The global fuel mix will continue to diversify, with increased emphasis on alternative energy by 2030 "for the first time nonfossil fuels will be major sources of supply growth," said analysts at BP PLC.
World energy growth over the next 20 years likely will be dominated by the emerging economies of China, India, Russia, and Brazil while energy efficiency improvements accelerate, they said in the recently published "BP Energy Outlook 2030."
The BP report's base case indicates primary energy use growing nearly 40% in the next 2 decades, with 93% of the growth coming from countries outside the Organization of Economic Cooperation and Development. Non-OECD countries are expected to increase rapidly their share of overall energy demand from just over half at present to two-thirds.
BP Energy Outlook said the combination of increased diversification of energy sources and nonfossil fuels (nuclear, hydro, and renewables) are expected for the first time to be the biggest source of growth. Solar, wind, geothermal, and biofuels energy are expected to increase to 18% of total energy growth from 5%.
For 60 years, BP produced historical data in the BP Statistical Review of World Energy, but this is its first energy outlook. In launching the new publication, BP Chief Executive Bob Dudley said, "The issues covered in this document are huge ones—the effort to provide energy to fuel the global economy, sustainably, in an era of unprecedented growth. I believe one of our responsibilities is to share the information we have to inform the debate on energy and now on climate change."
He said, "What producers, governments, and consumers all want is secure, affordable, and sustainable energy. But on a global scale, this remains an aspiration. And to meet that aspiration over the next 2 decades, we need smart, market-oriented policies to deliver the energy we need in a manageable way—without inhibiting economic development or jeopardizing improvements in living standards [for] billions of people worldwide."
The outlook's base case scenario "is a projection, not a proposition," said Dudley. It is "what we believe is most likely to happen on the basis of the evidence. For example, we are not as optimistic as others about progress in reducing carbon emissions. But that doesn't mean we oppose such progress," he said.
Highlights, energy intensity
The base case study projects world energy demand growth will average 1.7%/year to 2030, "decelerating slightly" beyond 2020. Non-OECD energy consumption is expected to be 68% higher by 2030, with growth averaging 2.6%/year. That would account for 93% of global energy growth by that period. In contrast, BP analysts project an average energy demand growth of just 0.3%/year among OECD members to 2030; from 2020 OECD energy consumption per capita is expected to decline 0.2%/year.
The OECD decline will slow transportation growth, they said. "The region's total demand for oil and other liquids peaked in 2005 and will be back at roughly the level of 1990 by 2030," officials said. Toward the end of the 20 years, coal demand in China will no longer be on the rise, and that country is projected to become the world's largest oil consumer.
Because of energy efficiency gains and a long-term structural shift towards less energy intensive activities, the amount of energy consumed per unit of income as measured by gross domestic product is falling at an accelerating rate, said Christof Ruhl, group chief economist and vice-president of BP. This applies to "almost all of the key countries and regions" to 2030, he said.
Still, global liquids demand is expected to reach 102.4 million b/d over the next 20 years, a net growth of 16.5 million b/d generated "exclusively" from the emerging economies outside the OECD, BP reported. "Non-OECD Asia will account for nearly two thirds of non-OECD consumption growth over the next 20 years and more than three quarters of the net global increase, rising by nearly 13 million b/d," Ruhl said.
The largest increment of new supply in response to that demand will come from OPEC with increased production of conventional crude in Saudi Arabia and Iraq and from NGL production that is not subject to OPEC quotas. A "modest" rise in Non-OPEC liquids production is expected, "driven by a large increase in biofuels" and smaller increments from Canadian oil sands, deepwater Brazil, and the former Soviet states that will offset continued declines in mature provinces, BP projected.
In the long run, the company expects a decline in market share for oil while natural gas will steadily gain share. According to BP's Energy Outlook, coal's recent gains in market share because of rapid industrialization in China and India will be reversed by 2030, "with all three fossil fuels converging on market shares around 27%." In 1990-2010 fossil fuels contributed 83% of the growth in energy markets, but that will likely drop to 64% of the growth by 2030. Renewables (excluding hydro) and biofuels together will supply 18% of the growth in energy to 2030, the report said.
Ruhl said, "Energy used to generate power remains the fastest growing sector, accounting for 53% of the growth in primary energy consumption 1990-2010 and projected to account for 57% of the growth to 2030."
Meanwhile, the role of transport fuel is weakening. "Over the past 20 years, transport sector energy demand grew at about the same rate as total energy demand, but over the next 20 years it will grow much less rapidly than total energy," said Ruhl.
Declines in OECD oil demand will be "primarily outside the transport sector, where it is relatively easier to displace oil by gas and renewables," he said. After 2015, OECD transport demand is expected to fall as technology and policy drive improved engine efficiency.
Biofuels production is expected to increase to 6.7 million b/d by 2030 from 1.8 million b/d in 2010 and to contribute 125% of net non-OPEC supply growth over the next 20 years, according to BP's calculations. Continued policy support, high oil prices, and continued technological innovations will contribute to that rapid expansion, the company said. The US and Brazil will continue to dominate biofuel production, but their combined production is expected to decline to 68% of total output by 2030 from 76% in 2010 as Asia-Pacific output begins to rise.
Energy Outlook 2030 assumes continued policy action to address both climate change and energy security. BP has developed an alternative 'policy case' to explore implications of a significant increase in the level of political commitment that translates into a tightening of policy.
"The key focus of the policy case is to reduce dependence on carbon intensive fuels. This can be achieved through a wide range of policy instruments, including various ways of putting a price on carbon," said Ruhl.
In BP's policy case, global emissions are expected to peak just after 2020 but will still be 20% above 2005 levels. "The emissions path is still expected to be well above the International Energy Agency's 450 Scenario 1, indicating how much more effort will be required after 2030 to put the world onto a 'safe' path," said Ruhl.
The reduction of emissions in the policy case would be achieved through a combination of more rapid efficiency gains, fuel switching—from gas to coal and from fossil fuels to nuclear, hydro, and renewable—and introduction of carbon capture and storage for both coal and gas power plants.
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