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Study Shows Growth in World Energy Use Slows, Remains Strong in China


World energy consumption grew last year, but not as fast as the world's economy. That is one of the conclusions in the BP annual Statistical Review of World Energy released this month by the London-based oil company. The study also shows a reduction in energy use in the world's most industrialized countries and a large increase in some of the largest developing nations. VOA's Greg Flakus has more from Houston.

In a presentation at Rice University's James Baker Institute, BP senior economist Mark Finley noted that analysis of data from 2006 shows continued growth in energy consumption, but at a somewhat lower rate than might have been expected given overall economic expansion.

"Last year, global energy consumption grew by 2.4 percent," he said. "That is a bit above the 10-year average, but not as strong as you would have expected, given how strong the world's economy was. By the way, the world's economy accelerated and the world's energy consumption decelerated last year."

Finley says most of the deceleration in energy use was in the industrialized nations that form the OECD, or Organization for Economic Development and Cooperation. He says energy consumption in large, developing nations like India and China has accelerated. Chinese energy consumption in 2006 rose more than eight percent, and Finley says China alone accounts for around half the growth in overall global energy consumption in the last five years.

Finley says demand for coal, in particular, has been strong there.

"China, by itself, accounted for nearly three quarters of all the growth in coal consumption in the world and the numbers are staggering," he said. "The growth of coal-fired electricity generating capacity last year was 25 percent. Steel output rose by 20 percent."

China relies on coal for most of its electricity, and the demand for coal has grown along with China's industrial expansion. But Finley says the use of coal increased elsewhere around the world in 2006 as well, even in countries that have made a commitment to reduce greenhouse gases under the 1997 Kyoto treaty.

"Coal consumption rose even in Europe, despite the existence of an emissions trading scheme and the Kyoto commitments," he said. "In fact, that is part of the reason why coal was able to rise in the European Union last year because there was no effective penalty for burning coal."

Finley explains that an important factor in reducing use of any given energy source is the price and that flaws in the EU system last year kept the price of coal low. He says futures prices for coal indicate that may not be the case for this year.

The BP report shows oil consumption has fallen in some rich countries, particularly in the United States, and Finley says a sharp rise in price last year is the reason. He says this clearly demonstrates that consumers do react to price and do reduce their consumption accordingly.

The BP report shows a drop of 400,000 barrels per day in oil consumption by OECD countries in 2006, the biggest such drop since 1983.

This is the 56th annual review of world energy conducted by BP. The report has become a highly valued tool for economists and energy industry planners both in government and the private sector.

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