven oil reserves of about 46 billion barrels (equivalent to 6.3 billion toe) account for 4.6 percent of global reserves with a reserve to production ratio of 22 years. The PRC and Indonesia account for almost 70 percent of these oil reserves. Natural gas reserves of about 331 trillion cubic feet (tcf) in DMCs (equivalent to 8.6 billion toe) account for 7 percent of proven world reserves with a reserve to production ratio of 65 years. Because of the current low level of natural gas utilization, the reserve to production ratio for natural gas looks relatively better than that for oil. Coal reserves are large, DMCs being endowed with about 401 billion tons of coal (equivalent to 267 billion toe) accounting for about 33 per cent of the world's proven reserves. At current levels of production, the reserve to production ratio is about 300 years. The DMCs' hydropower potential of about 650 gigawatt (gw) is also substantial, while geothermal energy resources estimated at 16 GW and mostly limited to Indonesia and the Philippines are modest.

6. In terms of energy utilization mix, the primary commercial energy requirements of DMCs (about 1.6 billion toe in 1992) were met by 2.9 billion barrels oil products (25 percent of the total energy requirement), 3.5 tcf of natural gas (5 percent of the total), 1.6 billion tons of coal (67 percent of the total), and 367 TWh of primary electricity (3 percent of the total). The amounts of energy reserves and annual consumption show that DMCs' energy resources, if adequately developed, can make them self-sufficient in energy. Coal plays a dominant role in PRC and India, accounting for 76 and 51 percent, respectively, of total primary energy supply, and for 74 percent and 71 percent of electricity generation. Other DMCs depend on coal for only about 10 percent of their primary energy needs. In electricity consumption terms, the share of the DMCs was only about 9.6 percent of the global figure of 12,000 TWh in 1992. This reflects the disparities of annual per capita electricity consumption and per capita installed capacity between the DMCs and the OECD countries (500 kWh vs 6,600 kWh and 0.1 kW vs 1.9 kW).

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