The transition into 2016 for global energy markets has been marked by oil-price collapse, carbon-constraint policy, low-price commodity markets, exploration cutbacks, and eyes fixed on emerging economies. As we look ahead to what that means for the next 20 years, we take a broad view, comparing forecasts across Wood Mackenzie, the International Energy Agency, BP and ExxonMobil to see where trends emerge and where risk underscores divergence.
As the world's energy needs have grown and shifted, we've entered a turning point in global energy demand. To get a clearer view of the road ahead, we've assembled our energy view to 2035 and compared it with similar forecasts from the International Energy Agency (IEA), BP and ExxonMobil (XOM).
Slowing global demand growth
All four organisations agree that demand growth will slow over the next 20 years; how fast it happens and how it times out are where differences emerge. Overall, however, the consensus is that global demand growth will be averaging 1% per year by 2035 — half its average over the preceding two decades.
Key players in each outlook are China and India, both poised to drive the bulk of global demand growth in the coming years. But with such uncertainty around the policies that will shape their economies, risks to this growth remains strongly in play, giving rise to divergent views on what future GDP and improvements to energy intensity look like in these countries.
Growing CO2 emissions policies
During this period of slowing demand growth, all forecasts depict CO2 emissions rising 15 to 30%, with further emissions-capping regulations increasing across all regions. These carbon-constraint policies will begin to drive inter-fuel competition as energy costs go down and demand for non-fossil fuels rises.
As these factors converge, we will see commodity markets respond, resulting in a risky outlook for coal and a robust upside for natural gas.
Facing an uncertain energy landscape
Although outlooks vary slightly, all forecasts see natural gas demand growing at the highest rate, while non-fossil-fuel demand rises the fastest. Differences appear where there is uncertainty about how technological advances and government policies will drive global power output toward renewables, as well as to hydro, nuclear, and biomass energy.
Facing so many unknowns, it's difficult to call where companies will place their bets. But one thing is certain — they must all adapt to the policy changes and market forces that will shape the next two decades of energy consumption, output and demand.
Our Insight report, Energy view to 2035: comparison with IEA, BP & XOM, provides detailed analysis and visual data on how each forecast approaches the drivers and challenges of the evolving energy market.
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