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Coal met 45% of the growth in global energy demand over the past decade (IEA, 2012a). Policy decisions, including possible measures to cut coal-related greenhouse gas (GHG) emissions and to develop and deploy CCS will determine whether demand carries on rising strongly or changes course radically. In the power sector, inter-fuel competition with renewables and gas can also affect coal demand (IEA, 2012a). Growth in oil consumption in emerging economies (China, India and the Middle East) is likely to outweigh reduced demands in OECD countries, pushing global oil demand steadily higher over the next two decades (IEA, 2012a). Demand for natural gas is expected to increase as a result of rapid growth in developing countries, led by China (IEA, 2012a). Abundant supplies in North America are likely to spur growth in natural gas development in the USA and Canada, and lower natural gas prices may lead to a significant shift towards the increasing use of gas in power generation and transport. The development of unconventional gas resources (i.e. shale gas) appears to be on a fast track in Australia, China and the USA. There are several other countries where shale gas resource estimates are high (above 5.6 km3) and there exists a significant natural gas production infrastructure for internal use or for export, including Algeria, Argentina, Brazil, Canada, Libya and Mexico (US EIA, 2011). However, regulatory uncertainties linked to environmental and health concerns are likely to slow down shale gas development in many of these countries (IEA, 2012a). Water limitations have also stymied development of shale gas resources in certain areas. Significant shale gas development could also emerge in countries that have at least some gas production infrastructure and whose estimated shale gas resources are substantial relative to their current levels of consumption, which are currently met by natural gas imports. Examples of countries in this group are Chile, France, Morocco, Poland, South Africa, Turkey and Ukraine (US EIA, 2011). 3.2.2 Biofuels In 2010, traditional biomass represented 9.6% of global final energy consumption (Figure 9.2), whereas modern biofuels represent only 0.8% of global final energy consumption (Banerjee et al., 2013, fig. 4.1). But the contribution of biofuels to energy supply is expected to grow rapidly, with beneficial impacts including reduction in GHGs, improved energy security and potential new income sources for farmers (de Fraiture et al., 2008). However, local and regional impacts of biofuels could be substantial, as they are among the most water intensive types of fuel production (Figure 3.1). Biomass production for energy will compete with food crops for scarce land and water resources, already a major constraint on agricultural production in many parts of the world. China and India, the world’s two largest producers and consumers of many agricultural commodities, already face severe water limitations in agricultural production, yet both have initiated programmes to boost biofuel production (de Fraiture et al., 2008). The potential impacts of biofuels on water resources and the impacts of bioenergy on ecosystems are discussed in detail in Sections 6.5 and 9.2.2, respectively. Biofuel production has increased dramatically since 2000 (Figure 3.3). Biofuel was originally perceived as a sustainable (‘green’) alternative to GHG-emitting oil and gas for transportation (primarily). Propelled in part by rising oil prices, the macroeconomic trading environment, and energy security concerns, biofuel policies in the European Union (EU) have been reconsidered due to growing recognition of their adverse effects on land, water and the environment. Understanding of short- term climate mitigation benefits of biofuels has also been revised; it has been estimated that biofuels will achieve net GHG savings only after 2030 (IIASA, 2009). 3.3 World ethanol and biodiesel production, 1975–2010 120 000 100 000 80 000 60 000 40 000 20 000 0 Biodiesel Ethanol Source: Shrank and Farahmand (2011, fig. 1, from source cited therein). 32 CHAPTER 3 STATUS, TRENDS AND CHALLENGES Million litres FIGURE 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008PDF Image | Water and Energy
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