FOR IMMEDIATE RELEASE
September 14, 2017
Emerging Asian economies drive the increase in world energy use from 2015 to 2040
World energy consumption is projected to increase by 28% by 2040, according to the International Energy Outlook 2017 (IEO2017), released today by the U.S. Energy Information Administration (EIA). Most of the world’s growth in energy demand is projected to take place in countries outside of the Organization for Economic Cooperation and Development (OECD). China and the other non-OECD Asia nations alone account for more than 60% of the projected increase in world energy demand (Figure 1).
"Transportation energy use rises by nearly 30%, with almost all of the growth coming from non-OECD countries, as personal incomes rise and energy markets in many of these nations' rapidly growing economies become further integrated into global supply chains," said Ian Mead, EIA's Assistant Administrator for Energy Analysis.
Some key findings:
World energy use increases from 575 quadrillion British thermal units (Btu) in 2015 to 736 quadrillion Btu in 2040. The increase mainly occurs in the emerging economies of the world, driven by long-term growth in economies and populations.
In the IEO2017 Reference case, world net electricity generation increases by 45% from 23.4 trillion kilowatthours (kWh) in 2015 to 29.4 trillion kWh in 2030 and to 34.0 trillion kWh in 2040. Electricity is the world’s fastest growing form of end-use energy consumption, as it has been for decades, and power systems continue to evolve from isolated, noncompetitive grids to integrated and even international markets.
IEO2017 projects renewables as the world's fastest-growing energy source—increasing by 2.3% per year through 2040—but fossil fuels still account for more than three-quarters of world energy use (Figure 2). Although petroleum and other liquids remain the largest source of energy, the liquid fuels share of world marketed energy consumption falls from 33% in 2012 to 31% in 2040.
Natural gas is the fastest-growing fossil fuel in the outlook. Global natural gas consumption grows by 1.4% per year from 2015 to 2040. Abundant natural gas resources and rising production—including supplies of tight gas, shale gas, and coalbed methane—contribute to the strong competitive position of natural gas.
Compared with the strong growth in coal use in the 2000s, worldwide coal use remains essentially flat through 2040. After 2030, natural gas surpasses coal to become the world's second-largest energy source after liquid fuels (Figure 2).
Other IEO2017 highlights:
By 2040, renewables provide the largest share (34%) of world electricity generation—a substantial change from 2015, when coal provided 40% of all power generation. Hydropower and wind are the two largest contributors to the increase in world electricity generation from renewable energy sources, together accounting for two-thirds of the total increase from 2015 to 2040. Hydropower and wind generation each increase by about 1.8 trillion kilowatthours (kWh) in the IEO2017 Reference case.
The top three coal-consuming countries—China, the United States, and India—together account for more than 65% of the world's coal use through 2040. China alone currently accounts for slightly more than half of the world's coal consumption, but a slowing economy and plans to implement policies to address air pollution and climate change mean that coal use in China will decline over the projection period. Of the world's three largest coal consumers, only India is projected to increase coal use through 2040.
Worldwide electricity generation from nuclear power increases from 2.5 trillion kWh in 2012 to 3.7 trillion kWh in 2040, as concerns about energy security and greenhouse gas emissions support the development of new nuclear generating capacity, but reactor retirements and opposition from local populations keep nuclear from expanding in many parts of the world. Virtually all of the projected net growth in the world's installed nuclear capacity occurs in non-OECD countries, led by China's addition of 111 gigawatts of nuclear capacity from 2015 to 2040.
The industrial sector continues to account for the largest share of delivered energy consumption, using more than half of global delivered energy in 2040.
Worldwide energy-related carbon dioxide emissions rise from 34 billion metric tons in 2012 to 39 billion metric tons in 2040, a 16% increase from 2015 to 2040. Much of the growth in emissions is attributed to non-OECD nations, many of which continue to rely on fossil fuels to meet the growth in energy demand.
IEO2017 is available at http://www.eia.gov/ieo/.The product described in this press release was prepared by the U.S. Energy Information Administration (EIA), the statistical and analytical agency within the U.S. Department of Energy. By law, EIA's data, analysis, and forecasts are independent of approval by any other officer or employee of the United States Government. The views in the product and press release therefore should not be construed as representing those of the Department of Energy or other federal agencies.
Something interesting to share?
Join NrgEdge and create your own NrgBuzz today
It has been 21 years since Japanese upstream firm Inpex signed on to explore the Masela block in Indonesia in 1998 and 19 years since the discovery of the giant Abadi natural gas field in 2000. In that time, Inpex’s Ichthys field in Australia was discovered, exploited and started LNG production last year, delivering its first commercial cargo just a few months ago. Meanwhile, the abundant gas in the Abadi field close to the Australia-Indonesia border has remained under the waves. Until recently, that is, when Inpex had finally reached a new deal with the Indonesian government to revive the stalled project and move ahead with a development plan.
