Why oil and gas will continue to power the world for decades

By: Canadian Fuels Association

Originally posted on the Canadian Fuels Association blog on August 20, 2015, and can be found here: http://blog.canadianfuels.ca/why-oil-and-gas-will-continue-to-power-the-world-for-decades/ 

“Energy transitions – be they from coal to oil, from oil to natural gas, or from coal-fired electricity generation to a system relying primarily on renewables – are inherently prolonged affairs. New energy sources and conversion techniques become commercially viable only after decades spent establishing often expensive infrastructure.” - Vaclav Smil, author of Energy Myths and Realities, 2010. 

Fossil fuels and their effects on climate change are in the news more than ever. United States President Barack Obama, for example, recently announced that his clean power plan will reduce CO2 emissions by 32 per cent over 2005 levels by 2030.

However, transitions to new forms of energy are expensive, lengthy and often difficult, which means petroleum fuels continue to be the best energy options for transport and heating.

Jock Finlayson, executive vice-president and chief policy officer of the Business Council of British Columbia, recently asked the question:

"Is the world in the midst of a rapidly accelerating migration away from fossil fuels?"

Certainly, many environment ministers and environmental advocacy organizations would lead one to presume ‘yes,’ he wrote in in the July edition of the Environment and Energy Bulletin.

"The real answer, however, is no - at least, not for a long time."

 “Looking out over the next two decades, the trendlines point to a real, but far from revolutionary, energy transition, one that is unlikely to entail an absolute reduction in the quantity of fossil fuels produced and consumed globally by 2035 or 2040,” he wrote.

Finlayson referred to recent demand projections from three sources: the International Energy Agency (IEA), the U.S. Energy Information Administration (EIA), and British Petroleum (BP). All three have a similar view of the global energy scene over the next 25 to 30 years.

Energy use forecasts

We’re all hearing a lot about a supply glut in oil, and how that is driving down the oil price. However, most forecasters believe energy use is on the rise.

  1. The IEA predicts global energy demand will rise by 37 per cent into 2040, “despite the diminishing energy intensity for each dollar of GDP in advanced economies,” said Finlayson. The forecast reflects a growing global population and higher energy consumption in emerging economies, which are home to 80 per cent of the Earth’s population.
  2. By the late 2030s, the global primary energy system will consist of four roughly equal-sized components: oil, natural gas, coal and low/no carbon sources, said Finlayson, quoting the IEA’s forecast. Renewable energy will begin to take a larger place in the fuel mix, but even in 2040, fossil fuels will still make up 75 per cent of the mix.
  3. “Regional distribution of energy demand changes significantly over time,” wrote Finlayson. While total energy use will flatline or fall in many advanced economies, “the volume of primary energy consumed continues to march ahead in the emerging world.” In all of the projections he used, Asia will account for around three-fifths of world energy consumption by 2035-2040. China will overtake the U.S. as the largest oil-consuming country by the early 2030s, or even earlier.
Finlayson noted that if these projections are correct, or even approximate, a world-wide energy transition is not the cards for many years to come.

It’s clear, then, that the world will continue to rely on oil to power transport, but the industry is working hard to mitigate emissions. Advances in engine technology, refinery sulphur reductions and many other improvements are underway.

In the next few weeks, we will take a look at the various forms of energy, what stage of development they are in, and what promise they hold for the future.

Meanwhile, check out these other blog posts:


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