Friday 19 / April / 2024
Muscat: The fast economic growth in developing economies is expected to drive global energy demand, according to an energy outlook report released by BP.
By 2040, the global energy mix is the most diverse the world has ever seen, with oil, gas, coal, and non-fossil fuels each contributing around a quarter, the report stated. The new Outlook was launched in London by Spencer Dale, group chief economist, and Bob Dudley, group chief executive.
The forces shaping the global energy transition to 2040 and the key uncertainties surrounding that transition, are the main focus of the 2018 edition of BP’s Energy Outlook, published recently.
It talks about the “Evolving Transition” scenario, which assumes that government policies, technologies, and societal preferences evolve in a manner and speed similar to the recent past.
“BP’s strategy has to be resilient and adaptable towards significant changes in the energy industry. This Outlook considers the possible implications of some of these changes and helps inform our long-term planning. We cannot predict where these changes will take us, but we can use this knowledge to get fit and ready to play our role in meeting the energy needs of tomorrow,” Dudley said.
Growing competition
“We are seeing growing competition between different energy sources, driven by abundant energy supplies and continued improvements in energy efficiency. As the world learns to do more with less, demand for energy will be met by the most diverse fuel mix we have ever seen,” Dale said.
Much of the Outlook’s narrative is based on the Evolving Transition scenario. This scenario, and the others considered in the Outlook, are not predictions of what is likely to happen. Rather, they explore the possible implications of different judgements and assumptions.
The Outlook considers several scenarios and explores the energy transition from three different viewpoints: fuels, sectors, and regions. The findings below are related to the Evolving Transition scenario.
Fuel analysis
“By 2040, oil, gas, coal, and non-fossil fuels each accounts for around a quarter of the world’s energy. More than 40 per cent of the overall increase in energy demand is met by renewable energy,” Dale explained.
Oil demand grows over much of the Outlook, although it plateaus in the later years. All the demand growth comes from emerging economies. The growth in supply is driven by the United States tight oil in the early part of the Outlook, with the organisation of petroleum exporting countries (Opec) taking over from the late 2020s, as Middle East producers adopt a strategy of growing their market share.
Sector analysis
Power accounts for nearly 70 per cent of the increase in primary energy demand. The mix of fuels used in power generation is set to shift materially, with renewable energy gaining a share more quickly than any energy source in history, increasing from 7 per cent today to around a quarter by 2040. Even so, coal remains the largest source of energy in power generation by 2040.
Transport energy demand grows by only 25 per cent, despite the total demand for transportation more than doubling, reflecting accelerating gains in vehicle efficiency. The transport sector continues to be dominated by oil (around 85 per cent in 2040), despite increasing penetration of alternative fuels, particularly natural gas and electricity.
This year’s Outlook argues that the penetration of electricity in the transport sector is best measured by considering both the number of electric vehicles (EVs) and how intensively each vehicle is used. In the Evolving Transition scenario, the share of EVs in the global car parc (statistics that are made up of a range of data) reaches some 15 per cent by 2040 – more than 300 million cars in a car parc of some 2 billion.
The share of passenger car kilometres powered by electricity, which also takes account of the intensity with which electric cars are used, however, is over 30 per cent. The Outlook shows how the interaction of fully autonomous cars with shared mobility has the potential to substantially boost the intensity with which electric cars are driven.
Regional analysis
All the growth in energy consumption is in fast-growing, developing economies; China and India account for half of the growth in global energy demand in 2040. Through the period, China’s energy growth slows as it transitions to a more sustainable pattern of economic growth. India’s slowing in demand growth is less pronounced and by the early 2030s, it overtakes China as the world’s fastest growing market for energy. In the later stages of the Outlook, Africa also plays an increasingly important role in driving energy demand, contributing more to global demand growth from 2035 to 2040 than China.
