HOUSTON: World energy demand will rise by 2.2% a year through 2020, outpacing the 1.6% growth of the past 10 years, according to a McKinsey & Co report.

That growth in demand, led by developing economies, could be cut to less than 1% if new policies and existing technologies are implemented worldwide to increase the efficient use of such products as oil, natural gas and coal, according to the report released today by the New York-based management consulting company.

"Under all scenarios, you see future energy growth being stronger in the next 15 years than in the past despite some pretty significant attempts to increase efficiency,’’ said Diana Farrell, director of the McKinsey Global Institute, which spent a year studying energy demand worldwide among sectors including residential and industrial.

Governments around the world are looking for ways to secure energy supplies amid increased demand from countries such as China and India and dwindling output in the US and North Sea. Debate also has raged over whether the world is nearing peak oil-production capacity, after which supplies will start to slide. The McKinsey report seeks to gauge world demand and energy productivity, a measure of economic growth per unit of energy consumed. The report’s second part, expected early next year, will provide more detailed analysis of sectors and fuel mix.

McKinsey’s estimated increase in consumption from 422 quadrillion British thermal units in 2003 to 610 quadrillion in 2020 is based on $50 a barrel of oil and 3.2% annual growth in worldwide gross domestic product.

The 2.2% pace marks an increase in demand from 1.6% over the previous 10 years, and is about 0.5% higher across all sectors than what the International Energy Agency forecast in its 2006 annual report, McKinsey said.

Developing countries account for 84% of the demand growth, with China representing 32% as a growing middle class fuels automobile ownership and steel demand, McKinsey said.

Europe and North Africa account for 11% combined, while the Arab Gulf region represents 11%. The increased demand includes an expected 1% increase in so-called energy productivity that would keep pace with the historical average. – Bloomberg