The International Energy Agency (IEA) has released its World Energy Outlook 2014, which projects that global demand for energy will increase 37% by 2040 despite no growth in energy demand from major developed nations throughout the forecast period. Oil, coal and natural gas remain major energy sources throughout the forecast, representing almost 75% of total demand in 2040, despite coal and oil demands reaching a plateau by 2040. Natural gas demand, however, increased by over 50% by 2040.
The global distribution of energy demand changes over the forecast period with energy use generally flat in Europe, Japan, Korea and North America, and rising consumption concentrated in the rest of Asia (60% of the global total), Africa, the Middle East and Latin America. In the early 2030s, China becomes the largest oil consuming country, overtaking the US but in that decade its energy growth slows dramatically. India, Southeast Asia, the Middle East and sub-Saharan Africa begin to take over as the major consumers of global energy demand growth in the later part of the forecast period.
By 2040, approximately 25% of the world’s energy supply comes from low carbon sources including nuclear and renewable energy. This growth in share of low carbon sources, however, does not curtail the growth in global energy related carbon dioxide emissions, which increase by 20%
Oil supply and demand
Global oil demand is projected to increase from 90 million bpd in 2013 to 104 million bpd in 2040, an increase of over 15%, due to increased oil use for transportation and petrochemicals. Oil demand reaches a plateau at the end of the forecast period due to high world oil prices and policy measures to constrain growth. Despite the number of vehicles in the world more than doubling by 2040, demand for oil in the transportation sector is expected to increase by only 25% due to the large number of vehicle sales subjected to efficiency standards (over 75% of global car sales). These efficiency standards suppress oil demand growth by 23 million bpd in 040, which is more than the current oil production of Saudi Arabia and Russia. For each barrel of oil that the OECD countries no longer demand, however, the growing non-OECD countries consume two barrels more.
IEA cautions about complacency in oil supply due to the oversupply that exists now, which they argue will wear off, bringing the need for increased oil investment in the Middle East and instability there back to the forefront. The agency expects tight oil supplies in the US to level off by the early 2020s and then to start to decline. IEA believes that US$ 900 billion/y is needed in upstream oil investment by the 2030s to meet global oil demand and is not sure that the investment will be forthcoming because of uncertainties in the oil supply market due to the:
- Complexity and capital intensity of developing Brazilian deepwater fields.
- Difficulty of replicating the US tight oil experience outside North America.
- Issues regarding the growth of Canadian oilsands production.
- Sanctions that restrict Russian access to technologies and capital markets.
- Political and security issues in Iraq.
Natural gas supply and demand
Natural gas demand increases by more than 50% by 2040 – the fastest growth rate of the fossil fuels and the only fossil fuel growing significantly to 2040. China and the Middle East are the main regions that push natural gas demand higher, but new regulations in the US limiting CO2 emissions in the electric generation sector increase natural gas consumption as well.
Natural gas production increases everywhere in Europe with unconventional gas production accounting for almost 60% of global supply growth. IEA sees increased global trade in LNG offering protection against supply disruptions – the main uncertainty being whether its price can remain attractive to consumers while providing enough incentives to increase investment and thus production. IEA expects future gas supplies to be relatively secure due to the increasing number of international gas suppliers, a near tripling of liquefaction facilities in the world, and flexibility in the ability of LNG to supply markets where gas is needed most.
Unlike other outlooks, IEA sees greater uncertainty and more renewable energy in future global energy markets. The outlook still expects fossil fuels to support the majority of energy demand in 2040 (approximately 75%), but oil and coal demand plateau at the end of the forecast period due to energy efficiency gains and government regulations. The agency cautions the world regarding complacency in the oversupply of oil because investment in oil wells will be needed in the Middle East in the future.
The IEA projection is also striking because it sees essentially no growth in demand from OECD nations. Historically, there has been a linkage between economic growth and rising energy consumption, although increasing energy efficiency has had substantial success at tempering that relationship. IEA may be indicating that the wealthy developed world is going to get much more efficient and not need the energy that has traditionally fueled economic improvements. On the other hand, it may be implicitly acknowledging that government energy policies and regulations will undermine the economic status of the developed countries should be following its forecasts closely, because serious decisions will need to be made across the public policy front.
Adapted from a press release by Emma McAleavey.
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/24112014/iea-world-energy-outlook-1678/