Oil and gas will grow to account for half of the world’s energy in 22 years, as natural gas overtakes coal as the second largest sources, BP said in its latest outlook.
The global energy mix will be the most diverse the world has ever seen by 2040, with oil, gas, coal and non-fossil fuels each contributing around a quarter, according to BP’s Energy Outlook 2018 which forecasts energy needs over the next two decades.
“We are seeing growing competition between different energy sources, driven by abundant energy supplies, and continued improvements in energy efficiency,” said BP’s group chief economist Spencer Dale. “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.”
Oil demand is expected to grow during the next few years before plateauing towards to end of the outlook period.
Most of the oil demand growth in will come from emerging economies. The growth in supply is driven by US 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, BP said.
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, comes 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, BP expects, will grow strongly over the period – supported by increasing levels of industrialisation 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 US will account for almost one quarter of global gas production, and global LNG supplies will more than double. The sustained growth in LNG supplies is likely to greatly increase the availability of gas around the world, with LNG volumes overtaking inter-regional pipeline shipments in the early 2020s.
Meanwhile, renewable energy will increasingly meet global energy demand. “More than 40 per cent of the overall increase in energy demand is met by renewable energy,” said Dale.
It will grow by over 400 per cent and account for 50 per cent of the increase in global power generation over the next two decades.
All the growth in energy consumption will come from fast-growing developing economies: China and India account for half of the growth in global energy demand to 2040, BP said.
It expects China’s energy growth to slow in the next 22 years as it transitions to a more sustainable pattern of economic growth. However, India’s slowing in demand growth will be less pronounced and by the early 2030s it is seen to overtake 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, the report said.