Growing Demand & Sustainable Development

Supplying Energy for Growing Demand in Developing Countries

What are the Issues?

In areas where there is adequate access to energy supplies, the main challenge at the intersection of energy and development is maintaining secure supplies at affordable prices, thereby enabling continued economic growth, while balancing the environmental impacts of increased energy use. The provision of reliable, affordable, efficient and clean energy supplies is widely acknowledged as a prerequisite for sustainable development.1

What are the Challenges?

Energy affordability is driven by supply and demand: as demand for oil and natural gas increases, and new supply sources become limited, there will be upwards pressures on prices.2 Slowing demand growth is one way to dampen the rate at which prices rise. Demand can be constrained through greater energy efficiency, which results from the use of improved technologies, the application of better industrial practices, and the creation and enforcement of policies encouraging efficiency. On the other hand, subsidizing energy prices has the counter-productive effect of encouraging energy consumption, and is generally not an effective solution. (See more on Energy Conservation & Efficiency)

Improvements in industrial efficiency are part of the answer but since consumers are increasingly the driving force of energy consumption, in developing and developed countries alike,3 strategies must also address the increasing energy use coming from residences and road transportation.

What are Solutions?

To make increased energy demand more sustainable, both developing and developed countries will have to use energy more productively, manage energy demand and thereby influence the affordability of energy supplies and the environmental impacts of increased energy use.4 Developing countries with growing economies may need to consider "technological leapfrogging" (i.e., bypassing some of the steps followed in the past in industrialized countries and jumping directly to modern technologies) to avoid unsustainable increases in energy demand.5 However, wide adoption of more efficient appliances, machinery, processes, vehicles, and transportation systems will require investment and significant, coordinated efforts.6

1. 1 UN Department of Economic and Social Affairs website, updated in February, 2008. http://www.un.org/esa/sustdev/sdissues/energy/enr.htm
2. 2 "Facing the Hard Truths about Energy", Executive Summary p.25.
3. 3 "Curbing Global Energy Demand Growth: The Energy Productivity Opportunity", McKinsey Global Institute, 2007, p.10.
4. 4 "Making the Most of the World’s Energy Resources", McKinsey Quarterly, 2007 November 1, Farrell, Nyquist, and Rogers, p.22. Found online at http://www.mckinseyquarterly.com/Making_the_most_of_the_worlds_energy_resources_1904
5. 5 "World Energy Assessment", p.37.
6. 6 Ibid, p.46-47.