Despite current weakness in global energy markets and the slowdown in China’s growth, demand for energy will continue to grow over the next 20 years and beyond as the world economy expands and more energy is required to power the higher level of activity.
According to the 2016 edition of the BP Energy Outlook, global demand for energy is expected to increase by 34% between 2014 and 2035, or by an average of 1.4% per year. This growth in overall demand includes significant changes in the energy mix, with lower carbon fuels growing faster than carbon intense fuels as the world begins to transition to a lower carbon future.
The Outlook looks at long-term energy trends and develops projections for world energy markets over the next two decades. The 2016 edition was launched in London yesterdat by Spencer Dale, BP’s group chief economist, and Bob Dudley, group chief executive.
“In the middle of a downturn in oil and gas prices, it is important not only to adapt to the current tough conditions, but also to prepare for the next set of challenges. Energy is a long-wave length industry and we need a long term perspective of how the energy landscape we operate in is likely to evolve,” said Dudley.
“As this year’s Outlook demonstrates, the world is going to continue to demand growing supplies of energy but the mix of those supplies is changing and becoming less carbon intense. However, further policy action may be necessary to meet international targets to limit carbon emissions.”
Despite the rapid growth of other sources, the Outlook projects that fossil fuels will remain the dominant form of energy over the period to 2035, meeting 60% of the projected increase in demand and accounting for almost 80% of the world’s total energy supplies in 2035.
Gas will be the fastest growing fossil fuel, increasing 1.8% a year and oil will grow steadily at 0.9% a year, although its share of the energy mix continues to decline. Growth of coal is projected to slow sharply, such that by 2035 its share in the energy mix is at an all-time low, with gas replacing it as the second largest fuel source.
Globally, shale gas is expected to grow by 5.6% per annum between 2014 and 2035, well in excess of the growth of total gas production. As a result, the share of shale gas in global gas production will more than double from 11% in 2014 to 24% by 2035. As with the past 10 years, the growth of shale gas supply is dominated by North American production, which accounts for around two-thirds of the increase in global shale gas supplies. Shale gas is expected to expand outside of North America, most notably in Asia Pacific and particularly in China, where shale gas production is projected to reach 13 Bcf/d by 2035.