By 2040 the world could be powered by the most diverse fuel mix ever, with oil, gas, coal, and renewables each accounting for a quarter of the world energy.
This is according to 2018 edition of BP’s Energy Outlook published on Wednesday in London by Spencer Dale, group chief economist, and Bob Dudley, group chief executive.
“BP’s strategy has to be resilient and adaptable to significant changes in the energy industry. This Outlook considers the possible implications of some of these changes and helps inform our long-term planning. We cannot predict where these changes will take us, but we can use this knowledge to get fit and ready to play our role in meeting the energy needs of tomorrow,” said Bob Dudley.
“We are seeing growing competition between different energy sources, driven by abundant energy supplies, and continued improvements in energy efficiency. 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,” said Spencer Dale.
According to BP, much of the narrative in the Outlook is based on the Evolving Transition scenario.
BP has said that the scenario is not a prediction of what is likely to happen, but rather, it explores the possible implications of different judgments and assumptions.
The Outlook considers several scenarios and explores the energy transition from three different viewpoints: fuels, sectors, and regions.
Oil grows, then plateaus
Below is a snapshot of BP’s fuel mix analysis over the course of the outlook.
“By 2040, oil, gas, coal and non-fossil fuels each account for around a quarter of the world’s energy. More than 40% of the overall increase in energy demand is met by renewable energy,” explained Dale.
Oil demand grows over much of the Outlook, although it plateaus in the later years. All the demand growth comes 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.
The transport sector continues 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 grows strongly over the period, supported by increasing levels of industrialization 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 accounts for almost one-quarter of global gas production, and global LNG supplies will more than double. The sustained growth in LNG supplies greatly increases the availability of gas around the world, with LNG volumes overtaking inter-regional pipeline shipments in the early 2020s.
Coal consumption flatlines over the Outlook period, with falls in China and the OECD offset by increasing demand in India and other emerging Asian economies. China remains the largest market for coal, accounting for 40% of global coal demand to 2040.
Renewable energy grows over 400% and accounts for over 50% of the increase in global power generation. This strong growth is enabled by the increasing competitiveness of wind and solar. Subsidies are gradually phased out by the mid-2020s, with renewable energy increasingly able to compete against other fuels. China is the largest source of growth, adding more renewable energy than the entire OECD combined, with India becoming the second largest source of growth by 2030.