We read the phrases 'energy transition' and 'peak demand' all over industry news, and use them in our own analysis. But what is the story – and what are the numbers – behind the words? In Energy View to 2035, our latest assessment of the energy landscape over the next two decades, we use cross-commodity data to analyse what will shape future trends in global energy consumption.
We've identified four key themes emerging as energy and natural resources markets move toward what seems like an inevitable paradigm shift.
1. Demand for fossil fuels will peak.
Fossil fuel demands are divergent in the near term, but all markets will reach 'peak fossil' before 2035, as cleaner fuels such as renewables quickly become cheaper. Coal will be hit first and hardest, while oil and gas demand growth will continue. Despite the shift to come, hydrocarbons have a long future ahead.
2. Global CO2 emissions will not peak before 2035.
Although the growth of CO2 emissions is slowing – due primarily to the evolution of China's energy demand – we don't foresee a peak in the next two decades. After power and transport, industry will be the biggest contributor to carbon emissions globally, accounting for 45% of oil and coal demand by 2035. Paris Agreement targets remain challenging long-term goals, but they appear more achievable than first thought.
3. A trend toward electrification is clear.
Globally, we expect electricity demand to grow twice as fast as demand for fossil fuels to 2035 – rising to 27% of global energy supply. Africa and Asia Pacific will show the fastest power demand growth, with China and India surpassing 25% of end-use demand. But even outside emerging markets, in more mature regions such as Europe, there is scope for additional switching to power.
Report: Energy View to 2035
Senior Product Manager David Brown answers three questions about what's driving the anticipated energy transition.
4. Renewable energy will drive the shifting power market.
As the cost of renewable energy sources continues their rapid decline, their influence on the future energy landscape is compounded. Solar and wind power have extraordinary potential across numerous and diverse markets, and output for both will outpace demand. China, Europe and North America will dominate growth in wind, while emerging markets make better prospects for solar.
Looking out 20 years is complex, and there are always variables that can modify or displace the trends we see today. Technological developments, policy changes, long-term demographic shifts, and changes in economic growth or consumer trends can all influence the trajectory of energy markets.
But while the future is never certain, the interdependencies of global energy markets are clear. Our long-term energy view brings together myriad data points, timely geopolitical analyses and detailed macroeconomic insights to help guide informed decisions on emerging opportunities.