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Global energy fundamentals

What will the world’s energy picture look like in the future? To answer this question, we need to start by analyzing the world’s long-term demographic and economic trends.


 

Energy trends overview

By 2040, world population is expected to reach 9.2 billion people, up from 7.4 billion today. Over that same period, global GDP will likely double. As a result, per capita GDP is projected to rise significantly, particularly in the non-member countries of the Organisation for Economic Co-operation and Development (OECD). Billions of people are expected to join the global middle class.

Rising living standards for expanding populations worldwide mean a dependence on reliable modern energy. Combined, they are expected to help drive up global energy demand by about 25 percent by the year 2040. That is roughly equivalent to adding another North America and Latin America to the world’s current energy demand.

The world will need to pursue all economic energy sources to keep up with this considerable demand growth.

Energy and economic projections

Energy supports living standards

  • Energy plays a critical role in supporting rising modern living standards around the world
  • Electricity use per capita is one important measure of energy consumption
  • A country’s electricity use per capita is well-aligned with its income level
  • About half of the global population resides in countries where average electricity demand per person is less than the annual consumption of basic household appliances
  • About 1 billion people still lack access to electricity

World demographics continue to shift

  • Global population grows from 7.4 billion today to 9.2 billion people in 2040
  • Africa’s population increases at the fastest rate across major regions; it also has the largest working-age population across regions by 2040
  • India likely to replace China as the most populous nation by 2025, with a significant increase in working-age population
  • China’s population will gradually trend down post 2030; its working-age population has already peaked, and its share of population age 65+ increases rapidly
  • OECD working-age population flattens while the 65+ group continues to grow

Non-OECD leads economic expansion

  • Economic output (GDP) growth consists of both income (measured by GDP per capita) and population growth
  • Projected OECD GDP growth trend reflects declining population growth and steady rise of income
  • Non-OECD GDP growth to 2025 expected to rise above historical average, reflecting higher income growth and slower population growth
  • Non-OECD GDP growth post-2025 projected to moderate as population growth slows further, while income growth is largely maintained

World GDP doubles; World GDP growth

  • World GDP likely to double from 2016 to 2040, with non-OECD GDP increasing about 165 percent, and OECD GDP growing about 60 percent
  • Non-OECD share of global GDP will rise to about 50 percent by 2040, up from about 35 percent in 2016
  • China is likely to be the largest contributor to GDP gains, with growth similar to that of Europe OECD and the United States combined
  • India will grow strongly, with its share of global GDP doubling

Purchasing power expands

  • All regions show significant gains in income by 2040
  • GDP per capita in OECD nations currently averages about four times that of non-OECD economies
  • China GDP per capita is likely to triple to more than $40,000 by 2040, similar to Europe OECD levels of purchasing power in 2030
  • India GDP per capita is also expected to triple, but will be less than half of China’s level by 2040
  • Africa GDP per capita is expected to increase by 50 percent, still trailing other emerging markets significantly

Unprecedented middle-class growth

  • Middle class to expand globally, growing about 80 percent by 2030 to reach more than 5 billion people; most of the growth comes from non-OECD countries
  • The rising middle class means billions of people with longer, healthier and better lives
  • Asia Pacific represents the largest increase, with India and China each reaching more than 1 billion middle-class citizens
  • Africa/Middle East and Latin America are also expected to increase, while North America and Europe hold their middle-class population steady

Technology helps us do more with less

  • Global energy demand grows more slowly than world GDP, implying falling energy intensity (amount of energy used to produce a unit of GDP)
  • From 2000 to 2016, energy intensity declined about 1 percent per year, the rate of improvement from 2016 to 2040 is likely to approach 2 percent per year
  • Meanwhile, the carbon intensity of energy (CO2 content per unit of energy used) has been fairly flat; the pace of improvement is likely to pick up from 2016 to 2040
  • The combined effect is reflected in decreasing carbon intensity of the world economy (tonnes CO2 per unit of GDP), which is expected to be about 40 percent lower by 2040 as global energy demand rises about 25 percent

Global efficiency limits demand growth

  • Despite growing population, global energy demand is expected to increase about 25 percent from 2016 to 2040, reflecting large savings due to efficiency improvements
  • Without energy savings enabled by gains in energy efficiency of the world’s economy, global energy demand could nearly double by 2040
  • Demand growth will come from non-OECD nations, led by China and India, where energy use is expected to rise about 40 percent
  • Demand in other Asia Pacific nations, Africa/Middle East and Latin America is similarly projected to grow strongly

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