BP Predicts Four-Way Energy Split by 2040

%2018 %09 %24

 

 

The newly-released 2018 edition of BP’s Energy Outlook predicts that oil, gas, coal and non-fossil fuels will each contribute around a quarter of the energy mix by 2040.

Its evolving transition scenario, which assumes that government policies, technologies and societal preferences evolve in a manner and speed similar to the recent past, also predicts:

• Fast growth in developing economies will drive up global energy demand a third higher.
• Renewables will be by far the fastest-growing fuel source, increasing five-fold and providing around 14 percent of primary energy.
• Demand for oil will grow over much of Outlook period before plateauing in the later years.
• Natural gas demand will grow strongly and overtake coal as the second largest source of energy.
• Oil and gas together will account for over half of the world’s energy.
• Global coal consumption will flatline, and it seems increasingly likely that Chinese coal consumption has plateaued.
• The number of electric cars will grow to around 15 percent of the car parc, but because of the much higher intensity with which they are used, they will account for 30 percent of passenger vehicle kilometers.
• Carbon emissions will continue to rise, signaling the need for a comprehensive set of actions to achieve a decisive break from the past.

The new Outlook was launched in London by Spencer Dale, group chief economist, and Bob Dudley, group chief executive. “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 fuels mix we have ever seen,” said Dale.

All the demand growth for oil comes from emerging economies. The growth in supply is expected to be driven by U.S. tight oil in the early part of the Outlook, with OPEC taking over from the late 2020s as Middle East producers adopt a strategy of growing market share.

The transport sector will continue to dominate global oil demand, accounting for more than half of the overall growth. Most of the growth in energy demand from transport, which flattens off towards the end of the Outlook, is expected to come from non-road (largely air, marine and rail) and trucks, with small increases from cars and motorbikes. After 2030, the main source of growth in the demand for oil is from non-combusted uses, particularly as a feedstock for petrochemicals.

Natural gas grows strongly over the period, supported by increasing levels of industrialization and power demand in fast-growing emerging economies, continued coal-to-gas switching and the increasing availability of low-cost supplies in North America and the Middle East. By 2040, the U.S. is expected to account for almost one quarter of global gas production, and global LNG supplies will more than double. The sustained growth in LNG supplies is expected to greatly increase the availability of gas around the world, with LNG volumes overtaking inter-regional pipeline shipments in the early 2020s.

Coal consumption flatlines over the Outlook period, with falls in China and the OECD offset by increasing demand in India and other emerging Asian economies. China is expected to remain the largest market for coal, accounting for 40 percent of global coal demand to 2040.

Renewable energy is expected to grow over 400 percent and accounts for over 50 percent of the increase in global power generation. This strong growth is enabled by the increasing competitiveness of wind and solar. Subsidies are expected to be gradually phased out by the mid-2020s, with renewable energy increasingly able to compete against other fuels. China is expected to be the largest source of growth, adding more renewable energy than the entire OECD combined, with India becoming the second largest source of growth by 2030.

All the growth in energy consumption is expected to be in fast-growing developing economies: China and India account for half of the growth in global energy demand to 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 latter 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.

In the Outlook’s evolving transition scenario, carbon emissions rise by 10 percent by 2040. While this is far slower than the rates seen in the past 25 years, it remains higher than the sharp decline thought to be necessary to achieve the Paris Agreement.

“We need a far more decisive break from the past,” concluded Dudley. “In BP, we continue to believe that carbon pricing must be a key element as it provides incentives for everyone to play their part – from consumers using energy more efficiently to producers providing more low-carbon forms of energy.”


The Maritime Executive

 

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