Saturday, May 14, 2011

2030 Energy Outlook

The first great wave of industrialisation was based almost entirely on a truly disruptive technology, the steam engine, and on coal. Coal remained the dominant fuel until after WWII.

The next major transition came with electricity and the internal combustion engine, which enabled diversification away from coal. Oil replaced coal use in transport. And while coal remains the principal fuel in power generation, it is gradually being replaced first by natural gas, and now by renewables.

The three fossil fuels are converging on market shares of 26-27%, and the major non-fossil fuel groups on market shares of around 7% each.

Oil continues to suffer a long run decline in market share, while gas steadily gains. Coal’s recent gains in market share, on the back of rapid industrialisation in China and India, are reversed by 2030.

Oil is expected to be the slowest-growing fuel over the next 20 years. Global liquids demand (oil, biofuels, and other liquids) nonetheless is likely to rise by 16.5 Mb/d, exceeding 102 Mb/d by 2030. Growth comes exclusively from rapidly-growing non-OECD economies. Non- OECD Asia accounts for more than three-quarters of the net global increase, rising by nearly 13 Mb/d. The Middle East and South & Central America will also grow significantly. OECD demand has likely peaked (in 2005), and consumption is expected to decline by just over 4 Mb/d.

Rising supply to meet expected demand growth should come primarily from OPEC, where output is projected to rise by 13 Mb/d. The largest increments of new OPEC supply will come from NGLs, as well as conventional crude in Iraq and Saudi Arabia.

Non-OPEC supply will continue to rise, albeit modestly. A large increase in biofuels supply, along with smaller increments from Canadian oil sands, deepwater Brazil, and the FSU should offset continued declines in a number of mature provinces.

Energy used for transport will continue to be dominated by oil, but should see its share of global energy use decline as other sectors grow more rapidly. Growth is expected to slow over the next twenty years to average 1.1% p.a. vs 1.8% p.a. during 1990-2010, with OECD demand slowing and then declining post-2015.

The slowing of growth in total energy in transport is related to higher oil prices and improving fuel economy, vehicle saturation in mature economies, and expected increases in taxation and subsidy reduction in developing economies.

The growth of oil in transport slows even more dramatically, largely because of displacement of oil by biofuels and is likely to plateau in the mid-2020s. Currently, biofuels contribute 3% on an energy basis and this is forecast to rise to 9% at the expense of oil’s share.

Rail, electric vehicles and plug-in hybrids, and the use of compressed natural gas in transport is likely to grow, but without making a material contribution to total transport before 2030.

Check more about the 2030 Energy Outlook at Bp Website.

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