Industry and commercial transportation drive economic growth

Today, industry and manufacturing make up 40% of the global economy (World Bank Development Indicators) and account for ~50% of energy use (including their share of electricity). When we add the energy required to move goods and services between producers and consumers through commercial transportation, these sectors account for ~65% of global energy use today.

Industry

With the rise in living standards, demand for the industrial products that enable modern living has grown enormously in recent decades.

These industrial products provide materials that are critical to modern economies and quality of life:

• Plastics are used in medical supplies, food storage, vehicles, and many household goods.
• Cement is needed to build roads, dams (hydropower), buildings, and more.
• Aluminum is used in power grids, construction, and vehicles.
• Steel is used for large-scale construction, shipping containers, trains, and ships.

We project industrial demand for energy and feedstocks to grow by ~15% through 2050, with all of the growth coming from developing countries.

The industrial sector has unique energy needs. Industrial processes for making steel, cement, glass, and chemical production require high heat and temperatures from ~400 to >1500°C (~750 to 2700°F). Reliably and/or cost effectively producing that much heat from electricity is challenging or completely unfeasible with most current technologies (U.S. Department of Energy Liftoff Reports, 2023).

For example, electric arc furnaces provide a viable option for recycling steel; however, producing new steel from raw materials continues to rely on blast furnaces. Other sectors such as chemicals and glass do not currently have viable commercialized technologies for electrification (U.S. Department of Energy Liftoff Reports, 2023). In these sectors, natural gas will continue to play an essential role in the cost-effective generation of high heat needed to produce a wide range of industrial goods.

Our Outlook projects significant electrification in the industrial sector by 2050 for a wide range of processes. This includes increasing electricity use for processes that rely on low to medium heat (up to ~400°C or ~750°F) and for on-site power for manufacturing facilities.

The chemical industry also relies on oil and natural gas as feedstocks due to their unique chemical characteristics. Naphtha (an oil-based product) is projected to remain the dominant feedstock in Asia; North America and the Middle East are expected to continue to rely on natural gas liquids and natural gas.

Commercial transportation

In addition to producing goods, global commerce relies on efficiently moving large quantities of essential supplies and services across and between continents. 

Trade and commercial activity require significant, high-density sources of energy to transport goods and people around the world. The Outlook projects energy demand for commercial transportation (including heavy trucks, aviation, marine, and rail) to grow nearly 40% to 2050, making the commercial sector the primary driver of energy growth in transportation. 90% of this growth is in developing countries, driven by increases in population and economic activity.

Electric vehicles are playing a growing role in deliveries within cities, where shorter routes and stop/start driving of last-mile deliveries are well suited for electrification. However, long-haul trucks need to carry much heavier loads and travel much farther distances. Today, these heavy-duty, long-haul trucks make up ~15% of the commercial road vehicle fleet but use ~50% of the fleet’s fuel usage.

Aviation and commercial shipping also require high energy density to move goods and people long distances, favoring liquid fuels. For example, with today’s technology, a Boeing 737 flying for five hours would require an electric battery weighing more than 200 metric tons, or nearly 3x the plane’s maximum takeoff weight (see supplemental information for methodology and sources).

The utility of oil and natural gas in meeting the world’s needs for industry and commercial transportation remains unmatched — they are energy dense, portable, available, and affordable. For example, diesel, which is commonly used for long-haul trucking, has >30x the energy density of today’s lithium ion batteries (see supplemental information for methodology and sources). By 2050, the industrial and commercial transportation sectors are projected to make up 75% of global oil demand (vs. 65% today) and 60% of global natural gas demand (including their share of electricity).