Onyx P&G Consulting Reviews the Global Energy Outlook through 2040 – Part 1

This month we begin a new series where we will broaden our scope to review the global energy outlook from 2010 – 2040. This long term outlook of how global dynamics will change the face of energy for the United States all countries as emerging nations are consuming increasing amounts of energy.

What do we see over the next 30 years? The answer to that question varies by region, reflecting diverse economic and demographic trends as well as the evolution of technology and government policies.

Everywhere, though, we see energy being used more efficiently and energy supplies continuing to diversify as new technologies and sources emerge. Other key findings of this year’s Outlook include:

  • Global energy demand will be about 30 percent higher in 2040 compared to 2010, as economic output more than doubles and prosperity expands across a world whose population will grow to nearly 9 billion people. Energy demand growth will slow as economies mature, efficiency gains accelerate and population growth moderates.
  • In the countries belonging to the Organization for Economic Cooperation and Development (OECD) – including countries in North America and Europe – we see energy use remaining essentially flat, even as these countries achieve economic growth and even higher living standards. In contrast, Non OECD energy demand will grow by close to 60 percent. China’s surge in energy demand will extend over the next two decades then gradually flatten as its economy and population mature. Elsewhere, billions of people will be working to advance their living standards – requiring more energy.
  • The need for energy to make electricity will remain the single biggest driver of demand. By 2040, electricity generation will account for more than 40 percent of global energy consumption.
  • Demand for coal will peak and begin a gradual decline, in part because of emerging policies that will seek to curb emissions by imposing a cost on higher-carbon fuels. Use of renewable energies and nuclear power will grow significantly.
  • Oil, gas and coal continue to be the most widely used fuels, and have the scale needed to meet global demand, making up about 80 percent of total energy consumption in 2040.
  • Natural gas will grow fast enough to overtake coal for the number-two position behind oil. Demand for natural gas will rise by more than 60 percent through 2040. For both oil and natural gas, an increasing share of global supply will come from unconventional sources such as those produced from shale formations.
  • Gains in efficiency through energy-saving practices and technologies – such as hybrid vehicles and new, high efficiency natural gas power plants – will temper demand growth and curb emissions.
  • Global energy-related carbon dioxide (CO2) emissions will grow slowly, then level off around 2030. In the United States and Europe, where a shift from coal to less carbon-intensive fuels such as natural gas already is under way, emissions will decline through 2040.
  • The world’s population will rise by more than 25% from 2010 to 2040, reaching nearly 9 billion people. Population and economic growth are key factors behind increasing demand for energy.

Demographics and Economic Expansion Drive Energy Demand

Non Organization for Economic Co-operation and Development (OECD) will see a steep rise in population, but demographics also shape energy demand

Population growth is one reason why global energy demand is rising by about 30 percent from 2010 to 2040. By 2040, there will be nearly 9 billion people on the planet, up from about 7 billion today.

But population growth is slowing. In some places – many OECD countries, plus China – populations will change little by 2040. This global deceleration, coupled with gains in energy efficiency, will further the significant slowdown in energy demand growth that has been under way for decades. For example, global energy demand rising by 20 percent from 2010 to 2025, but by only 10 percent from 2025 to 2040.

While population is a key to projecting energy demand, demographics matter, too. Of particular importance is a country’s working-age population – people 15 to 64 years old – because that group is the engine for economic growth and energy demand.

In OECD countries, low birth rates and other factors are producing a rising percentage of older citizens. China, whose population will peak around 2030, will see a steep drop in its working-age group. This shift, tied to policies on family size, helps explain why China’s gross domestic product (GDP) growth – and its energy demand – is expected to moderate in coming decades.

India, meanwhile, will see steep growth in its population and its working-age group, as will Africa. These demographic trends will help India and Africa become two of the strongest areas of GDP growth through 2040.

