Oil remains king of fuels to 2035, while gas demand displaces coal

24 August 2017 Consultancy.uk

Oil is set to remain the largest in-demand fuel type up to 2035, according to five of the world’s most renowned energy analysts. On the development of coal or gas there is more debate, with China to remain the runaway leader when it comes to energy consumption.

According to new research from energy consultancy Wood Mackenzie, oil is due to remain the most high-demand fuel source in the world. Each year, Wood Mackenzie benchmarks an analysis of global cross-commodity trends to similar outlooks from the International Energy Agency (IEA NP), BP and ExxonMobil (XOM). The comparison addresses several major cross-commodity uncertainties, which include the impact of renewables on fossil fuel demand, along with when or if emerging markets will leapfrog from traditional hydrocarbons.

Despite former predictions from McKinsey & Company suggesting that improved renewable energy technology and energy efficiency measures could lead to peak energy demand, followed by a drop in demand for fossil fuels, five top analysts have forecast that oil could remain king of fuels until at least 2035, closely followed by coal and gas. Renewable Energy Sources (RES), meanwhile, will continue to lag far behind.Global demand by fuel 2035With major uncertainties facing commodity markets, such as the UK, and France’s recently announced plans to ban the sale of petrol and diesel cars by 2040, Wood Mackenzie’s analysis is designed to assist companies target new opportunities and analyse how disruptive trends will impact energy markets in the long term.

While the experts consulted agree that oil will remain the largest fuel, XOM were forecast as the leading supplier as far as projections are concerned, followed by BP; Wood Mackenzie (WM EMS) and the IEA NP are very similar. While coal will remain one of the most in demand fuel sources meanwhile, gas will displace it as the second largest fuel across all forecasts, except the IEA NP, especially with the emissions levels of coal making it decreasingly viable for nations concerned with meeting Paris Agreement targets. Nuclear power, meanwhile, will remain a key mid-level energy source, largely above demand for RES, barring the lone supplier of BP. Fuel demand growth will be strongest during 2015-2025, and while outlooks expect gas growth at around low to mid 3% from 2015-2025; in the back half of the forecast, post 2025, growth moderates materially – between 1-1.5% over 10 years due to slower economic growth and more efficient energy production, especially in the power sector.

For energy markets, growth over the coming two decades is no longer just about China. Despite the Asian superpower remaining the region with the highest demand for energy come 2035, China’s total energy demand by 2035 will equal around a 28% share of total energy demand globally. Analysts confirm through Wood Mackenzie’s collection of outlooks that China’s demand profile is moderating long term, including WM EMS. Other Asia-Pacific nations will see a significant boost in demand meanwhile, and will likely make rapid ground on the energy demands of the North American region over the same period.

2035 total primary energy demand by region

A supply glut had left the American oil market particularly vulnerable since 2016, with a study from BDO showing a massive drop in revenues and profits in the preceding year, resulting in investors taking stock of the situation. The situation also began to hit UAE and Dubai in the same year, while in 2017 global oil companies were forced to decrease operational costs by 29% on average, with around 50% of cost cutting likely to be sustainable in the longer-term. Despite this, growing industrial demand is likely to see oil sustained as the top energy source.

According to David Brown, a Senior Product Manager at Wood Mackenzie, “With energy demand growth in China and Japan moderating, where are the major growth markets in Asia Pacific? Let’s focus on India, where WM EMS expects Total Primary Energy Demand (TPED) to nearly double over the next 20 years. The industrial sector is on pace to be one of India’s largest sources of demand by 2020, supporting the country’s industrialisation process. India’s swift demand growth and infrastructure requirements will increase demand for coal, despite the ramp-up of gas and renewables.”


More news on


WEF finds no progress made on greening economy

01 April 2019 Consultancy.uk

The reports of two influential bodies, in the space of a day, have warned that no progress is being made to prevent major climate change. The World Economic Forum has warned that greening of the global energy transition has stagnated over last five years, while the International Energy Agency has confirmed coal use rose again last year.

The position of the Academies of Science from 80 countries, plus a majority of scientific organisations that study climate science, is that humans are causing rapid climate change – often referred to as global warming. Roughly 95% of active climate researchers publishing climate papers endorse the consensus position that since the industrial revolution, the boom in carbon emissions from fossil fuel powered human activity has heavily impacted the planet, with rising levels of CO2 and other greenhouse gases trapping heat from the sun causing global temperatures to rise – something which will have catastrophic results in the near future.

Despite the steadfast consensus among the scientific community on the matter, however, there has been little to no meaningful action to avert disaster. In fact, while the signing of the Paris Accord was met with great excitement, since it came into force, global carbon dioxide emissions have continued to rise. Today, they sit at their highest levels yet, after a strong economy and extreme weather stoked a surge in energy demand last year.WEF finds no progress made on greening economyAccording to the world’s energy watchdog, the Paris-based International Energy Agency (IEA), energy spiked by 2.3% in 2018 – the biggest leap since 2010 – with that demand largely being met with fossil fuels. As a result, global emissions of carbon dioxide hit the record high of 33 billion tonnes in 2018, a rise of 1.7% on 2017’s figures. Commenting on the findings, IEA chief Fatih Birol said the rise in energy demand was “exceptional” and a “surprise for many.”

Birol added, “We have seen an extraordinary increase in global energy demand in 2018, growing at its fastest pace this decade. Looking at the global economy in 2019, it will be rather a surprise to see the same level of growth as 2018.”

The suggestion from Birol that 2018 is likely to be an anomaly which will not be seen again is strange, considering the added strain which the boom in emissions will place on the environment. To suggest that heightened energy demand was driven by extreme weather – which is increasingly difficult to claim is unrelated to man-made climate change – and then to suggest that such a thing is unlikely to occur any time soon in spite of emissions having increased seems contradictory.

Regardless of this, the bad news was further compounded within hours of the IEA’s release. A report from the World Economic Forum released on the same day concluded that the world's energy systems have not become any greener in the last five years. Despite the agreement of global climate targets, falling green power costs, and mounting public and business concern over the catastrophic impacts runaway climate change could wreak, the WEF’s damning assessment warned that little to no progress has been made on making energy systems more environmentally sustainable since 2014.

Coal is the largest hindrance of change on this front, according to the report. Recent years have seen improvements in energy access and security, but far too many nations remain dependent on coal power for the new energy systems to have made any environmental gains. At the same time, major economies have failed to decrease or even slow the amount of energy they use per unit of GDP, leaving smaller actors who have made changes micturating into a gale. Change on the part of the world’s largest economies is therefore crucial to driving the development of a greener, more efficient global economy, the WEF concluded.

Commenting on the findings, Roberto Bocca, leader of the WEF's future of energy and materials division, said urgent action is now needed to move toward decarbonisation. He added, "We need a future where energy is affordable, sustainable and accessible to all. Solid progress in bringing energy within the reach of more and more people is not enough to mask wider failures, which are already having an impact on our climate and on our societies."

The news comes even as sustainability continues to be talked about as a ‘top agenda item’ at the majority of the world’s largest corporations. While 85% say that it will be more important still in another five years, it is clear that the majority of the world’s most powerful businesses are failing to walk the talk on the matter, regardless of what governments do.