While the world’s population and wealth grow over the next 20 years, so too does demand for energy. As we might expect, most of the growth comes in emerging economies. Perhaps the surprise is that between 2013 and 2035, global primary energy consumption grows at an annual rate of 1.4%, significantly below the 2.4% average for the years between 2000 and 2013.
The data come from the BP Energy Outlook 2035 released Tuesday by BP PLC (NYSE: BP). CEO Bob Dudley points out three key features in energy markets for the next 20 years:
- Crude flows are now heading from west to east, from the U.S. to Europe and Asia as strong North American production continues.
- The mix of fuels is changing, even though fossil fuels are expected to meet two-thirds of energy demand through 2035.
- The environmental challenge of reducing carbon emissions which Dudley says “underpins the importance of policy-makers taking steps that lead to a global price for carbon.”
BP sees growth in renewables averaging 6.3% per year while growth in coal shrinks from an average of 3.8% per year for the 2000 to 2013 period to just 0.8% per year for the period to 2035. Natural gas is the fastest growing fossil fuel source of primary energy, with a projected growth rate of 1.9% a year, compared with oil demand growth at roughly the same level as coal.
Power generation’s share of primary energy consumption rises from 42% today to 47% by 2035. BP sees the largest shifts as the increase in share for renewables and the decline in share for coal. However, coal remains the dominant fuel worldwide for power generation, accounting for more than a third of primary fuel. The good news is that coal’s share declines from 44% today.
As energy intensity diminishes, the gap between global GDP and energy consumption widens. In other words, producing a unit of output now requires less energy — and that is a good thing for the environment. According to BP, all things equal, “gains in energy efficiency lead to a far greater reduction in projected emissions than improvements in the fuel mix.”
On the supply side, BP sees production growing with demand and cites International Energy Agency (IEA) data that technically recoverable global resources for tight (shale) oil are now estimated at around 340 billion barrels and the shale gas resource totals an enormous 7,500 trillion cubic feet. The United States is expected to continue to dominate production of oil and gas from shale for at least the next 20 years, with about 50% of the oil production and 30% of the gas production from global shale resources.
Among oil-producing nations, North America switches to being a net exporter of energy in 2015, while Asia’s import requirements account for about 70% of inter-regional net energy imports by 2035. The nations of the Middle East remain the largest net exporters, but their share declines from 46% in 2013 to 36% in 2035. Russia remains the world’s leading oil exporter.
Plantagenet on Tue, 17th Feb 2015 6:20 pm
Good to hear that North America will become a net exporter of energy in 2015. Now if only the price of oil would go back up, folks could be making some serious money.
Makati1 on Tue, 17th Feb 2015 7:21 pm
More Wall Street pimp dreams that will be shattered by the 2X4 of reality.
Dave Thompson on Wed, 18th Feb 2015 12:06 am
“While the world’s population and wealth grow over the next 20 years,” WTF? With 85 people now owning as much as the bottom half the worlds population, those 85 people will see a wealth increase for sure. The rest of us? Not so much.
viewcrafters on Wed, 18th Feb 2015 11:27 am
Crude flows are not flowing west to east. Nor will it as anyone will be able to do their own fracking.
viewcrafters
nubs on Wed, 18th Feb 2015 2:01 pm
Time for a reality check. There have been several books written on the subject of the historical accuracy of expert predictions; here are two nice quotes from a recent article (http://www.washingtontimes.com/news/2012/dec/12/expert-predictions-future-have-history-being-wrong/?page=all)
“Long-term expert predictions have been found to be about as accurate as monkeys tossing darts at a board labeled with potential future outcomes. And yet forecasting remains a growth industry, in both the intelligence community and televised political punditry.”
“[Experts] are overconfident, believing they know much more about the future than they actually do — for example, when they reported themselves as 80 or 90 percent confident about a particular prediction, they often were correct only 60 or 70 percent of the time…”
About 15 years ago I found an article that listed all of the measurements of the speed of light, along with the estimated errors in the measurements. As expected, it showed that the recent measurements appear to be much more accurate than the old ones, based on the fact that they are converging on the same number, but the interesting thing was that the error estimates grossly overestimated the accuracy of the measurements. So physicists, like other experts, routinely overestimate their accuracy. Alas, I have tried but failed to relocate this article.
And, finally, the BP Energy Outlook can hardly be taken as unbiased. It’s good for a laugh, and no more.