The International Energy Association has its energy projection out to 2040. They project strong growth and transition to electric cars and renewables but they do not forecast an acceleration of technology. This is part of their methodology to update to what is happening now and then extrapolating. They now admit the rise of electric cars in one New Policy scenario but they do not see a massive reduction in private car ownership from robotic ride sharing.
Out to 2020-2024 electric cars getting to 10-25% of all new cars does not totally upend the old world energy order of oil and coal. There are large impacts but not beyond the level of adaptation of countries and big companies.
IEA 2040 forecast
The International Energy Association believes that the USA will continue to grow shale oil production through the 2020s and then sustain production to 2040. The USA will be the top oil and natural gas producer for decades.
IEA reports China’s energy demand growth slowed markedly from an average of 8% per year from 2000 to 2012 to less than 2% per year since 2012, and in the New Policies Scenario it slows further to an average of 1% per year to 2040. Energy efficiency regulation explains a large part of this slowdown. Without new efficiency measures, end-use consumption in 2040 would be 40% higher. Nonetheless, by 2040 per-capita energy consumption in China exceeds that of the European Union.
China overtakes the United States as the largest oil consumer around 2030, and its net imports reach 13 million barrels per day (mb/d) in 2040. But stringent fuel-efficiency measures for cars and trucks, and a shift which sees one-in-four cars being electric by 2040, means that China is no longer the main driving force behind global oil use – demand growth is larger in India post-2025.
The IEA is likely underestimating the rise of electric cars. All new cars should be electric by 2030.
IEA is projecting no growth in coal usage in China but is not seeing coal rolled back by 2040.
World Energy Outlook 2017
Global shifts in the energy system
Four large-scale shifts in the global energy system set the scene for the World Energy Outlook 2017: the rapid deployment and falling costs of clean energy technologies, the growing electrification of energy, the shift to a more services-oriented economy and a cleaner energy mix in China, and the resilience of shale gas and tight oil in the United States.
These shifts come at a time when traditional distinctions between energy producers and consumers are being blurred and a new group of major developing countries, led by India, moves towards center stage.
How these developments play out and interact is the story of this year’s Outlook.
Growing energy demand
In the New Policies Scenario, global energy needs rise more slowly than in the past but still expand by 30% between today and 2040. This is the equivalent of adding another China and India to today’s global demand.
A global economy growing at an average rate of 3.4% per year, a population that expands from 7.4 billion today to more than 9 billion in 2040, and a process of urbanization that adds a city the size of Shanghai to the world’s urban population every four months are key forces that underpin our projections.
The largest contribution to demand growth – almost 30% – comes from India, whose share of global energy use rises to 11% by 2040 (still well below its 18% share in the anticipated global population).
Southeast Asia is another rising heavyweight in global energy, with demand growing at twice the pace of China. Overall, developing countries in Asia account for two-thirds of global energy growth, with the rest coming mainly from the Middle East, Africa and Latin America.
Renewables step up, coal strikes out
Compared with the past twenty-five years, the way that the world meets its growing energy needs changes dramatically in the New Policies Scenario, with the lead now taken by natural gas, by the rapid rise of renewables and by energy efficiency.
Improvements in efficiency play a huge role in taking the strain off the supply side: without them, the projected rise in final energy use would more than double. Renewable sources of energy meet 40% of the increase in primary demand and their explosive growth in the power sector marks the end of the boom years for coal.
Since 2000, coal-fired power generation capacity has grown by nearly 900 gigawatts (GW), but net additions from today to 2040 are only 400 GW and many of these are plants already under construction. In India, the share of coal in the power mix drops from three-quarters in 2016 to less than half in 2040. In the absence of large-scale carbon capture and storage, global coal consumption flatlines.
Oil demand continues to grow to 2040, albeit at a steadily decreasing pace. Natural gas use rises by 45% to 2040; with more limited room to expand in the power sector, industrial demand becomes the largest area for growth. The outlook for nuclear power has dimmed since last year’s Outlook, but China continues to lead a gradual rise in output, overtaking the United States by 2030 to become the largest producer of nuclear-based electricity.
Bright future for renewables
Renewables capture two-thirds of global investment in power plants to 2040 as they become, for many countries, the least-cost source of new generation.
Rapid deployment of solar photovoltaics (PV), led by China and India, helps solar become the largest source of low-carbon capacity by 2040, by which time the share of all renewables in total power generation reaches 40%.
In the European Union, renewables account for 80% of new capacity and wind power becomes the leading source of electricity soon after 2030, due to strong growth both onshore and offshore. Policies continue to support renewable electricity worldwide, increasingly through competitive auctions rather than feed-in tariffs, and the transformation of the power sector is amplified by millions of households, communities and businesses investing directly in distributed solar PV.
Growth in renewables is not confined to the power sector. The direct use of renewables to provide heat and mobility worldwide also doubles, albeit from a low base. In Brazil, the share of direct and indirect renewable use in final energy consumption rises from 39% today to 45% in 2040, compared with a global progression from 9% to 16% over the same period.
The future is electrifying
Electricity is the rising force among worldwide end-uses of energy, making up 40% of the rise in final consumption to 2040 – the same share of growth that oil took for the last twenty-five years.
Industrial electric motor systems account for one-third of the increase in power demand in the New Policies Scenario. Rising incomes mean that many millions of households add electrical appliances (with an increasing share of “smart” connected devices) and install cooling systems.
Electricity makes inroads in supplying heat and mobility, alongside growth in its traditional domains, allowing its share of final consumption to rise to nearly a quarter. A strengthening tide of industry initiatives and policy support pushes our projection for the global electric car fleet up to 280 million by 2040, from 2 million today.
The scale of future electricity needs and the challenge of decarbonizing power supply help to explain why global investment in electricity overtook that of oil and gas for the first time in 2016 and why electricity security is moving firmly up the policy agenda.
The increasing use of digital technologies across the economy improves efficiency and facilitates the flexible operation of power systems, but also creates potential new vulnerabilities that need to be addressed.
When China changes, everything changes
China is entering a new phase in its development. The president’s call for an “energy revolution”, the “fight against pollution” and the transition towards a more services-based economic model is moving the energy sector in a new direction – with the emphasis in energy policy now firmly on electricity, natural gas and cleaner, high-efficiency and digital technologies.