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IEA stresses growing energy demand Report predicts shift in demand to Asia & Middle East, highlights Brazil as oil producer, stresses energy pricing and efficiency Alan Bailey Petroleum News
In the 2013 edition of its World Energy Outlook report the International Energy Agency, or IEA, sees global energy demand growing by one-third between now and 2035, but with Asia and the Middle East taking center stage for demand growth while demand remains static in the developed countries of the Organization for Economic Cooperation and Development. The report predicts that India and Southeast Asia will take over the lead from China in driving energy demand growth in the 2020s, while the Middle East will become the world’s second largest consumer of natural gas and third largest oil consumer by 2030.
“Major changes are emerging in the energy world in response to shifts in economic growth, efforts at de-carbonization and technological breakthroughs,” said IEA Executive Director Maria van der Hoeven when announcing the publication of the new report on Nov. 12. “We have the tools to deal with such profound market change. Those that anticipate global energy developments successfully can derive an advantage, while those that do not risk taking poor policy and investment decisions.”
The report singles out Brazil as of particular interest. This country is anticipated to maintain one of the world’s least carbon-intensive energy sectors while increasing its energy use by 80 percent and becoming a top oil producer during the next couple of decades or so, the report says.
Key to success But the ready availability of affordable energy will prove critical to economic success and industrial competitiveness in the years to come for many countries. At present, natural gas trades in the United States at one-third of the import price for Europe and one-fifth of that for Japan, with Japanese or European industrial consumers paying twice as much for electricity as their counterparts in the United States, and Chinese industry also paying almost double the U.S. prices, the report says.
The United States should see an increase in its share of global exports of energy-intensive goods in the coming years while Europe and Japan should see their shares decline, the report says.
The report highlights the importance of energy efficiency as a means of addressing high energy prices but says that it is likely that as much as two-thirds of the potential economic gains from energy efficiency will remain untapped by 2035, unless market barriers such as the use of fossil fuel subsidies can be overcome.
Global gas market An accelerating move towards a more global market in natural gas could reduce the current differentials in gas prices between different regions of the world. The export of liquefied natural gas from the United States coupled with market reforms in the Asia-Pacific region could trigger a loosening of the rigidity of gas supply contracts and their linkage to high oil prices, the report says.
At the same time, efforts to address climate change will not diminish. A projected rise of 20 percent in energy-related carbon emissions by 2035 is expected to cause an average global temperature rise of 3.6 C, a rise that is much larger than the internationally agreed target of 2 C, the report says. And the report predicts a continuing increase in the level of subsidies for renewable energy sources.
New technologies Although the Middle East is set to remain central to world oil supplies, new technologies such as shale oil development and the development of oil fields in very deep water are making available new oil resources previously viewed as technically or economically inaccessible. And estimates of ultimately recoverable oil resources continue to increase, offsetting estimated production decline rates of about 6 percent per year for conventional oil fields that have passed their peak, the report says. The use of oil is becoming increasingly focused in just the transportation and petrochemical sectors, the report says.
But oil refining is facing worldwide turbulence as oil demand in developed countries declines while demand in Asia and the Middle East rises, and as the composition of oil feed stocks for refineries changes. In countries where oil consumption drops, refinery capacity will be under used, with some refineries potentially closing, making way for new refining capacity in new centers of demand.
The use of biofuels will probably triple by 2035, eventually meeting 8 percent of the demand for road transportation fuel, the report says.
Increasing electricity demand The report says that worldwide electricity demand is likely to increase by more than two-thirds by 2035 and that the use of fossil fuels will probably continue to dominate electricity generation. However, the share of renewable energy sources in power generation will probably increase from 20 percent in 2011 to 31 percent in 2035, overtaking natural gas as a source of energy and approaching coal, which will likely remain the dominant fuel for use in power stations. However, the future demand for coal is somewhat uncertain, mainly because of the varying stringency of different environmental policies, the report says. Nuclear power’s share of the electricity generation energy mix will probably remain fairly static, the report says.
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