Report Feb. 2, 2018
What resources will be available to meet the world’s increasing demand for more energy? Technology advancements underpin the diversification of energy choices.
Report Feb. 2, 2018
Energy supply projections
The supply mix to meet growing energy demand will be historically diverse – from the oil and natural gas in America’s shale regions, to the deepwater fields off Brazil; from new nuclear reactors in China, to wind turbines and solar arrays in nations around the world.
This diversification in global energy supply will grow over the next two-and-a-half decades. Society’s push for lower-emission energy sources will drive substantial increases in renewables such as wind and solar. By 2040, nuclear and all renewables will be approaching 25 percent of global energy supplies.
Oil grows and continues to be the primary source of energy for transportation and as a feedstock for chemicals. Natural gas also grows, with increasing use in power generation, as utilities look to switch to lower-emissions fuels. Coal struggles to grow due to increased competition in power generation from renewables and natural gas, led by declines in OECD nations.
Energy supply evolves to meet diverse demand
- Technology improvements lead to wind, solar and biofuels increasing, with a combined growth of about 5 percent per year
- Non-fossil fuels reach about 22 percent of total energy mix by 2040
- Oil continues to provide the largest share of the energy mix; essential for transportation and chemicals
- Natural gas demand rises the most, largely to help meet increasing needs for electricity and support increasing industrial demand
- Oil and natural gas continue to supply about 55 percent of the world’s energy needs through 2040
- Coal’s share falls as OECD countries and China turn to lower-emission fuels
- Nuclear demand grows 70 percent between 2016 and 2040, led by China
- Wind, solar and biofuels reach about 5 percent of global energy demand
Liquids supply projections
Liquids demand is expected to grow by about 20 percent over the next two-and-a-half decades, driven by the transportation and chemicals sectors.
To meet the demand, supply growth will come from diverse sources, with technology advancements a key enabler. Technology enables growth in supply from tight oil and natural gas liquids, together reaching nearly 30 percent of global supply by 2040. Combined with growth in oil sands, energy markets shift, and North America becomes a net exporter.
Liquids demands driven by transportation and chemicals
- Global liquids demand grows about 20 percent from 2016 to 2040
- Commercial transportation and chemicals sectors lead demand growth
- Advances in light-duty vehicle efficiency lead to liquids demand decline in North America and Europe
- Africa liquid demand grows by about 30 percent as emerging economies advance
- Asia Pacific accounts for nearly 65 percent of the increase in global liquids demand to 2040, surpassing the combined liquids demand of North America and Europe by 2025
Liquids supply highlights technology gains
- Global liquids production rises by 20 percent to meet demand growth
- Technology innovations lead to growth in natural gas liquids, tight oil, deepwater, oil sands and biofuels
- Technology enables efficient production from conventional sources, which still account for more than 50 percent of production in 2040
- Most growth over the Outlook period is seen in tight oil and natural gas liquids, which reach nearly 30 percent of global liquids supply by 2040
- Continued investment is needed to mitigate decline and meet growing demand
Liquids supply highlights regional diversity
- Liquids trade balances shift as supply and demand evolve
- North America swings to a net exporter as shale growth continues
- Latin America exports increase from added deepwater, oil sands and tight oil supplies
- The Middle East and Russia/Caspian remain major oil exporters to 2040, and Africa shifts to an importer
- Europe remains a net oil importer, as demand and production both decline
- Asia Pacific imports increase to 80 percent of oil demand in 2040
Liquids demand and supply warrant investment
- Without further investment, liquids supply would decline steeply
- More than 80 percent of new liquids supply needed to offset natural decline
- Per the International Energy Agency, about $400 billion a year of upstream oil investment is needed from 2017 to 2040
Technology expands recoverable resources
- Global oil resources are abundant
- Oil resource estimates keep rising as technology improves
- Technology has added tight oil, deepwater and oil sands resources
- Less than one-quarter of global oil resources have been produced
- Remaining oil resources can provide about 150 years of supply at current demand
Natural gas projections
It is not surprising that natural gas grows more than any other energy source when one considers its abundance, convenience and many uses: home heating, fertilizer feedstock, delivery truck fuel and flexible, reliable electricity generation, just to name a few. Global natural gas demand grows by about 40 percent, as its share of the world’s energy mix rises from 23 percent to 26 percent between 2016 and 2040. As a lower carbon alternative to coal, natural gas also plays a key role in the pathway to lower CO2 emissions.
Natural gas resources are geographically and geologically diverse. Technologies, such as horizontal drilling and hydraulic fracturing, have unlocked vast unconventional resources, which have dramatically altered the natural gas supply landscape in the past decade, particularly for North America. Unconventional gas will continue to play a significant role, contributing more than half of the growth in natural gas supply to 2040.
Trade is critical to move natural gas to where consumers need it. Liquefied natural gas is well-suited to transport natural gas over long distances where pipelines are impractical. Liquefied natural gas trade will meet one-third of demand growth to 2040.
