Tuesday 07 / May / 2024
Muscat: Global demand for energy is expected to increase by some 30 per cent between 2015 and 2035, an average growth of 1.3 per cent per year, according to the 2017 edition of the BP Energy Outlook, published on Sunday.
However, this growth in energy demand is significantly lower than the 3.4 per cent per year rise expected in global GDP, reflecting improved energy efficiency driven by improvements in technology and environmental concerns.
“The global energy landscape is changing. Traditional centers of demand are being overtaken by fast-growing emerging markets. The energy mix is shifting, driven by technological improvements and environmental concerns. More than ever, our industry needs to adapt to meet those changing energy needs,” said Bob Dudley, BP group chief executive.
The Outlook reviews long-term energy trends and develops projections for world energy markets over the next two decades.
Main energy sources
While non-fossil fuels are expected to account for half of the growth in energy supplies over the next 20 years, the Outlook projects that oil and gas, together with coal, will remain the main source of energy powering the world economy, responsible for more than 75 per cent of total energy supplies in 2035, compared with 86 per cent in 2015.
Oil demand grows at an average rate of 0.7 per cent per year, although this is expected to gradually slow over the period. The transport sector continues to consume most of the world’s oil with its share of global demand, remaining close to 60 per cent in 2035. However, non-combusted use of oil, particularly in petrochemicals, is expected to become the main source of growth for oil demand by the early 2030s.
“The possibility that the most important source of growth in oil demand in the 2030s would not be to power cars or trucks or planes, but rather used as an input into other products, such as plastics and fabrics, is quite a change from the past,” said Spencer Dale, BP’s group chief economist.
Natural gas
Gas grows more quickly than either oil or coal, with demand growing an average 1.6 per cent per year. Its share of primary energy overtakes coal to be the second-largest fuel source by 2035. Shale gas production accounts for two-thirds of the increase in gas supplies, led by growth in the US. LNG growth, driven by increasing supplies in Australia and the US, is expected to lead to a globally integrated gas market anchored by US gas prices.
Coal consumption is projected to peak in the mid-2020s, largely driven by China’s move towards cleaner, lower-carbon fuels. India is the largest growth market for coal, with its share of world coal demand doubling from some 10 per cent in 2015 to 20 per cent in 2035.
Renewable energy
Renewables are projected to be the fastest growing fuel source, growing at an average rate of 7.6 per cent per year, quadrupling over the Outlook, driven by increasing competitiveness of both solar and wind. China is the largest source of growth for renewables over the next 20 years, adding more renewable power than the EU and US combined.
All of the growth in demand for oil in the period to 2035 comes from emerging markets, with China accounting for one half.
The transport sector accounts for around two-thirds of the growth in oil demand. Within that, oil demand for cars increases by some 4 million barrels per day, underpinned by a doubling in the global car fleet. The number of electric cars is assumed to increase from 1.2 million in 2015 to around 100 million in 2035 (some 5 per cent of the global car fleet). The Energy Outlook constructs two illustrative scenarios to consider the impact of the broader mobility revolution affecting the car market, including autonomous cars, car sharing and ride-pooling.
“The impact of electric cars, together with other aspects of the mobility revolution, such as self-driving cars, car sharing and ride pooling, is one of the key uncertainties surrounding the long-term outlook for oil” said Dale.
The slowing rate of growth in oil demand is contrasted by the abundance of global oil resources. The Energy Outlook speculates that the abundance of oil may cause low-cost producers, such as Middle East OPEC, Russia and the US, to use their competitive advantage to increase their market share at the expense of higher-cost producers.
Gas continues to gain market share from coal, helped by energy policies that encourage the shift in both industry and power generation. The main growth comes from China, the Middle East and the US.
In China, growth in gas consumption outstrips domestic production, so that by 2035 imported gas comprises nearly 40 per cent of total consumption, up from 30 per cent in 2015. In Europe, the share of imports rises from some 50 per cent in 2015 to over 80 per cent by 2035.
