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Fossil-fuel will dominate even in 2030

There is bad news for those determined to tackle global warming. No matter how desperately the world wants to reduce carbon emissions through a cut in fossil-fuel consumption, it seems an inescapable fact that such fuels will continue dominating global energy demand 20 years from now.

According to ExxonMobil’s “Outlook for Energy: A View to 2030”, in that year the combined demand for oil, coal and gas will remain at about 80 per cent of overall fuel needs, even with the increasing supply of nuclear, hydropower, biomass/wastes and other renewables.

“[Despite the sharp growth of other types of fuel], they will grow from a very low base,” Rob Gardner, manager of the Economics and Energy Division of ExxonMobil’s Corporate Strategic Planning Department, said during a recent briefing to the Nation Group.

He predicts demand will rise 1.2 per cent per annum from 2005 to 2030, when the world’s population will reach 8 billion.

However, Gardner acknowledged during the briefing that the US giant’s outlook had been completed prior to the nuclear disaster in Japan, which is now swaying development plans in several countries and could send the demand for oil, coal and gas even higher.

“It’s very unfortunate, what happened in Japan following the tsunami and earthquake. Certainly, there’s going to be a near-term impact on energy demand as Japan continues to rebuild over time. In the long term, it’s unlikely we’re going to see a substantial change in energy. The mix may change slightly as we better understand the implications of nuclear and other choices,” he said.

He foresees some shifts in supply, probably from nuclear to gas and coal.

Updated on an annual basis, the ExxonMobil outlook emphasises the long-term trends in energy demand, supply, emissions and technologies.

“A major factor driving the increase in global energy demand will be the growth in emerging markets’ requirements, which will rise by 65 per cent over the forecast period from 2005 through 2030,” Gardner said.

During the period, the average annual demand for oil, gas and coal is expected to increase by 0.7 per cent, 2 per cent and 0.7 per cent, respectively. The report is built upon detailed analysis of data from about 100 countries, incorporating publicly available information as well as in-house expertise.

Gardner said the increase in global demand posed a significant challenge of meeting the energy needs of a growing global population while also reducing the impact of energy use on the environment. “This is only possible because of expected advancements in efficiency,” he added.

Efficiency gains over the next two decades are expected to accelerate more than ever before, driven by higher energy costs, government mandates and regulations, and technology advances. Gains in energy efficiency through 2030 are expected to reduce global energy-demand growth by about 65 per cent.

For example, the outlook foresees flat demand from personal transportation means, as commuters use their cars for short-distance travel and rely more on public transport.

Gardner anticipates greater penetration of hybrid vehicles, as the price of oil will rise to the point that it matches the cost of hybrid development. In 2030, the number of hybrids is expected to account for 30 per cent of cars, while non-hybrids will be 30 per cent more energy-efficient. Thanks to energy efficiency, demand will grow at a slower pace than the global economy, he said.

During the period, power generation will continue to be the largest and fastest-growing primary industrial energy consumer, using about 40 per cent of the world’s energy in 2030, posting an average annual growth rate of 1.7 per cent. Demand from the transport sector will account for 20 per cent of global energy consumption by that year.

Energy demand will also grow, largely due to a 1.3-per-cent average growth demand from the transport sector, 0.9 per cent from the industrial sector and 0.3 per cent from the residential/commercial sector.

The outlook includes an assessment of how potential carbon-emission reduction policies will affect future energy demand and impact the fuel mix. Gardner admits that it is, however, hard to predict these policies. For example, Europe is going to levy a carbon tax, which will raise the prices of fossil fuels to levels that make the cost of renewable energy worthwhile for investment.

Policies will also drive nations to switch to less carbon-intensive fuels such as natural gas, which can help meet growing electricity demand and help reduce power-generation emissions by up to 60 per cent versus coal.

The report projects that oil will remain the largest energy source, while natural gas will be the fastest-growing fossil fuel. It also flags that meeting rising energy demand with reliable, affordable supplies is a vital issue to support expanded prosperity for a growing world. Meeting this challenge requires recognising the importance of efficiency as well as pursuing all commercially viable options, encouraged by sound and stable policy frameworks.

Gardner said ExxonMobil also bases its investment decisions on the outlook. Last year, it started a study on natural gas that led to a US$40-billion takeover by the company.

Source: The Nation

ThaiVest Editorial Team