Fossil Fuels ‘Will Remain Key Energy Source’
June 3, 2014
Over the next 20 years, fossil fuels will remain the main source of energy and their global production will increase by more than 40 percent, according to the BP Energy Outlook 2035 report released by British oil giant BP.
Coal, natural gas and oil will each account for just over a quarter of the market, the report says. Production of energy from unconventional sources such as shale gas, tight oil and tar sands will increase dynamically. However, due to high production costs, the role of renewables will increase to no more than about 7 percent of the market, according to BP.
BP Energy Outlook 2035 is the fourth such report to date. Every year, the authors present it in a few selected venues around the world. This year it was unveiled in Poland for the first time. The report was presented at the end of April by Paul Appleby, Head of Energy Economics at BP, during a lecture at the Warsaw School of Economics.
By 2035 energy consumption worldwide is expected to increase by 41 percent, the report says. This is due to both economic growth, which will double globally by 2035, and population growth—by about 1 percent a year. Ninety-five percent of the growth in energy demand will be generated by developing non-OECD countries, mainly China and India, the report says. These two countries will be responsible for half of the growth. Consumption in OECD countries, on the other hand, will increase by only about 5 percent during this period, the report says.
Demand for oil will grow at the slowest rate (0.8 percent annually). The increase in demand for coal will decelerate (to about 1 percent annually). According to Appleby, this will be primarily due to China’s move away from an oil-driven economy in favor of gas. Demand for gas will grow by 1.8 percent a year.
Shale gas will account for almost half of the new demand for gas in general and by 2035 its extraction will represent 21 percent of total gas production. Shale gas will come mainly from the United States, but in six years production in other regions, such as China, should increase. However, until 2035, North America will meet nearly two-thirds of global demand for gas, and some of it may be exported in the form of liquefied natural gas (LNG).
Other fossil fuels will also increasingly come from unconventional sources such as tight oil and tar sands. Until 2035, the amount of energy from these sources will grow by an average of more than 6 percent a year and will account for nearly half of the total increase in energy consumption during this period. It is thanks to unconventional sources of fossil fuels that the United States may outperform Saudi Arabia as the largest producer of liquid fuels by 2035.
The market share of non-fossil fuels, nuclear power, hydroelectric power and renewables will come to around 5-7 percent for each. After 2025 non-fossil fuels will be responsible for almost 40 percent of the growth in energy production. The fastest growth, by 6.4 percent a year, will be seen in the production of energy from renewable sources (including biofuels). Nuclear power and hydroelectric power will each grow at a rate of about 2 percent per annum. Solar energy, despite heavy subsidies, will account for only 1 percent of the market.
More primary energy will be converted into electricity, the report says. In 2012, 42 percent of primary energy was converted into electricity in the power sector; by 2035 that figure will rise to 46 percent. While most of it will still be produced from coal, the role of gas and renewables is growing rapidly. With the increase in energy consumption, carbon dioxide emissions will grow as well. By 2035 they will increase by almost 30 percent, despite lower emissions in OECD countries, the report says.