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“The easiest transformation to see is the switch from coal to cleaner-burning gas,” says Dr Dominic Emery, vice president for long-term planning and policy at BP. “The technology for gas-fired power is mature and highly efficient, and long-distance transportation has been facilitated by developments in liquefied natural gas. Building pipelines and transmission infrastructure is of course necessary, but the breakthrough US experience with shale gas has shown that this can happen at pace.“
According to this year’s BP Energy Outlook, gas is predicted to be the fastest growing fossil fuel over the next 20 years, increasing by 1.8 per cent a year. It is forecast to overtake coal as a source of power before 2035, as the growth in coal use slows. The use of coal – which releases twice as much carbon as gas when burnt for power generation – is already slowing, particularly because its biggest single user, China, is gradually shifting to cleaner, lower-carbon sources of energy.
Forecasts suggest that the switch to gas, coupled with big gains in energy efficiency and strong gains in renewable energy, could halve the rate of growth in carbon emissions over the next 20 years compared with the past 20. However, all that and much more will be needed to meet the ambitious emissions targets set out at last year’s Paris climate change summit.
The fastest-growing energy source over the next 20 years is likely to be renewables, trebling their share of global energy output, but starting from a low base means they will still only form 9 per cent of global output in 2035, according to Energy Outlook predictions. Renewables are showing impressive gains in efficiency: every time to date that the installed capacity of utility-scale solar projects in North America has doubled, the cost of the energy they produce has fallen by around 40 per cent. China is expected to add more renewable power over the next 20 years than the EU and US combined.
Another source of change is improvements in energy efficiency, a well-established trend in the developed world, where energy demand has been flat for around a decade despite growing GDP. “EU energy demand in 2035 is projected to fall back to where it was 50 years earlier, in 1985, even though the EU economy is 150 per cent bigger,” says Spencer Dale, BP’s group chief economist. The pace of improvement in energy efficiency looks set to increase over the next 20 years, playing a vital role in reducing the growth of carbon emissions.
Even the combustion engine is changing rapidly. The average fuel consumption of passenger cars is set to be transformed in the next two decades, thanks to huge gains in fuel efficiency. Today’s global average fuel consumption for passenger cars of around 30 miles per gallon is forecast to improve to 50 miles per gallon in 2035: a 60 per cent increase in just 20 years, making for unprecedented gains in efficiency.
Rising population and most of all rising productivity mean energy demand will continue to increase as the global economy grows.
It is vital to look ahead in the energy business. So how are forecasts made?