WASHINGTON — What will happen to the price of oil and its supply if Asia’s emerging economic giants, China and India, continue their quest to raise living standards and catch up with rich nations by emulating the West’s energy-intensive growth model? And what will the impact be on the global environment, which is already being battered by climate change?
When the crude oil price surged to almost $140 a barrel recently, it marked a 40 percent gain this year alone. Most analysts agree that a mainspring of the oil price rise is voracious demand from China and India. Some say that if this demand continues unchecked the oil price could reach $200 a barrel or go even higher within the next few years.
Last November, the International Energy Agency warned in its annual energy survey that if governments around the world stick with existing policies, global energy needs would be well over 50 percent higher in 2030 than today and China and India together would account for 45 percent of this increase. China surpassed Japan several years ago to become the second largest oil user after the United States.
Accommodating the energy needs of China and India, even if they adopt more sustainable policies, will be difficult in a world that is already straining oil supply. There will also have to be some painful compromises and trade-offs made between developed and developing countries in negotiations to curb global warming.
Can China and India ever emulate Western lifestyles? The IEA thinks not. “Quite simply, the resource-intensive economic model currently being pursued throughout the world cannot be sustained indefinitely,” it says in its most recent annual energy survey. “A level of per capita income in China and India comparable with that of the industrialized countries would, on today’s model, require a level of energy use beyond the world’s energy resource endowment and the absorptive capacity of the planet’s ecosystem.”
The U.S., with no more than 5 percent of the world’s population, consumes 25 percent of the world’s oil. The U.S. uses around 14 times as much oil as China on a per capita basis, and over 28 times as much as India per person. If per capita oil use in China and India were to increase to the current level in the U.S., their oil demand would rise by a combined 160 million barrels a day — almost twice the present level of world oil consumption of around 87 million barrels a day. Moreover, this does not allow for future increases in population, which would intensify demand for energy.
The IEA has calculated that this level of demand for oil from China, India and the rest of the world — close to 240 million barrels a day — would deplete remaining proven world reserves of conventional oil in less than 15 years. It would drain the ultimately recoverable oil and natural gas liquids that are estimated to lie under the ground and the seabed in under 26 years.
Of course, big new finds of could be made. But that is getting tougher and much more expensive. Heavy oil and tar sands or shale could also be exploited to stretch oil consumption by quite a few more years. However, the cost to the environment would be high. Producing, processing and then burning this kind of fuel is very polluting.
According to a study just issued by the Netherlands Environmental Assessment Agency, China last year overtook the U.S. as the largest source of carbon dioxide, the main greenhouse gas warming the planet. China accounted for 24 percent of the nearly 30 billion metric tons of CO2 spewed into the atmosphere in 2007, the U.S. 21 percent and India 8 percent.
Yet on a per capita basis, China emitted barely a quarter of U.S. CO2 emissions while India emitted just 10 percent. If per person emissions of CO2 in China and India reached current American levels, again assuming no major departures from trends elsewhere, world emissions would be three times higher than today. The IEA says that the implications for climate change of such an increase could be catastrophic. It adds that even sustained global fossil energy consumption at current levels risks causing a substantial rise in CO2 concentrations and temperatures around the world.
Michael Richardson is an energy and security specialist at the Institute of South East Asian Studies in Singapore.