BUSINESS

Global energy demand to expand through 2040

September 24, 2018

JEDDAH — Global energy demand will continue to rise through 2040 reaching 680 quadrillion British thermal units in 2040, up nearly 25 percent, reflecting its fundamental link to growing prosperity and better living standards for an increasing population worldwide. Besides, global transportation-related energy demand is projected to increase by close to 30 percent. At the same time, total miles traveled per year by cars, sport utility vehicles (SUVs) and light trucks will increase about 60 percent, reaching about 14 trillion in 2040, ExxonMobil said in its report titled “2018 Outlook for Energy: A View to 2040”.

Non-OECD share of global energy demand reaches about 70 percent in 2040, as efficiency gains and slowing economic growth in the United States and OECD nations help keep energy demand relatively flat.

China and India contribute about 45 percent of world energy demand growth. The combined share of energy used in the United States and in European OECD nations will decline from about 30 percent in 2016 to close to 20 percent in 2040, similar to China’s share of world energy demand.

Energy efficiency improvements will help curb the growth in global energy demand to about 25 percent over the period to 2040, while global economic output nearly doubles. To put this in perspective, if world energy demand grew as fast as estimated GDP, energy demand growth could be about four times the projected amount.

Emerging markets in non-OECD nations will account for essentially all energy demand growth, led by the expanding economies in the Asia Pacific region.

Continuing urbanization and a significant expansion of the middle class, particularly in China and India, will help drive this trend, highlighted by greater access to modern energy in homes, rising industrial demand, and significant increases in personal and commercial transportation needs.

Electrification and gradual decarbonization continue as significant global trends. Energy demand for power generation accounts for about 50 percent of global demand growth. Energy sources shift toward cleaner fuels such as natural gas, renewables and nuclear.

The report said as personal mobility increases, average new-car fuel economy (including SUVs and light trucks) will improve as well, rising from about 30 miles per gallon now to close to 50 miles per gallon in 2040.

The growth in transportation energy demand is expected to account for about 60 percent of the growth in liquids fuel demand. Liquids demand for light-duty vehicles is expected to be relatively flat to 2040, reflecting better fleet fuel economy and significant growth in electric cars.

Growth in economic activity and personal income drives increasing trade of goods and services, leading to higher energy demand in the commercial transportation sector.

Moreover, the report said currently there are approximately 2 million electric vehicles in the global fleet, or about 0.2 percent of the total. Recently, some car manufacturers and governments have announced plans to limit future vehicle sales to those with an electric motor, including hybrids, plug-in hybrids and battery electric vehicles.

The electric vehicle fleet will see strong growth driven by decreasing battery costs, increasing model availability and continued support from government policies.

Future battery costs and government policies are uncertain, hence there is a wide range of perspectives on future electric vehicle growth, with third-party estimates for 2040 ranging from a factor of three higher and lower than the Outlook

Sensitivities help assess potential impacts to light-duty liquids demand using alternate assumptions around electric vehicle penetration, changes

in fuel efficiency or broader mobility trends.

For every additional 100 million electric vehicles on the road in 2040, liquids demand could fall by ~1.2 million barrels per day; if the entire light-duty fleet is electrified in 2040, total liquids demand could be approximately the same as in 2013 (see page 42)

Alternatively, recent consumer preferences have slowed the increase in fuel efficiency of new vehicle sales in both the OECD and non-OECD.

While the Outlook forecasts new car fuel efficiency trends will be well aligned with government policies, a continuation of recent trends in consumer preferences could

add more than 2 million barrels per day of liquids demand by 2040. — SG


September 24, 2018
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