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Thursday, December 14, 2017

IEA World Energy Outlook predicts demand for oil will continue to expand

The latest International Energy Agency (IEA) 2004 World Energy Outlook includes energy projections to 2030. IEA presented a reassuring assessment of the prospects for global energy supplies, but drew attention to serious concerns about energy security, investment, the environment and energy poverty. IEA calls for more vigorous action to “steer the global energy system onto a more sustainable path”.

IEA stressed that the central message of the World Energy Outlook remains an optimistic one. The Earth contains more than enough energy resources to meet demand for many decades to come, it says. The world is not running out of oil just yet. Moreover, there is more than enough money globally to finance the large expansion of energy infrastructure that will be needed.

Soaring oil and gas prices, the increasing vulnerability of energy supply routes and ever-increasing emissions of climate-destabilising carbon dioxide are “symptoms of a considerable malaise in the world of energy.” IEA described as “deeply troubling” the inexorable increase in global energy demand predicted by the Outlook from now until 2030, as well as our continuing heavy reliance on carbon-emitting fossil fuels

In the Outlook’s Reference Scenario, which projects energy trends in the absence of new government policies or accelerated deployment of new technology, world primary energy demand is set to rise by 59% from now till 2030. Some 85% of that increase will be in the form of fossil fuels: coal, oil and natural gas. Two-thirds of the new demand will come from the developing world, especially China and India.

Demand for oil will continue to expand, at 1.6% a year, from 82 mbd today to 121 mbd in 2030, and inter-regional trade in oil will double to 65 mbd. Most of that additional trade will have to pass through vital choke points, sharply increasing the possibility of a supply disruption. More and more oil will come from fewer and fewer countries, primarily the Middle East members of OPEC. The dependence of all importing countries on those suppliers will grow.

Gas use is projected to double by 2030, largely because it will be the fuel of choice for electric power generation. Coal will continue to supply a fifth of world energy needs, mostly in power generation and increasingly concentrated in China and India.

Nuclear power will grow very slightly, decreasing in Europe while advancing in Asia. Use of other non-carbon-emitting renewable energy sources will triple, but will still account for only 6% of world electricity production in 2030.

The IEA analysis shows that more vigorous government action could steer the world onto a markedly different energy path. In an “Alternative Policy Scenario” world energy demand is 10% lower and carbon-dioxide emissions 16% lower. The world’s reliance on Middle East oil and gas is also much reduced. More efficient use of energy in vehicles, electrical appliances, lighting and industry account for more than half of the reduction in emissions. A shift in the power generation fuel mix in favour of renewables and nuclear power accounts for most of the rest. Even in this alternative scenario, energy imports and emissions would still be higher in 2030 than today and would still be growing.

Achieving a truly sustainable energy system will depend on technological breakthroughs that radically alter how we produce and use energy. IEA called on governments to take the lead in accelerating the development and deployment of new technologies that will allow us to meet our growing energy needs without compromising our energy security and the environment.

The World Energy Outlook includes:

  • a focused study of the effects of persistently high oil prices. It concludes that, if oil prices stay high, they will erode oil demand substantially and reduce the income of OPEC producers over the medium term.
  • an in-depth study of Russia’s growing role as a major energy power. While recognising it is the most important energy supplier of the moment, there are enormous uncertainties surrounding Russia’s energy future.
  • a “World Alternative Policy Scenario” – which for the first time includes the developing world and emerging market economies, and considers what would happen if governments decided to act much more vigorously to combat environmental problems and reduce energy-security risks.

Statistics on world oil supply and demand (tables and graphs), including the IEA 2005 predictions, can be found on the following  link on the INTERTANKO website:

Contact: Erik Ranheim /Jan Svenne