A model approach for analysing trends in energy supply and demand at country level: Case study of industrial development in China

Ideally, national energy supply and demand choices would be based on comprehensive models and predictions of the energy sources, energy transformations, energy carriers and energy end-uses expected to play major roles into the foreseeable future (20-40 years). However, in many cases, the necessary detailed, high quality, consistent and timely data is not available for such comprehensive models to be constructed, in particular in large and complex developing economies expected to be major energy users in the near future. In the developing countries that are the focus of UNIDO's work, attention has been concentrated on making progress simultaneously on two fronts: (a) a dramatic decrease in energy intensity, particularly in activities linked to industrial production and (b) a major increase in the contribution of local renewable energy to limit growth in fossil fuel use. National policies need to be oriented towards a strict and strategic monitoring of the respective energy matrices with a simultaneous focus on both fronts. Robust assessments of industrial development trends throughout the whole 20-40 year transition phase are needed to achieve both objectives. Until more comprehensive energy-related models can be built up, to overcome the limited availability of data at country level it is proposed that a simple energy supply and demand model analysis consisting of three phases be used for identifying the consistency of future scenarios and corresponding policy requirements. This model analysis, which is a dynamic exercise, consists, first, of an analysis at aggregate level of the current and future national energy matrices; secondly, an analysis of perspectives for decreasing the energy intensity of the most inefficient systems or industrial sectors; and thirdly, an analysis of perspectives for increasing the supply and cost-effectiveness of sustainable energy sources. As an illustration of this model approach, the case of China is analysed with emphasis on the industrial sector, followed by a discussion of some of the structural change policies indicated for China to reach its planned energy supply and demand objectives for 2020.