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An Updated Look at the Future of Energy

  By Denise Mullen and Jock Finlayson

Ahead of the climate change conference in Paris next month, the International Energy Agency has just released the World Energy Outlook 2015.  The data, projections and analysis in this well regarded annual publication provide an excellent foundation to ponder the future of global energy supply and demand. Below are some highlights from the new report.

As shown in Table 1, fossil fuels will continue to meet a majority of the world’s demand for primary energy in all scenarios.  This is the case even if one assumes governments take strong action to contain and reduce emissions of greenhouse gases (GHGs).  The IEA projects that fossil fuels will supply 78% of world primary energy demand in 2020, and 60% in 2040, even with aggressive policies to mitigate GHGs (see the last two columns of the table, which summarize the “aggressive” policy scenario in the IEA’s report whereby governments strive to keep atmospheric concentrations of GHGs below 450 parts per million). 

Based on experience to date, it seems more likely that the “current” or “middle” IEA scenario will prevail. If so, then by 2040 fossil fuels would still meet between 75% and 79% of global primary energy demand, rather than 60% in the aggressive policy scenario. Of interest, emerging and developing countries, particularly India, China, Africa and the Middle East, account for ALL of the increase in energy use in the scenarios developed by the IEA.  This explains why world fossil fuel demand continues to grow.  The advanced industrial countries, as a group, reached their peak energy use in 2007. The IEA’s middle scenario suggests that primary energy demand in the advanced countries will continue to diminish over time. 

Table 1: 
World Primary Energy Demand by Fuel (MTOe)[1] Under Different Policy Scenarios
  Historic Current Policies Middle (New Policies) Aggressive (450)
  2013 2020 2040 2020 2040 2020 2040
Coal 3,929 4,228 5,618 4,033 4,414 3,752 2,495
Oil 4,219 4,539 5,348 4,461 4,735 4,356 3,351
Gas 2,901 3,233 4,610 3,178 4,239 3,112 3,335
Nuclear 646 827 1,036 831 1,201 839 1,627
Hydro 326 380 507 383 531 384 588
Bioenergy 1,376 1,537 1,830 1,541 1,878 1,532 2,331
Other renewables 161 296 693 316 937 332 1,470
Total 13,558 15,040 19,642 14,743 17,935 14,307 15,197
Fossil-fuel Share 81% 80% 79% 79% 75% 78% 60%
Non-OECD Share 60% 63% 70% 63% 70% 63% 69%
CO2 emissions (Gt) 31.6 34.2 44.1 33.1 36.7 31.5 18.8

 

Table 2 below shows the share of world energy use by fuel type in 2013 and also under the three future scenarios modelled by the IEA. 

Table 2:
World Primary Energy Demand   %  of Total by Fuel Type[2]
  Historic Current Middle Aggressive (450)
  2013 2020 2040 2020 2040 2020 2040
Coal 29.0% 28.1% 28.6% 27.4% 24.6% 26.2% 16%
Oil 31.1% 30.2% 27.2% 30.3% 26.4% 30.4% 22%
Gas 21.4% 21.5% 23.5% 21.6% 23.6% 21.8% 22%
Nuclear 4.8% 5.5% 5.3% 5.6% 6.7% 5.9% 11%
Hydro 2.4% 2.5% 2.6% 2.6% 3.0% 2.7% 4%
Bioenergy 10.1% 10.2% 9.3% 10.5% 10.5% 10.7% 15%
Other renewables 1.2% 2.0% 3.5% 2.1% 5.2% 2.3% 10%
Total 100% 100% 100% 100% 100% 100% 100%

  

