Al-Mejrin added that privatization cuts waste in the use of resources, and thus minimizes cost of production. He argued that the added high value of the petroleum industry tends to lead to lack of concern for efficiency - and thus to inefficiency. He also pointed out that due to the extremely capital-intensive nature of the upstream oil industry, overstaffing and labor redundancy are not a real threat in this sector. "The social cost of privatizing upstream oil activities may not be as high as the social cost of privatization in other industries. Moreover, if regulators are effective, they ought to have solutions to absorb redundant personnel in areas where their skills are most needed," said Al-Mejrin.
Nagy Eltony from the Arab Planning Institute of Kuwait said that Kuwait has exploited its fixed costs advantages, but it needs to develop the petrochemical industry further to ensure that today's strengths do not transform into weaknesses tomorrow. Dramatic capacity expansion is underway or has already taken place in the GCC and Asia, intensifying the competition among GCC producers. Expanding markets for the GCC's petrochemicals is only part of the solution. He added that the region needs to improve cooperation in the petrochemicals sector under the umbrella of the GCC, to coordinate marketing efforts or perhaps even jointly form a cartel with other new producers. "Such cooperation will prove beneficial as the GCC countries are beginning to capture sizeable portions of the world petrochemicals export market," said Eltony.
In a thoroughly discussed paper on the effects of CO2 on the environment, one of the participants said that approximately 80% of all human-caused carbon dioxide emissions are currently due to fossil fuel combustion, and world energy use has become the main subject of the climate change debate. The paper showed that the world's carbon dioxide emissions are projected to rise from 6.5 billion metric tons carbon equivalent in 2001 to 7.7 billion metric tons in 2010 and 10.4 billion metric tons in 2025. Much of the projected increase in carbon dioxide emissions is expected in developing states, accompanying the large increases in energy use projected there. Developing countries account for 59% of the projected increase in carbon dioxide emissions between 2001 and 2025.
Continued heavy reliance on coal, oil and other fossil fuels, as projected for the developing countries, would ensure that even if the industrialized states reduced their carbon dioxide emissions, there still would be substantial increases in worldwide carbon dioxide emissions in the foreseeable future. In the industrialized countries, history shows a relatively weak link between energy consumption and economic growth. Growth in demand for energy lagged behind economic growth. In the developing countries, the two have been more closely correlated.
The IEO forecasts that energy intensity in the industrialized countries is expected to improve (i.e. to decrease) by 1.3% per year between 2001 and 2025, as against the 1.4% per year decrease between 1970 and 2001. Energy intensity is expected to improve more rapidly in the developing countries - by 1.7% per year on average - as their economies begin to behave more like those of the industrialized states due to improving living standards.
World carbon intensity has improved (decreased) substantially over the past three decades, falling from 302 metric tons per million 1997 dollars of GDP in 1970 to 202 metric tons per million 1997 dollars in 2001. Although the pace of improvement in emissions intensity is expected to slow over the forecast period, a continuing decline is projected to 154 metric tons per million 1997 dollars of GDP in 2025.
On a regional basis, the most rapid rates of improvement in carbon intensity are projected for the transitional economies and for China and India. In China and India, this is chiefly due to rapid economic growth rather than to a switch to less carbon-intensive fuels. Both China and India are projected to remain heavily dependent on fossil fuels, particularly coal, but their annual GDP growth is projected to average 5.9%, as compared with an expected 3.4% annual rate of increase in fossil fuel use from 2001 to 2025.
The rate of improvement in carbon dioxide intensity could vary considerably in the future. Technological advances and government policy initiatives have the potential to affect it, and different rates of economic improvement could also considerably alter future carbon intensity levels. The IEO projects a fall in world carbon dioxide intensity from 202 metric tons carbon equivalent per million 1997 dollars of GDP in 2003 to 154 metric tons per million dollars in 2025. However, if world economic growth proceeds faster, carbon dioxide intensity could fall more quickly, to 142 metric tons per million dollars in 2025. In contrast, if the world's GDP expanded more slowly, world carbon dioxide intensity would decline to a projected 166 metric tons per million dollars in 2025.