OECD energy demand flattens through 2040, but Non OECD demand rises by 60 percent as energy efficiency improves in all regions

The world’s economies will continue to grow, but at varying rates. OECD economies are expected to expand by about 2 percent a year on average through 2040, as the United States, European nations and others gradually recover and return to sustained growth. Non OECD economies will grow much faster, at almost 4.5 percent a year.

This economic growth – and the improved living standards it enables – will require more energy. Global energy demand is expected to be about 30 percent higher in 2040 than in 2010.

While that is a significant increase, and meeting it will require trillions of dollars in investment and advances in energy technology, growth in energy use would be more than four times that amount were it not for expected gains in energy efficiency across the world’s economies. Some of these efficiency gains will come from ongoing improvements in technologies and energy management practices; some will be spurred by policies that impose a cost on CO2 emissions

The power of efficiency can be seen most clearly in the more mature economies of the OECD where energy demand will remain essentially flat through 2040 even as GDP nearly doubles.

Efficiency will have a big impact in Non OECD countries, too. But these gains will not be enough to offset the rise in energy demand associated with having five-sixths of the world’s population accelerating its progress toward better living standards and greater prosperity. Non OECD energy demand is expected to rise by nearly 60 percent. However, even by 2040, per-capita energy use in these countries will be about 60 percent less than in the OECD.

The World’s Energy Continues to Evolve

Natural gas will become the world’s number-two fuel as demand shifts to lower-carbon sources

Even with advances in efficiency, rising populations and expanding economies will produce a net increase in global energy demand. Demand for all forms of energy is projected to rise at an average annual rate of 0.9 percent a year from 2010 to 2040.

Oil will remain the world’s top energy source, led by 70-percent growth in liquid petroleum demand in Non OECD nations. The fastest-growing major energy source will be natural gas, with global demand rising by about 60 percent from 2010 to 2040. By 2025, natural gas will have risen to become the second most widely used source of energy worldwide.

Demand for coal, on the other hand, will peak around 2025 and then decline, as improved efficiency couples with a shift to less carbon-intensive energies, particularly in the electricity generation sector. This shift will be led by the OECD, but even China, which today accounts for close to 50 percent of global coal demand, will see its coal usage fall by more than 10 percent through 2040. This would mark the first long-term decline in global coal usage since the start of the Industrial Revolution. Nonetheless, oil, gas and coal combined account for about four-fifths of the fuel mix throughout the Outlook period.

Global demand for the least carbon-intensive fuels – natural gas, nuclear and renewables – will rise at a faster than-average rate. Nuclear power will grow on average at about 2.2 percent a year – a substantial increase, but lower than projections prior to the 2011 tsunami damage to the Fukushima plant in Japan.

Wind, solar and biofuels also will see strong growth. By 2040, they will account for about 4 percent of global demand. Growth in wind power is especially rapid. Wind is the fastest-growing energy source in the Outlook period, rising at about 8 percent a year – or more than 900 percent – over the period.

Demand for reliable, affordable energy exists every day in every community. Successfully meeting this demand requires foresight and effective long-term planning, followed by huge investments and years of work to build the infrastructure required to produce and deliver energy and chemicals. It also takes an ongoing ability to understand and manage an evolving set of technical, financial, geopolitical and environmental risks in a dynamic world. The Outlook for Energy is an essential tool to help us provide the energy needed for continuing human progress.[1]

Ensuring that there is adequate energy to meet the growth and demand for energy is very important.  In next month’s blog we will look at global energy demand in the residential and commercial markets.  The current demand and usage outlook is based a relatively stable global economic and political environment.  Any drastic events on a global basis could have a drastic effect on supply and prices. The professional consultants at Onyx Power & Gas Consultant are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing.  Volatility in the energy markets makes it too precarious to take chances.  Partner with Onyx Power & Gas in Making Energy Make a Difference!

[1] Information for this blog was sourced from: 2012 The Outlook for Energy: A View to 2040 by ExxonMobil

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3 Responses to Onyx P&G Consulting Reviews the Global Energy Outlook through 2040 – Part 1

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