Despite the current weakness in global energy markets and the slowdown in Chinas growth, demand for energy is expected to increase by 34% over the next 20 years, according to the 2016 edition of the BP Energy Outlook. The 2016 edition was launched in London last Thursday by Spencer Dale, BPs group chief economist, and Bob Dudley, group chief executive.
"We expect the mix of fuels to change quite significantly over the next 20 years, gas to grow quickly, also strong growth in renewables like solar and wind." In this video Dale discusses the key themes of the BP Energy Outlook.
The Energy Outlook considers a base case, which outlines the most likely path for energy demand based on assumptions about future changes in policy, technology and the economy. In the base case, the worlds GDP (gross domestic product) is expected to more than double around one-fifth of the doubling being due to population growth and four-fifths to improvements in productivity. China and India together account for almost half of the projected increase in global GDP, with OECD (Organisation for Economic Co-operation and Development) economies accounting for around a quarter.
Virtually all of the additional energy is consumed in fast-growing emerging economies. Energy demand within the OECD barely grows. Growth in Chinas energy demand slows as its economy rebalances towards a more sustainable rate. By the final decade of the Outlook, China contributes less than 30% of global energy growth, compared with nearly 60% over the past decade.
Fossil fuels remain the dominant form of energy powering the global expansion: providing around 60% of the additional energy and accounting for almost 80% of total energy supplies in 2035. Renewables grow rapidly, almost quadrupling by 2035 and supplying a third of the growth in power generation.
Demand for natural gas grows by 1.8% p.a., making it the fastest growing fossil fuel. This robust growth is helped by ample supplies and supportive environmental policies. The majority of the increase in demand comes from emerging economies, with China and India accounting for around 30% of the increase and the Middle-East over 20%.
In contrast, coal suffers a sharp reversal in its fortunes. After gaining share since 2000, the growth of coal is projected to slow sharply at (0.5% p.a.), compared with almost 3% p.a. over the past 20 years, such that by 2035 the share of coal in primary energy is at an all-time low, with gas replacing it as the second-largest fuel source.
China remains the worlds largest coal market, consuming almost half of global coal supplies in 2035. India is the largest growth market for coal (435 Mtoe), overtaking the US to become the worlds second biggest consumer of coal. Coal demand in both the US and OECD Europe is projected to fall by more than 50%, driven by plentiful supplies of gas, falling cost of renewables, and stronger environmental regulation.
Among non-fossil fuels, renewables (including biofuels) are projected to be the fastest growing fuel, almost quadrupling (6.6% p.a.) over the Outlook, causing their share in primary energy to rise from around 3% today to 9% by 2035.
More than half of the increase in global energy is used for power generation as the long-run trend towards global electrification continues, particularly benefiting those who currently lack adequate access to electricity in regions such as Asia and Africa.
The oil market gradually rebalances, with the current low level of prices boosting demand and dampening supply. The increase in consumption of liquid fuels is largely driven by the increase in the global vehicle fleet, which more than doubles from around 1.2 billion today to 2.4 billion by 2035.
To view BP's complete 2016 Energy Outlook,
click here
