Report of the National Intelligence Council's 2020 Project
Date: Sunday, March 06, 2005 @ 21:26:47 GMT
Topic: General

In the tapten yahoo group, Al posted: Excerpted from Report of the National Intelligence Council's 2020 Project Based on Consultations With Nongovernmental Experts Around the World

Growing Demands for Energy

Growing demands for energy-especially by the rising powers-through 2020 will have substantial impacts on geopolitical relations. The single most important factor affecting the demand for energy will be global economic growth, particularly that of China and India.

Despite the trend toward more efficient energy use, total energy consumed probably will rise by about 50 percent in the next two decades compared to a 34 percent expansion from 1980-2000, with an increasing share provided by petroleum.

Renewable energy sources such as hydrogen, solar, and wind energy probably will account for only about 8 percent of the energy supply in 2020. While Russia, China, and India all plan expansions of their nuclear power sector, nuclear power probably will decline globally in absolute terms in the next decade.

The International Energy Agency assesses that with substantial investment in new capacity, overall energy supplies will be sufficient to meet growing global demand. Continued limited access of the international oil companies to major fields could restrain this investment, however, and many of the areas-the Caspian Sea, Venezuela, West Africa and South China Sea-that are being counted on to provide increased output involve substantial political or economic risk. Traditional suppliers in the Middle East are also increasingly unstable. Thus sharper demand-driven competition for resources, perhaps accompanied by a major disruption of oil supplies, is among the key uncertainties.

China and India, which lack adequate domestic energy resources, will have to ensure continued access to outside suppliers; thus, the need for energy will be a major factor in shaping their foreign and defense policies, including expanding naval power.

Experts believe China will need to boost its energy consumption by about 150 percent and India will need to nearly double its consumption by 2020 to maintain a steady rate of economic growth.

Beijing's growing energy requirements are likely to prompt China to increase its activist role in the world-in the Middle East, Africa, Latin America, and Eurasia. In trying to maximize and diversify its energy supplies, China worries about being vulnerable to pressure from the United States which Chinese officials see as having an aggressive energy policy that can be used against Beijing.

For more than ten years Chinese officials have openly asserted that production from Chinese firms investing overseas is more secure than imports purchased on the international market. Chinese firms are being directed to invest in projects in the Caspian region, Russia, the Middle East, and South America in order to secure more reliable access.

The Geopolitics of Gas. Both oil and gas suppliers will have greater leverage than today, but the relationship between gas suppliers and consumers is likely to be particularly strong because of the restrictions on delivery mechanisms. Gas, unlike oil, is not yet a fungible source of energy, and the interdependency of pipeline delivery-producers must be connected to consumers, and typically neither group has many alternatives-reinforces regional alliances.

More than 95 percent of gas produced and three quarters of gas traded is distributed via pipelines directly from supplier to consumer, and gas-to-liquids technology is unlikely to change these ratios substantially by 2020.

Europe will have access to supplies in Russia and North Africa while China will be able to draw from eastern Russia, Indonesia, and potentially huge deposits in Australia. The United States will look almost exclusively to Canada and other western hemisphere suppliers.

Europe's energy needs are unlikely to grow to the same extent as those of the developing world, in part because of Europe's expected lower economic growth and more efficient use of energy. Europe's increasing preference for natural gas, combined with depleting reserves in the North Sea, will give an added boost to political efforts already under way to strengthen ties with Russia and North Africa, as gas requires a higher level of political commitment by both sides in designing and constructing the necessary infrastructure. According to a study by the European Commission, the Union's share of energy from foreign sources will rise from about half in 2000 to two-thirds by 2020. Gas use will increase most rapidly due to environmental concerns and the phasing out of much of the EU's nuclear energy capacity.

".many of the areas. being counted on to provide increased [energy] output involve substantial political or economic risk.. Thus sharper demand-driven competition. perhaps accompanied by a major disruption of oil supplies, is among the key uncertainties."

Deliveries from the Yamal-Europe pipeline and the Blue Stream pipeline will help Russia increase its gas sales to the EU and Turkey by more than 40 percent over 2000 levels in the first decade of the 21st century; as a result, Russia's share of total European demand will rise from 27 percent in 2000 to 31 percent in 2010. Russia, moreover, as the largest energy supplier outside of OPEC, will be well positioned to marshal its oil and gas reserves to support domestic and foreign policy objectives. Algeria has the world's eighth largest gas reserves and also is seeking to increase its exports to Europe by 50 percent by the end of the decade.


Climate Change and Its Implications Through 2020

Policies regarding climate change are likely to feature significantly in multilateral relations, and the United States, in particular, is likely to face significant bilateral pressure to change its domestic environmental policies and to be a leader in global environmental efforts. There is a strong consensus in the scientific community that the greenhouse effect is real and that average surface temperatures have risen over the last century, but uncertainty exists about causation and possible remedies. Experts in a NIC-sponsored conference judged that concerns about greenhouse gases, of which China and India are large producers, will increase steadily through 2020. There are likely to be numerous weather- related events that, correctly or not, will be linked to global warming. Any of these events could lead to widespread calls for the United States, as the largest producer of greenhouse gases, to take dramatic steps to reduce its consumption of fossil fuels.

Policymakers will face a dilemma: an environmental regime based solely on economic incentives will probably not produce needed technological advances because firms will be hesitant to invest in research when there is great uncertainty about potential profits. On the other hand, a regime based on government regulation will tend to be costly and inflexible. The numerous obstacles to multilateral action include resistance from OPEC countries that depend on fossil fuel revenues, the developing world's view that climate change is a problem created by the industrial world and one they cannot address given their economic constraints, and the need for significant technological innovation to maximize energy efficiency.

Among reasons for optimism, participants noted that the world is ready and eager for US leadership and that new multilateral institutions are not needed to address this issue. Indeed, crafting a policy to limit carbon emissions would be simplified by the fact that three political entities-the United States, the European Union, and China-account for over half of all CO2 emitted into the atmosphere. An agreement that included these three plus the Russian Federation, Japan, and India would cover two-thirds of all carbon emissions.

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