The World energy council has predicted that world energy demand will peak by 2030. Or so the headlines in the press said. What this group say in the report out this week is more nuanced. They present three different scenarios. The three different scenarios are described as different types of music but at this point I began to lose the will to live…
- World energy demand per capita will shrink by 2030 but since there will be more people overall energy demand is going to rise. In fact by 2060 the demand for electricity will double. Meeting this demand will need a huge investment in infrastructure.
- Demand for coal will peak in 2020 and oil in 2030. Oil production will peak at 104mbd. This may lead to “stranded resources”.
- Renewables will grow at an enormous rate and make up about 20-39% of power generation by 2060.
- Despite all the above good news limiting global temperature to a 2 degree rise will be very hard.
- There will be very substantial growth of electric vehicles, but this will be very difficult to bring about at the same time?
In all the OECD countries energy demand has peaked and its likely that energy demand will fall in real terms (although this depends on electrification of transport and heat- see below). The exception could be the UK where population growth is continuing upwards, most other OECD countries have falling and ageing populations. The reasons for this energy demand are straightforward if you buy any product in the West now it uses a lot less energy than its predecessor. Where the increase in energy demand is going to come from is from the developing world where billions have no access to electricity. Further demand will also come from electrification of transport and heat. This could push up energy demand in OECD countries and developing countries alike. It depends if efficiencies in other areas are larger than than this other electrification of the economy.
104mbd is a big increase in demand by 2030 from 91mbd now. With all the talk about shale oil it should be remembered that almost all conventional regions outside OPEC and many in OPEC are in decline. That is a lot of oil to replace. There are exceptions at the moment, Iran is now ramping up production having underperformed due to sanctions, but peak oil could be back. At the moment we are seeing a complex mix of falling demand, rising unconventional oil production and falling conventional production. This makes it very difficult to predict what will happen.
This brings me to my final point. The change could be far faster than this report envisages. Wind and solar prices and deployment always beat predictions and then some. Electric car deployment is also doing better than could be expected with low oil prices.
World energy demand may or may not be on a downward trend but the world energy scene is certainly changing more than it has in my lifetime. One thing is for certain we need to get off oil and gas ASAP. It causes pollution, wars and distorts economies.