U.S Energy Information Administration International Energy Outlook 2017 – The Highlights

Friends of Science Society’s Note: Canadians will find these figures of interest in light of the recent cancellation of #EnergyEast pipeline in Canada, some of the reasons suggested for the cancellation were related to additional considerations of GHG emissions, driven by claims from ENGOs and anti-fossil fuel activists that the world is phasing out hydrocarbons.

Contributed by Robert Lyman © 2017

Robert Lyman was a public servant for 27 years and a diplomat for 10 years prior to that. He is an Ottawa-based energy policy consultant.

The United States Energy Information Administration is one of the most respected authorities in the world that conducts analysis of present and future energy supply and demand conditions. Every year, it updates its analysis of global energy supply and demand and publishes an International Energy Outlook (IEO). The outlook is developed using the World Energy Projection System Plus, an integrated model that aims to capture various interactions between the economy and energy supply, demand, and prices across regional markets.

Energy market projections are based on much uncertainty, and they use a range of important assumptions with respect to the future global population, economic growth, technology trends, and the policy choices of governments. The projections are not predictions, but rather systematically developed estimates about the likely consequences of future trends as best one can judge them from today’s perspective. While they are far from infallible, they are far better than the guesses or opinions of any single person.

There are a number of important differences in the 2016 and 2017 IEOs as to their projections from now to 2040, the outlook period.  This may be due to more pessimistic assumptions concerning world economic growth rates. The 2017 IEO, unlike the 2014 version, contains some preliminary projections to 2050.

In the context of the ongoing debate about whether humans are causing catastrophic global warming and what, if anything, governments and citizens should do about this, it is useful to note the highlights of the 2017 IEO. We can compare or contrast the projections with the futures favoured by the advocates of rapid energy transformation of our energy systems.

All of the comments below concern the EIA’s reference case, or “mostly likely” scenario.

Trends in World Energy Consumption 

• It is projected that world energy consumption will rise 28%, from 575 quadrillion British Thermal Units (Btu) in 2015 to 736 quadrillion Btu in 2040. Most of this increase will come from non-OECD countries because of rapid economic and population growth there.
• Even in the OECD countries, however, energy consumption is expected to grow 9% between 2015 and 2040.
• More than half the energy consumption growth is expected to occur in non-OECD Asia, and especially China and India. However, energy consumption in Africa and the Middle East is also expected to grow by 51% and 45%, respectively.
• Among energy sectors, more than half the consumption growth is projected in the industrial sector (mining, manufacturing, agriculture and construction).
• 89% of the industrial energy consumption growth will occur in the non-OECD areas.
• Use of all fuels except coal grows in the reference case.
• Petroleum and other liquids will retain the largest share of energy consumption right through to 2040 and beyond, although their share of marketed energy declines from 33% in 2015 to 31% in 2040.
• Natural gas is the world’s fastest growing fossil fuel, with use growing at the rate of 1.4% per year.
• Worldwide coal use is expected to remain flat, with declines in OECD regions and China (after 2025) offset by growth in India and other non-OECD regions.

These projections are decidedly at odds with the storyline that frequently appears in the media and is propounded by environmental groups, which confidently predict that the world is reducing its use of fossil fuels and that the reduction by mid-century will essentially result in the near-elimination of oil, natural gas and coal. It is especially striking that, by 2040, the IEO 2017 projects fossil fuels to still account for over 77% of global energy use and, indeed, to retain that share through 2050. Perhaps even more remarkable, given the frequent claims that the world is abandoning its use of coal, is the projection that coal use will remain near present levels until at least 2040.

Liquid Fuels (Oil and Natural Gas Liquids) 

• World consumption of liquid fuels is projected to rise from 95 million barrels per day in 2015 to 113 million barrels per day in 2040.
• Non-OECD countries account for most of the increase.
• These projections are considerably lower than those of the IEO 2016, which projected global liquids demand to grow to 121 million barrels per day by 2040. The reduced estimates of liquids demand by 2040 are also surprising given that, in its short-term forecasts, the EIA sees global oil demand rising at a near-record rate in 2017.
• OECD demand for liquids will actually decline by 3% to 2040 as regulations on vehicle fuel efficiency more than offset the increase in vehicle miles driven.
• China’s liquids use will grow by 36% and India’s by 142% to 2040.
• By 2040, transportation will still account for 56% of oil demand.
• Most of the growth in world oil production will occur in the Middle East, although the United States, Russia, Canada and Brazil will also increase their production considerably.

Contrary to claims that the world does not need more oil, the projected steady growth in both oil supply and demand means that, on the global scale at least, there will continue to be a growing and healthy market and more pipelines built to transport it.

Natural Gas 

• World gas consumption is projected to increase by 43% from 2015 to 2040, again with the largest increases occurring in the non-OECD areas.
• The share of world natural gas consumption in non-OECD countries increases from 53% in 2015 to 59% in 2040.
• 75% of the increased demand will come from the electricity generation and industrial sectors.
• The largest increases in natural gas production will occur in the Middle East, United States and China, with shale and tight gas resources becoming increasingly important (nearly 50% of the increase in China’s natural gas production will come from shale).

These projections indicate the EIA’s generally pessimistic view of Canada’s ability to become a major participant in the international LNG market. One might assume that this is largely due to the barriers now in place to pipeline and LNG port development in Canada. Natural gas will largely take the place of nuclear energy in Europe, leaving more doubt as to whether the European Union will meet it ambitious CO2 emission reduction goals.

Coal 

• Worldwide coal consumption is projected to remain stable at around 160 quadrillion Btu from 2015 to 2040.
• China will remain the largest consumer of coal in 2040, using about 73 quadrillion Btu, but India’s consumption will grow rapidly and probably surpass that of the United States before 2020.
• Coal will maintain about a 20% share in total world energy consumption throughout the period.
• Coal demand in India is projected to increase by 90% between 2015 and 2040.

The rumours of coal’s death have been greatly exaggerated.

Carbon Dioxide Emissions

• Energy related carbon dioxide emissions are projected to grow slowly but steadily throughout the projection period.
• In OECD countries, emissions will remain essentially flat through 2040 and be about 9% below their 2005 level by then.
• Energy related emissions from non-OECD countries will rise at an annual rate of about 1%.
• Total CO2 emissions will grow from 33.9 gigatonnes (Gt) in 2015 to 39.3 Gt in 2040 and 42.8 Gt in 2050. OECD emissions will rise barely at all, but non-OECD emissions will rise from 21.5 Gt in 2015 to 26.9 Gt in 2040 and 29.7 Gt in 2050.

The United Nations goal is that global emissions drop to around 14 Gt by 2050. Some environmental non-governmental organizations demand that OECD countries like Canada eliminate CO2 emissions by as early as 2030. Several sub-national jurisdictions like California, Ontario and Quebec have committed their residents to attain emissions reductions of 80% or more from either 2005 or 1990 levels. According to the IEO 2017 analysis, these goals clearly will not be attained. Indeed, the entire OECD could cease to exist and that would not be sufficient to move the world from a projected 42.8 Gt in emissions to the U.N. goal of 14 Gt. We are well beyond the point at which we should treat such goals as realistic. It would be wise to design our policies accordingly.

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