Emerging Economies to Fuel Future Energy Demand Growth
Growth in global energy demand through 2040 will be driven by increasing prosperity and improving living standards in fast-growing emerging economies. Plentiful supplies of energy enable this increasing prosperity, according to the recently-released BP Energy Outlook 2018.
In the primary scenario entertained in the BP report, the majority of the increased energy is consumed in Asia, with China, India, and other non-OECD Asian economies, accounting for two-thirds of global growth. (Energy demand within the OECD, meanwhile, will remain flat during this period.)
China and India each account for 25 percent of the increase in world energy through 2040, but the trends seen in these two countries diverge dramatically. China’s energy growth will slow significantly as it transitions to a more sustainable pattern of growth and its energy needs change. India’s demand growth also slows, but much less so, making India the world’s largest growth market for energy in the 2030s.
The BP report projects that China’s energy demand will grow by 1.5 percent per year, less than a quarter of its growth rate over the past 20 years. China’s energy mix also changes, as it moves to cleaner and lower carbon fuels.
China’s coal consumption is projected to fall through 2040, in sharp contrast to the rapid industrialization seen in the country over the last 20 years when coal provided the vast majority of the energy used. “It seems increasingly likely that China’s consumption of coal has peaked,” the report concluded.
Meanwhile, renewable energy, nuclear, and hydro will account for over 80 percent of the increase in China’s energy demand through 2040. Renewables will become the second largest energy source in China during that period, overtaking oil.
The rise in India’s energy demand is supported by continued robust economic growth. Coal will continue to provide the main source of energy supporting India’s economy, accounting for 45 percent of the increase in energy demand. Over 70 percent of the increase in India’s coal consumption will be attributable to the power sector, as the country continues in the process of electrification.
“The increasing prosperity of the developing world is a key force shaping economic and energy trends over the next 25 years,” the report concluded.
At the global level, energy demand will grow at 1.3 percent per year, down from over two percent over the previous 20 years. “This slowing in demand growth is largely due to energy intensity (energy used per unit of GDP) falling more quickly than in the past,” the report stated Global GDP will more than double by 2040, according to the report, but energy consumption will increases by only 35 percent during that same period. The use of renewable energy, and particularly solar energy, will expand rapidly through 2040, while natural gas consumption will triple.