Energy and Development Trends

December 19, 2011

One of the least understood but potentially important trends in the energy field is how emerging economies’ development priorities are shaping energy markets. Emerging economies are expected to make up the bulk of growth in demand for energy in the coming decades, with countries outside the Organisation for Economic Co-operation and Development (OECD) accounting for 83 percent of expected growth in energy demand between 2008 and 2035. As the global centers of expansion, these countries will increasingly influence how new energy markets evolve—commercial frameworks, technology sharing and development, regulations, and preferences for fuels and technologies that meet their societies’ needs. Many of these countries have integrated new notions of sustainable development—driven by concerns about local pollution, energy security, climate change, and social development—that are likely to bring about energy systems different from U.S. or European models of energy infrastructure and use.

These development frameworks also influence how companies compete and succeed in these markets by influencing technology decisions, efficiency or local pollution regulations, local rules about content, interaction with state-dominated sectors, and the dynamics of markets and physical infrastructure. Moreover, the influence these development policies have on the investments and strategies of energy companies and energy markets can materially impact investment and technology trends available to other developing countries. These strategies and experiences can open up opportunities for bringing energy to new areas in other countries. U.S. development efforts might gain useful insights through a survey of how Brazil, China, and India view meeting their energy needs within their development agenda, how companies are involved in these ventures, and what models could be useful for countries developing their systems. This report evaluates the role of rapidly emerging developing economies in energy development trends and recommends how the development programs of the United States, along with the international donor community, should shift to capitalize on these trends.