Fossil fuels will continue to dominate the global energy mix in 2030, oil group BP forecasts in its latest ‘Energy Outlook 2030’, in which it estimates that such primary energy sources should still comprise 81% of global energy demand by that date. But the overall share of fossil fuels in the mix is likely to be 6% lower than is the case currently as fuel switching accelerates, with gas and renewables replacing coal and oil.
This “gradual” switching should result in renewables, including biofuels, remaining the fastest-growing sources of energy supply globally, rising at a yearly rate of more than 8% – materially quicker that the rate of growth of the fastest-growing fossil fuel, natural gas, the use of which is likely to increase by 2% a year over the period.
By 2030, BP expects renewables to make up 11% of world electricity generation, with the European Union having 26% of it power arising from such solutions.
It also anticipates that policy support will be sustained to help the renewables industry deploy new technologies and drive down costs. But the report cautions that the pace of penetration is likely to be constrained by a willingness and ability to meet the rapidly expanding cost of policy support as renewables scale up.
“One of the mega trends is that fuel shares globally are equalising,” says chief economist Christof Rühl.
“By 2030, for the first time since the industrial revolution, there will be no one dominant fuel. The fuel shares between coal, gas and oil will be roughly equal,” he asserts, adding that, at a lower level, the shares between nuclear, hydro and renewables will also be nearly equal.
Renewables technologies also face a “tough” challenge in penetrating the transport fuels market. By 2030, BP expects that only 7% of world transport fuels will be derived from renewable sources, led by Brazil where biofuels consumption may have risen from 21% in 2010 to 39% by 2030.
In fact, Rühl expects oil to continue to dominate the transport sector by 2030, comprising 87% of demand.
A 60% increase (from 1-billion to around 1.6-billion) in the number of vehicles is forecast for the coming 20 years. But transport-related energy consumption will grow by only 26%, or at a yearly rate of 1.2% – down from 1.9% a year between 1990 and 2010.
Rühl attributes this modest rate of growth to an assumption that the efficiency of the internal combustion engine will double over the period, owing primarily to “hybridisation”. Hybrids should dominate the sales mix by 2030, with full hybrids comprising 22% and mild hybrids, 34%.
Rühl argues that if current technologies were to remain, the world would require 11-million barrels a day of additional oil, which would be nearly the size of Saudi Arabia’s production.
Overall energy demand could grow by 39% by 2030, or 1.6% yearly, underpinned almost entirely by emerging market demand. Consumption in developed countries, meanwhile, is expected to rise by only 4% over the period.
Oil, currently the world’s leading fuel source, will lose market share throughout the period. Nevertheless, demand for hydrocarbon liquids may climb to 103-million barrels a day by 2030, up 18% from 2010 levels.
“This means the world will still need to bring on enough liquids - oil, biofuels and others - to meet that forecast 16 million barrels a day of extra demand by 2030 and replace declining output from existing sources.”
China’s oil demand is predicted to rise by 8-million barrels a day over the period, India’s by 3.5-million barrels a day and the Middle East by four-million barrels a day and these regions should also account for nearly all of the net global increase. By contrast BP believes developed country demand peaked in 2005 and that consumption will decline by 6-million barrels a day by 2030.
Interestingly, BP expects growth in unconventional supply – including US shale oil and gas, Canadian oil sands, and Brazilian deep-water production – and the gradual decline in oil demand to result in the Western Hemisphere becoming almost energy self-sufficient by 2030. “This means that growth in the rest of the world, principally Asia, will depend increasingly on the Middle East in particular for its growing oil requirements.”
Coal is expected to continue gaining market share in the current decade, but this growth could wane in the decade spanning 2020 to 2030. Nonfossil fuels are likely to contribute nearly half of the growth after 2020.
Power generation is expected to be the fastest growing user of energy in the period to 2030, accounting for more than half the total growth in primary energy use. But it is also in the power sector where the greatest changes in the fuel mix are expected. Renewables, nuclear and hydroelectric power could account for more than half the growth in the sector.
BP says global carbon dioxide (CO2) emissions are likely to rise by about 28% by 2030 – slower than the current rate of energy demand growth, owing to the rapid growth of renewables and natural gas.
“If more aggressive policies than currently envisioned are introduced, global CO2 emissions could begin to decline by 2030,” the report assets.
Rühl suggest that to facilitate more aggressive action, efforts should be made to harness the forces of competition and technology innovation to help noncarbon energy meet the market test.
Further, a price should be set for “the source we want to minimise, which is carbon”.