China, India Will Drive Global Energy Demand Over Next 20 Years, Says BP
Economic expansion in Asia, primarily China and India will drive continued growth in the world’s demand for energy over the next 20 years, according to energy major BP.
According to the new edition of the BP Energy Outlook 2035 released Tuesday, global demand for energy is expected to rise by 37 percent from 2013 to 2035, or by an average of 1.4 percent a year.
Demand for natural gas will grow fastest of the fossil fuels over the period to 2035, increasing by 1.9 percent a year, led by demand from Asia, BP said.
Half the increased demand will be met by rising conventional gas production, primarily in Russia and the Middle East, and about a half from shale gas. By 2035, North America, which currently accounts for almost all global shale gas supply, will still produce around three quarters of the total.
Coal had been the fastest growing of the fossil fuels over the past decade, driven by Chinese demand. However over the next 20 years BP sees coal as the slowest growing fossil fuel, growing by 0.8 percent a year, marginally slower than oil. According to the report, the change is driven by three factors: moderating and less energy-intensive growth in China; the impact of regulation and policy on the use of coal in both the US and China; and the plentiful supplies of gas helping to squeeze coal out from power generation.
The report further stated that as demand for gas grows, there will be increasing trade across regions and by the early 2020s Asia Pacific will overtake Europe as the largest net gas importing region. The continuing growth of shale gas will also mean that in the next few years North America will switch from being a net importer to net exporter of gas, BP said.
The overwhelming majority of the increase in traded gas will be met through increasing LNG supplies. Production of LNG will show dramatic growth over the rest of this decade, with supply growing almost 8 percent a year through the period to 2020. This also means that by 2035 LNG will have overtaken pipelines as the dominant form of traded gas.
Increasing LNG trade will also have other effects on markets, the BP report stated. Over time it can be expected to lead to more connected and integrated gas markets and prices across the world. And it is also likely to provide significantly greater diversity in gas supplies to consuming regions such as Europe and China.
Energy self-sufficiency in North America - which is expected to become a net exporter of energy this year - and increasing LNG trade are also over time expected to have fundamental impacts on global energy flows.
Increased oil and gas supplies in the US and lower demand in the US and Europe due to improving energy efficiency and lower growth will combine with continuing strong economic growth in Asia to shift the energy flows increasingly from west to east.