China and India in Energy Markets and Its Implication for Global Greenhouse Gas Emissions

Conference Proceedings Paper
China and India in Energy Markets and Its Implication for Global Greenhouse Gas Emissions
Paltsev, S., and J. Reilly (2007)
Conference Proceedings, Conference on India and China's Role in International Trade and Finance and Global Economic Governance

Abstract/Summary:

We describe several scenarios for economic development, energy use, and greenhouse gas emissions in China and India based on the MIT Emissions Prediction and Policy Analysis (EPPA) model, a computable general equilibrium model of the world economy. Historic indicators for economic growth, energy use, and energy intensity in China and India are discussed. In the Baseline scenario, energy use in China is projected to increase from around 60 EJ in 2005 to around 110 EJ in 2025, and energy use in India from around 20 EJ in 2005 to 40 in 2025. Alternative scenarios were developed to consider: (1) How fast might energy demand grow in China and India and how does it depend on key uncertainties? (2) Do rising prices for energy affect growth in the region? (3) Would growth in China and India have a substantial effect on world energy markets? (4) Would development of regional gas markets have substantial effects on energy use in the region and on gas markets in other regions? We also consider the implications for greenhouse gas emissions in these scenarios. Briefly, we find that with more rapid economic growth energy demand in China could reach 235 EJ and in India 95 EJ by 2025, more than twice the level in the Baseline; rising energy prices place a drag on growth of countries in the region of 0.2 to 0.6% per year; world crude oil markets could be substantially affected by demand growth in the region, with the price effect being as much as $15 per barrel in 2025; and development of regional gas markets could expand gas use in Asia while leading to higher gas prices in Europe. Greenhouse gas emissions in China and India grow from 9.3 GtCO2e in 2005 to 16.4 GtCO2e in 2025 in the Baseline scenario. Depending on the scenario, GHG emissions range from 12.5 to 36.9 GtCO2e. In the high case emissions from these two countries would be almost half of the global GHG emissions by 2025.

Citation:

Paltsev, S., and J. Reilly (2007): China and India in Energy Markets and Its Implication for Global Greenhouse Gas Emissions. Conference Proceedings, Conference on India and China's Role in International Trade and Finance and Global Economic Governance (http://www.icrier.org/conference/2007/6dec07.html)
  • Conference Proceedings Paper
China and India in Energy Markets and Its Implication for Global Greenhouse Gas Emissions

Paltsev, S., and J. Reilly

Conference on India and China's Role in International Trade and Finance and Global Economic Governance

Abstract/Summary: 

We describe several scenarios for economic development, energy use, and greenhouse gas emissions in China and India based on the MIT Emissions Prediction and Policy Analysis (EPPA) model, a computable general equilibrium model of the world economy. Historic indicators for economic growth, energy use, and energy intensity in China and India are discussed. In the Baseline scenario, energy use in China is projected to increase from around 60 EJ in 2005 to around 110 EJ in 2025, and energy use in India from around 20 EJ in 2005 to 40 in 2025. Alternative scenarios were developed to consider: (1) How fast might energy demand grow in China and India and how does it depend on key uncertainties? (2) Do rising prices for energy affect growth in the region? (3) Would growth in China and India have a substantial effect on world energy markets? (4) Would development of regional gas markets have substantial effects on energy use in the region and on gas markets in other regions? We also consider the implications for greenhouse gas emissions in these scenarios. Briefly, we find that with more rapid economic growth energy demand in China could reach 235 EJ and in India 95 EJ by 2025, more than twice the level in the Baseline; rising energy prices place a drag on growth of countries in the region of 0.2 to 0.6% per year; world crude oil markets could be substantially affected by demand growth in the region, with the price effect being as much as $15 per barrel in 2025; and development of regional gas markets could expand gas use in Asia while leading to higher gas prices in Europe. Greenhouse gas emissions in China and India grow from 9.3 GtCO2e in 2005 to 16.4 GtCO2e in 2025 in the Baseline scenario. Depending on the scenario, GHG emissions range from 12.5 to 36.9 GtCO2e. In the high case emissions from these two countries would be almost half of the global GHG emissions by 2025.