Inside Out
What are the key projections ?
Inside Out
Transforming our energy world
THE INSIDE OUT FEATURE IN THE APRIL 2017 ISSUE OF FUEL OIL NEWS DESCRIBED THE WORK OF THE INTERNATIONAL ENERGY AGENCY ( IEA ) WHICH PRODUCES SEVERAL PUBLICATIONS EACH YEAR . AMONG THESE PUBLICATIONS IS THE WIDELY PUBLICISED ANNUAL OUTLOOK FOR ENERGY WHICH IS PRODUCED IN NOVEMBER
The Outlook for Energy incorporates both a long and wide perspective . It also gives a complete view of the energy landscape , looking at , among other things , supply of and demand for various energy sources , significant trends and developments , imponderables / uncertainties and policy measures , etc .
Witht the title A World in Transformation , the IEA ’ s latest Outlook makes some significant observations .
Setting the backdrop are four large-scale shifts in the global energy system
► the rapid deployment and falling costs of clean energy technologies
► the growing electrification of energy
► the shift to a more services-oriented economy and a cleaner energy mix in China
► the resilience of shale gas and tight oil production in the United States These shifts come at a time when traditional distinctions between energy producers and consumers are being blurred and a new group of major developing countries , led by India , moves towards centre stage .
What are the key projections ?
GROWING ENERGY DEMAND While global energy demand will rise more slowly than in the past , it will still expand by 30 % between now and 2040 , the equivalent of adding another China and India to today ’ s global demand .
The global economy is projected to grow at an average rate of 3.4 % per year , with the population expanding from 7.4 billion today to more than 9 billion in 2040 . A process of urbanisation will add a city the size of Shanghai to the world ’ s urban population every four months ; these are the key drivers underpinning projections .
At almost 30 %, the largest contribution to demand growth will come from India with
18 Fuel Oil News | January 2018 its share of global energy use rising from 7.5 % to 11 % by 2040 ( but well below its 18 % share in the anticipated global population ). At 23 %, the second largest contribution will come from China .
The way in which the world meets its growing energy requirements will change dramatically , with the lead now taken by ( 1 ) natural gas , ( 2 ) the rapid rise of renewables and ( 3 ) energy efficiency .
Efficiency improvements will play a huge role when it comes to taking the strain off the supply side . Without such improvements , the projected rise in final energy use would more than double . Renewable energy sources will meet 40 % of the increase in primary demand and their enormous growth in the power sector will mark the end of the boom years for coal . Up to 2040 oil demand will continue to grow albeit at a steadily decreasing pace whilst the use of natural gas will rise by 45 %; with more limited room to expand in the power sector , industrial demand will become the largest sector for growth . The prospects for nuclear power have diminished since the last Outlook , with China continuing to lead a gradual rise in output , overtaking the United States by 2030 to become the largest producer of nuclear-based electricity .
ROSY PROSPECTS FOR RENEWABLES In the run up to 2040 , renewables will capture two-thirds of global investment in power plants , as they become , for many countries , the leastcost source of new generation . Led by China and India , rapid deployment of solar photovoltaics will enable solar to become the largest source of low-carbon capacity by 2040 . By this time the share of all renewables in total power generation will reach 40 %. In the EU , renewables will account for 80 % of new capacity , and after 2030 wind power will become the principal source of electricity , due to strong growth in both onshore and offshore facilities .
THE RISE IN ELECTRICITY Electricity will be the rising force among worldwide end-uses of energy , accounting for 40 % of the rise in final consumption to
2040 . Industrial electric motor systems will account for one-third of the increase in power demand . Rising incomes mean that many millions of households will add electrical appliances , with an increasing share of smart connected devices , and install cooling systems . A combination of industry initiatives and policy support will result in expansion of the global electric car fleet from two million today to 280 million by 2040 .
CHINA – THE CHANGE CATALYST China is entering a new phase in its development , evolving towards a more services-based economic model . This is moving the energy sector in a new direction , with the emphasis of its energy policy now firmly on electricity , natural gas and cleaner , highefficiency and digital technologies . Prompted largely by efficiency measures , China ’ s energy demand growth will slow to an average 1 % per year to 2040 vs 8 % per year over 2000- 2012 and 2 % over 2013-2016 . Without such efficiency measures energy demand would be 40 % higher by 2040 ; by then , per-capita energy consumption in China will exceed that of the European Union .
The scale of China ’ s clean energy deployment , technology exports and outward investment will make it a key determinant of momentum behind the low-carbon transition . One third of the world ’ s new wind power and solar PV will be installed in China ; the country will also account for more than 40 % of global investment in electric vehicles .
China will provide 25 % of the projected rise in global gas demand and its projected imports by 2040 will be second only to those of the EU , making China a lynchpin in the global gas trade . Around 2030 China will overtake the US as the largest oil consumer .
THE US SHALE REVOLUTION Shale will push combined US oil and gas output to a level that is 50 % higher than any other country has ever managed . Already a net exporter of gas , the US will become a net exporter of oil in the late 2020s . This is prompting major investments in
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