About that Low Carbon Economy….

Recently the media has been full of stories about how Canada must jump on the ‘low-carbon’ economy bandwagon or be left behind.  Eco-activists are claiming 100% renewables is possible.

Robert Lyman, energy economist of 37 years experience, has reviewed a recent EXXON report on future demand and summarizes it as follow. “Love ’em or hate ’em” this corporation is well-positioned to provide clear and accurate assessments of market realities. To make thoughtful policy decisions, it is important that we understand the reality of market demands and global growth.

EXXON’S VIEW OF GLOBAL ENERGY SUPPLY AND DEMAND TO 2040

Contributed by Robert Lyman @ March 2016

EXXON Corporation, one of the world’s largest energy enterprises, recently published its updated projection of energy supply and demand to 2040. The International Energy Agency, the United States Energy Information Administration, and British Petroleum have recently issued similar projections.

Projections of these kinds are interesting for several reasons, among which is the fact that they offer informed judgments about the trends in the world economy and energy sector that one may compare to the political aspirations of governments that the world sharply reduce fossil fuel consumption as a way to reduce greenhouse gas emissions. At the recent Conference of the Parties to the Climate Change Convention in 2015 in Paris, several governments committed in principle to the goal of eliminating the use of fossil fuels by 2100 and aiming to do this in the developed (OECD) countries by 2050. In short, several governments have claimed that they will eliminate all use of oil, natural gas, and coal by 2050. Environmentalists seek to do while also prohibiting any growth in the use of nuclear energy, the most reliable source of non-carbon base load electricity generation. A question, therefore, is how do EXXON’s projections square with the goals articulated at the COP 21 meeting?

Generally, EXXON has accepted that the political push to reduce GHG emissions will have significant impacts in the OECD countries over the period to 2040, especially in terms of altering the sources of electricity generation and requiring fuel economy improvements in light duty vehicles and other energy-using equipment.

The following are the main observations that come from the EXXON report as to the changes that will occur from 2014 to 2040:

• World population will grow 25% from 7.2 to 9 billion people.

• Global income will more than double, with developing countries leading the growth.

• Global energy demand consequently will grow by 25%. China and India together will account for almost half this increase.

• The world middle class will grow from 2 billion to nearly 5 billion; the new members will want to have the cars, quality residences and appliances enjoyed by the middle class today.

• By 2040, oil, natural gas and coal will not fade away as hoped by governments. In fact, they will continue to meet about 80 % of global energy demand. Natural gas demand will grow more that any other source.

• Substantial gains in energy efficiency will see the carbon dioxide intensity of the global economy cut in half by 2040.

• Global demand for transportation will increase by about 30%. Today there are about 1 billion light-duty vehicles (cars and SUVs) in the world. This number will rise by close to 800 million vehicles by 2040, with about 90% of this growth outside of the OECD.

• Hybrid vehicles will increase from 2% of new car sales today to 40% by 2040, but all-electric plug-ins are likely to account for less than 10% of new car sales by 2040.

• Demand for heavy-duty vehicles (i.e. trucks and buses) will increase by 45% by 2040, with about 85% of the growth coming from non-OECD countries.

• Energy demand from ships, planes and trains will grow by 65%.

• Over 90% of transportation demand will still be met by oil in 2040.

• Global demand for electricity is expected to rise by 65% by 2040; 85% of electricity demand growth will comes from developing countries.

• By 2040, the share of electricity generated by natural gas will rise to 30% and be about even with coal. (In other words, despite claims that coal will be eliminated, it will still be a major source of electricity supply globally.) The amount of electricity generated by coal in India will rise 150% from 2014 to 2040.

• The amount of electricity from nuclear power will double from 2014 to 2040, with much of this growth coming in China.

• Wind and solar energy will account for about 10% of electricity generation in 2040, up from 4% in 2014. (This projection is entirely at odds with the predictions of environmental groups that wind and solar energy will replace all other energy sources by 2030.)

• Carbon dioxide emissions will rise from about 30 billion tonnes per year in 2014 to a peak of about 37 billion tonnes by 2030, before slightly declining thereafter. By 2040, global emissions still will be about 35 billion tonnes, even though emissions in the OECD will drop by 20%.

• By 2040, China’s per capita CO2 emissions will be close to OECD levels.

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