Natural gas competes in every sector
- As an abundant, versatile and cleaner-burning energy source, natural gas is increasingly a fuel of choice for homes, businesses and large-scale electricity generators
- Natural gas supplies about a quarter of the energy for industry and electricity generation in 2040
- Residential and commercial users continue to rely on natural gas as a convenient, modern fuel for heating and cooking
- Natural gas is a small fraction of transportation demand, but sees strong growth in the commercial road and marine sectors
Natural gas meets an increasing share of world demand
- Global natural gas demand grows by about 40 percent from 2016 to 2040
- The share of natural gas in the world’s energy supply mix increases from 23 percent in 2016 to 26 percent in 2040
- Natural gas-rich regions like the Middle East and Russia/Caspian rely on natural gas to meet about half of their energy needs
- Abundant unconventional resources prompt North America’s steady shift toward natural gas
- Natural gas plays an important role in fueling economic growth in Asia, Africa and Latin America
Natural gas supply highlights regional diversity in meeting demand
- Advances in unconventional gas production and liquefied natural gas markets continue to reshape natural gas supplies
- Abundant unconventional gas fuels regional demand growth and liquefied natural gas exports for North America
- Russia/Caspian remains a significant exporting region, supplying Europe and Asia Pacific via pipeline, while also expanding liquefied natural gas export capabilities
- The Middle East and Africa see rising demand and exports; Latin American demand outpaces supply growth
- Europe and Asia Pacific increasingly rely on natural gas trade to meet consumer needs, as local production falls short of demand
Europe and Asia Pacific dominate LNG imports
- Liquefied natural gas trade supplies one-third of natural gas demand growth from 2016 to 2040
- Together, Asia Pacific and Europe account for about 85 percent of liquefied natural gas imports in 2016 and 95 percent of the growth from 2016 to 2040
- Europe leverages competitive liquefied natural gas to diversify its natural gas import portfolio
- Air quality management is a key driver for China’s and India’s natural gas demand growth
- Other Asia Pacific importers utilize liquefied natural gas to fill existing natural gas infrastructure as domestic natural gas supplies plateau or decline
Abundant natural gas supplies underpin new LNG exports
- Three-quarters of liquefied natural gas exports in 2016 originated in Asia Pacific or the Middle East
- By 2040, four regions will have similar liquefied natural gas exports: Asia Pacific, the Middle East, North America and Africa
- North America’s exports grow the most as low-cost unconventional gas production prompts investment in liquefied natural gas
- Liquefied natural gas will remain highly competitive due to abundant natural gas resources and many aspiring exporters
- Low-cost liquefied natural gas supply sources will be advantaged in the marketplace
Technology expands recoverable resources
- Less than 15 percent of recoverable natural gas resources have been produced
- Remaining natural gas resources can provide more than 200 years of supply at current demand
- Natural gas resource estimates keep rising as technology unlocks resources previously considered too difficult or costly to produce
- About 45 percent of remaining natural gas resources are from unconventional sources like shale gas, tight gas and coal-bed methane
- Natural gas resources are geographically widespread
Test uncertainty projections
Demand for liquid fuels is projected to grow by about 20 percent through the Outlook period, driven primarily by commercial transportation and chemicals demand. Liquids demand from light-duty transportation peaks and declines with more efficient vehicles, even as personal mobility continues to rise.
Uncertainties in government policies and the pace of market penetration of various technologies could have a material impact on light-duty transport sector demand. To assess the magnitude of this uncertainty, we developed a hypothetical sensitivity to illustrate the impact of all light-duty liquids demand being replaced by electricity by 2040.
To achieve this, global sales of light-duty vehicles would likely need to be 100 percent all-electric starting in 2025. This would require sales of about 110 million electric vehicles starting in 2025, rising to about 140 million in 2040 – more than 100 times the number of electric vehicles sold in 2016. Battery manufacturing capacity for electric cars would need to increase by more than 50 times from existing levels by 2025 under this hypothetical case.
Liquids demand by sector
- In a 100 percent electric light-duty vehicles by 2040 sensitivity, light-duty transportation liquids demand would be fully displaced
- In this sensitivity, total liquids demand in 2040 would be similar to levels seen in 2013 as growth in chemicals and commercial transportation would mostly offset a decline in light-duty vehicle demand
- Post-2040, liquids demand would likely revert to modest growth as chemicals and commercial transportation demand continue to rise
Electricity demand, Demand increase
- The additional electricity needed to power a 100 percent all-electric light-duty vehicle fleet could increase total electricity demand by about 15 percent in 2040 relative to the base Outlook
- Assuming the fuel mix for electricity generation is the same as in the Outlook, power generation from natural gas would be about 25 percent of the overall increase
- Under a 100 percent light-duty EV sensitivity, total energy-related CO2 emissions in 2040 could be reduced by about 5 percent
- Light-duty tailpipe emissions would reduce to zero but emissions from power generation would rise with the increase in electricity demand
- CO2 emissions from power generation would increase by about 15 percent, with coal accounting for 60 percent of the increase
Natural gas demand increases
- Higher electricity demand would lead to about a 20 percent increase in natural gas demand for power generation in 2040
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