Petroleum company British Petroleum’s (BP’s) 2017 Energy Outlook notes that oil, gas and coal will remain the main sources of energy for powering the world economy, accounting for more than 75% of total energy supply in 2035, compared with 86% in 2015.
According to the outlook, which was published in January, the global demand for energy is expected to increase by around 30% between 2015 and 2035, an average growth of 1.3% a year. However, this growth in energy demand is significantly lower than the expected 3.4% a year rise in global gross domestic product. The company believes that this reflects improved implementation of energy efficiency initiatives, driven by technology improvements and environmental concerns.
The outlook looks at long-term energy trends and develops projections for world energy markets over the next two decades.
“The global energy landscape is changing. Traditional centres of demand are being overtaken by fast-growing emerging markets. The energy mix is shifting, driven by technological improvements and environmental concerns. More than ever, our industry needs to adapt to meet those changing energy needs,” says BP group CE Bob Dudley.
The company expects oil demand to grow at an average rate of 0.7% a year, although this is expected to slow gradually over the period. The transport sector is likely to continue to consume most of the world’s oil with its share of global demand remaining close to 60% in 2035. However, noncombusted use of oil takes over as the main source of growth for oil demand by the early 2030s.
“The possibility that the most important source of growth in oil demand in the 2030s won’t be to power cars or trucks or planes, but rather used as an input into other products, such as plastics and fabrics, is quite a change from the past,” says BP group chief economist Spencer Dale.
All of the expected demand growth for oil until 2035 comes from emerging markets, with China accounting for half.
The transport sector accounts for around two-thirds of the growth in oil demand. Within that, oil demand for cars increases by around 4-million barrels a day underpinned by a doubling in the global car fleet.
Dale notes that, “the impact of electric cars, together with other aspects of the mobility revolution, such as self-driving cars, car sharing and ride pooling, is one of the key uncertainties surrounding the long-term outlook for oil”.
The slowing rate of oil demand growth contrasts with the abundance of global oil resources. The outlook speculates that the abundance of oil may cause low-cost producers to use their competitive advantage to increase their market share at the expense of higher-cost producers.