This could have come much earlier. Much, much earlier. Inpex had submitted its first development plan for Abadi in 2010, encompassing a Floating LNG project with an initial capacity of 2.5 million tons per annum. As the size of recoverable reserves at Abadi increased, the development plan was revised upwards – tripling the planned capacity of the FLNG project to be located in the Arafura Sea to 7.5 million tons per annum. But at that point, Indonesia had just undergone a crucial election and moods had changed. In April 2016, the Indonesian government essentially told Inpex to go back to the drawing board to develop Abadi, directing them to shift from a floating processing solution to an onshore one, which would provide more employment opportunities. The onshore option had been rejected initially by Inpex in 2010, given that the nearest Indonesian land is almost 100km north of the field. But with Indonesia keen to boost activity in its upstream sector, the onshore mandate arrived firmly. And now, after 3 years of extended evaluation, Inpex has delivered its new development plan.
The new plan encompasses an onshore LNG plant with a total production capacity of 9.5 million tons per annum. With an estimated cost of US$18-20 billion, it will be the single largest investment in Indonesia and one of the largest LNG plants operated by a Japanese firm. FID is expected within 3 years, with a tentative target operational timeline of the late 2020s. LNG output will be targeted at Japan’s massive market, but also growing demand centres such as China. But Abadi will be entering into a far more crowded field that it would have if initial plans had gone ahead in 2010; with US Gulf Coast LNG producers furiously constructing at the moment and mega-LNG projects in Australia, Canada and Russia beating Abadi’s current timeline, Abadi will have a tougher fight for market share when it starts operations. The demand will be there, but the huge rise in the level of supplies will dilute potential profits.
It is a risk worth taking, at least according to Inpex and its partner Shell, which owns the remaining 35% of the Abadi gas field. But development of Abadi will be more important to Indonesia. Faced with a challenging natural gas environment – output from the Bontang, Tangguh and Badak LNG plants will soon begin their decline phase, while the huge potential of the East Natuna gas field is complicated by its composition of sour gas – Indonesia sees Abadi as a way of getting its gas ship back on track. Abadi is one of Indonesia’s few remaining large natural gas discoveries with a high potential commercialisation opportunities. The new agreement with Inpex extends the firm’s licence to operate the Masela field by 27 years to 2055 with the 150 mscf pipeline and the onshore plant expected to be completed by 2027. It might be too late by then to reverse Indonesia’s chronic natural gas and LNG production decline, but to Indonesia, at least some progress is better than none.
The Abadi LNG Project:
Headline crude prices for the week beginning 10 June 2019 – Brent: US$62/b; WTI: US$53/b
Headlines of the week
Midstream & Downstream
A month ago, crude oil prices were riding a wave, comfortably trading in the mid-US$70/b range and trending towards the US$80 mark as the oil world fretted about the expiration of US waivers on Iranian crude exports. Talk among OPEC members ahead of the crucial June 25 meeting of OPEC and its OPEC+ allies in Vienna turned to winding down its own supply deal.
That narrative has now changed. With Russian Finance Minister Anton Siluanov suggesting that there was a risk that oil prices could fall as low as US$30/b and the Saudi Arabia-Russia alliance preparing for a US$40/b oil scenario, it looks more and more likely that the production deal will be extended to the end of 2019. This was already discussed in a pre-conference meeting in April where Saudi Arabia appeared to have swayed a recalcitrant Russia into provisionally extending the deal, even if Russia itself wasn’t in adherence.
That the suggestion that oil prices were heading for a drastic drop was coming from Russia is an eye-opener. The major oil producer has been dragging its feet over meeting its commitments on the current supply deal; it was seen as capitalising on Saudi Arabia and its close allies’ pullback over February and March. That Russia eventually reached adherence in May was not through intention but accident – contamination of crude at the major Druzhba pipeline which caused a high ripple effect across European refineries surrounding the Baltic. Russia also is shielded from low crude prices due its diversified economy – the Russian budget uses US$40/b oil prices as a baseline, while Saudi Arabia needs a far higher US$85/b to balance its books. It is quite evident why Saudi Arabia has already seemingly whipped OPEC into extending the production deal beyond June. Russia has been far more reserved – perhaps worried about US crude encroaching on its market share – but Energy Minister Alexander Novak and the government is now seemingly onboard.
Part of this has to do with the macroeconomic environment. With the US extending its trade fracas with China and opening up several new fronts (with Mexico, India and Turkey, even if the Mexican tariff standoff blew over), the global economy is jittery. A recession or at least, a slowdown seems likely. And when the world economy slows down, the demand for oil slows down too. With the US pumping as much oil as it can, a return to wanton production risks oil prices crashing once again as they have done twice in the last decade. All the bluster Russia can muster fades if demand collapses – which is a zero sum game that benefits no one.
Also on the menu in Vienna is the thorny issue of Iran. Besieged by American sanctions and at odds with fellow OPEC members, Iran is crucial to any decision that will be made at the bi-annual meeting. Iranian Oil Minister Bijan Zanganeh, has stated that Iran has no intention of departing the group despite ‘being treated like an enemy (by some members)’. No names were mentioned, but the targets were evident – Iran’s bitter rival Saudi Arabia, and its sidekicks the UAE and Kuwait. Saudi King Salman bin Abulaziz has recently accused Iran of being the ‘greatest threat’ to global oil supplies after suspected Iranian-backed attacks in infrastructure in the Persian Gulf. With such tensions in the air, the Iranian issue is one that cannot be avoided in Vienna and could scupper any potential deal if politics trumps economics within the group. In the meantime, global crude prices continue to fall; OPEC and OPEC+ have to capability to change this trend, but the question is: will it happen on June 25?
Expectations at the 176th OPEC Conference