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Global energy supplies

Over the Outlook period, we see several major trends in energy supplies

Oil remains the top global energy source and the fuel of choice for transportation. Demand for oil is projected to rise by approximately 25 percent through 2040, led by increased commercial transportation activity. A growing share of this demand will be met by sources such as deepwater, oil sands and tight oil, which are increasing as a result of advances in technology.

Natural gas will contribute the biggest growth in energy supplies. Natural gas is affordable, widely available, extremely versatile, and emits up to 60 percent less CO2 than coal when used for power generation. With abundant resources unlocked by continuing technology advances, natural gas is expected to become more important in the global energy mix, accounting for more than 25 percent of global energy needs by 2040, as natural gas demand rises by about 65 percent.

Coal is currently the top fuel for power generation and accounts for the second-largest share of energy supplies today. We expect demand will continue to rise until around 2025 and then decline – despite the existence of a huge resource base. Driving this decline will be demand reductions in OECD countries as well as in China, which today consumes approximately half of the world's coal production. By 2040, we anticipate that coal’s share of the global energy mix will fall from approximately 25 percent in 2010 to below 20 percent.

Nuclear energy will see solid growth. While some countries scaled back their nuclear expansion plans in the wake of the 2011 Fukushima incident in Japan, many other countries are expected to expand the use of this energy source to meet electricity needs while reducing emissions. Growth will be lead by the Asia Pacific region, where nuclear output is projected to rise from 3 percent of total energy in 2010 to close to 9 percent by 2040. 

Renewable energy supplies — including traditional biomass, hydro and geothermal as well as wind, solar and biofuels — will grow by close to 60 percent, led by increases in hydro, wind and solar. Wind, solar and biofuels are likely to make up about 4 percent of energy supplies in 2040, up from 1 percent in 2010. We foresee wind and solar providing about 10 percent of electricity generated in 2040, up from about 2 percent in 2010.

Expanding energy will require trillions of dollars in investment. The IEA estimates that meeting the world’s energy needs will require expenditures on the energy-supply infrastructure of approximately $1.6 trillion per year on average through 2035. About half of the investments relate to projected oil and natural gas needs, while approximately 45 percent relate to expected power generation requirements.