  • Coal now satisfies 29% of global primary energy demand; it is mainly used in electricity generation.  Given that the growth in energy demand is being driven by emerging market economies, it is not surprising that Asia will account for ~4/5 of world coal consumption by 2040, according to the IEA. However, thanks to more efficient generation technology and more stringent environmental controls, the environmental impacts of coal use will be less pronounced than at present.
  • Oil represents 31% of world primary energy use and is preponderantly a transportation fuel. Recent price declines are not expected to recover to the >=US$80/barrel range until sometime after 2020 -- and perhaps not until 2040. At today’s low prices there may be some increase in demand for oil, which will make it harder to implement energy efficiency measures (e.g., vehicle standards), to stimulate fuel switching or to introduce new technology. Higher prices for oil (and for coal) would assist in accelerating the transition to a lower-carbon global economy.  With market prices low, the wider adoption of carbon pricing policies would encourage both new technology development and the shift to lower-carbon energy sources.
  • Natural gas maintains a 21-24% share of total global energy demand and supply through 2040 under all of the IEA scenarios.  As the least carbon-intensive fossil fuel, it is being used to displace coal in the power sector in many countries. The IEA suggests that China and the Middle East will see the largest increases in demand for natural gas.  Globally, demand may also be buoyed by low prices in Asia and North America. Steady growth in global demand for natural gas will create attractive opportunities for supplier jurisdictions, including those – like BC – looking to build or expand LNG production.
  • Electricity is a form of secondary energy.  Fuel types used to produce electricity include nuclear, gas, hydro and other renewables.  The IEA predicts that electricity will make up 25% of world final energy consumption by 2040, and that under all scenarios 70% of new power generation capacity will be added in emerging and developing economies. Also under all scenarios, ~60% of new investment in electricity generation will be in renewables.  But this does not mean a quick fuel transition in the global electricity sector because of slow capital stock turnover and the embedded nature of existing, often very capital-intensive generating and transmission systems.
  • From the table above, nuclear more than doubles its share of world primary energy use by 2040 based on the IEA’s aggressive policy scenario, hydro stays roughly the same, and bio-energy together with other renewables rise to one-quarter of global energy consumption.  In the middle scenario, bio-energy and other renewables (apart from hydro) account for ~16% of global energy consumption in 2040.   

Table 3 below shows the rate of change in demand for each fuel type, based on the IEA’s projections.  Nuclear, hydro, bioenergy and other renewables all make substantial percentage gains, despite their relatively small shares of total primary energy demand at present. With aggressive policies in place, coal and oil demand fall significantly while consumption of natural gas rises by 15% by 2040.  In the middle scenario, which is probably more realistic than the IEA’s aggressive policy scenario, natural gas demand jumps by 46% by 2040 while demand for both oil and coal climbs by ~12%.  

Table   3:
Percent Change of World Primary Energy Demand as Compared to 2013[4]
  Current Middle
(New Policies)
Aggressive
(450)
  2020
% change
2040
% change
2020
% change
2040
% change
2020
% change
2040
% change
Coal 7.6% 43.0% 2.6% 12.3% -5% -36%
Oil 7.6% 26.8% 5.7% 12.2% 3% -21%
Gas 11.4% 58.9% 9.5% 46.1% 7% 15%
Nuclear 28.0% 60.4% 28.6% 85.9% 30% 152%
Hydro 16.6% 55.5% 17.5% 62.9% 18% 80%
Bioenergy 11.7% 33.0% 12.0% 36.5% 11% 69%
Other renewables 83.9% 330.4% 96.3% 482.0% 106% 813%

 

It is conceivable that technological step changes could alter the picture and further raise the overall share of non-fossil fuel sources in the global energy mix by 2030 or 2040, but this is far from assured. The high power densities of fossil fuels,[3] and the fact that most non-fossil fuel energy sources face challenges associated with land use (e.g., wind power) and intermittency, make it harder to achieve deployment at scale in the short- to medium-term.  

In the context of the international discussions around managing greenhouse gases, the issue of adaptation has received scant attention.  Given the vast size of the global energy system, the huge amounts of capital invested in it, and the difficulties of making changes to complex integrated systems, it would be wise to pay more attention to climate adaptation.  A full transition from fossil fuels will be an “inherently protracted affair that [will] unfold [over] decades or generations.”[5]



[1] World Energy Outlook 2015, International Energy Agency, November 2015, ISSN: 2072-5302 ISBN: 978-92-64-24366-8

[2] ibid

[3] Density is the amount of energy produced per unit weight or per unit volume.  For a more detailed description of power densities see Power Density Primer: Understanding the Spatial

Dimension of the Unfolding Transition to Renewable Electricity Generation (Part I – Definitions): http://www.vaclavsmil.com/wp-content/uploads/docs/smil-article-power-density-primer.pdf

[4] IEA, World Energy Outlook 2015.

[5] Vaclav Smil, see note 3