How much more energy will the world need in the future? Are there enough energy resources to meet growing demand? What role will different forms of energy play? And which countries will produce and consume the most energy? These are the kinds of questions BP's economics team sets out to answer in the company's annual Energy Outlook publication. Here, we review some of the highlights of the 2013 edition and ask BP's chief economist Christof Rühl for his thoughts.
More people, more wealth, more energy demand - that has been the story of the world's civilisation over the past 250 years. And that is how BP's economists expect it to continue - at least for the next 20 years. Around 1820 the world population reached 1 billion. Since then, it has soared to more than 7 billion and it is set to exceed 8 billion by 2030. This demographic growth has been accompanied by even more spectacular economic growth. The world economy has almost doubled in size over the past 20 years and it's expected to double again over the next 20. Energy has been a contributing factor as the number of people living on less than $1 a day has halved since 2000, from approximately 2 billion to around 1 billion, achieving the first of the Millennium Goals set by world leaders in 2000.
Note: the following text refers to OECD [Organization for Economic Co-operation and Development] and non-OECD. OECD brings together countries such as those of Europe, North America and Australasia, which have generally had industrial economies for a century or more. Non-OECD stands for developing or emerging market economies. Growth rates quoted in text refer to the period 2011-2030.
Demand - who is using the energy?
Christof Rühl says
"This projection is what we think is most likely to happen, not necessarily what we would most like to happen. It is based on current and anticipated trends in energy supply and demand, as well as what we see as the most likely path of policy and technological development. Things may not turn out this way if unexpected developments or game-changing technologies come along. As economies develop, their energy intensity falls - that is the amount of energy you need to generate every unit of income. For example, in the OECD countries, where ownership of energy-using appliances is already high, vehicles continue to cover more miles for every litre of fuel, homes will still become better insulated and industrial processes continue to become more energy efficient, often propelled by government regulations. Together with relatively slow population and economic growth, this explains why there already is so little growth in energy demand now coming from the industrialised countries. "
Christof Rühl says
"Electricity is the biggest growth area, with power generation expected to account for almost 60% of the rise in energy consumption to 2030, followed by energy used in industry. This, first and foremost, shows the scale of energy needed in emerging economies as they continue to build their industrial sectors and cities. Transport accounts for much less growth around 10% with vehicles becoming more efficient. BP expects the efficiency of the internal combustion engine to double by 2030, largely driven by continued hybridisation of the car fleet."
Christof Rühl says
"Given the scale of demand, a perennial question has been whether the world has enough supply to meet it. The data collated by BP suggests it does - with the industry consistently finding more oil and gas than it produces over time. As a result, total reserves continue to go up, not down. In 1980, companies and governments collectively had proved reserves of just under 700 billion barrels of oil. Today, there are more than 1,600 billion, despite massive consumption over this period. "
Total energy production - Christof Rühl says
"Growth in production will be dominated by the non-OECD economies, which are likely to account for almost 80% of the increase in global production. We expect that non-OECD countries will supply 71% of global energy production in 2030, up from 58% in 1990. The dominance of the non-OECD group in growth of production is not as great as it is in consumption because several OECD countries, led by the US and others, continue to be significant producers."
Liquid fuel production - Christof Rühl says
"One of the most dramatic developments in the global energy landscape recently has been the renaissance of oil production in North America, largely thanks to unlocking massive reserves of 'tight oil' or oil contained in shale formations (see page 23). We have also seen growth in biofuels in both the US and Brazil, as well as the emergence of Canadian heavy oil. These developments mean North and South America together are set to overtake the Middle East as the world's largest source of liquid fuels during the current decade and retain that position up to 2030 when we expect the Middle East to catch up again. The speed of these developments, especially in the US and Canada would have been unthinkable only a few years ago
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