Last Thursday, the Center for Strategic & International Studies (CSIS) held a live conference as part of their CSIS Energy and National Security Program. The presentation, hosted by CSIS Senior Vice President and Trustee Fellow, Frank Verrastro, called upon Ian Meed, Assistant Administrator of the U.S. Energy Information Administration’s (EIA) Office of Energy Analysis to present the United States Energy Administration’s (EIA) International Energy Outlook 2017.
The presentation focused primarily on the long-term, international energy projections on a variety of topics including:
- Electricity generation by energy type
- Region defined primary energy sources
- Carbon dioxide emissions
- Fuel supplies
- Natural gas markets
- Demand growth
- Energy uncertainties
The information presented in the 2017 long-term energy outlook was based on projections between 2015 and 2040. The presenters provided several key takeaways including:
- The total global energy consumption is predicted to increase 28%, from 575 to 736 billion BTU between 2015 and 2040.
- Electricity demand within the Industrial sector will increase by 50% (of delivered energy consumption), while the demand for Residential and Transportation will grow more quickly.
- In 2040, most of the energy consumption will come from non-OECD countries, in particular, Asia.
- Non-OECD areas will also see a 30% increase in Transportation related energy consumption between 2015 and 2040.
- By 2040, 77% of the world’s energy use will continue to come from fossil fuels.
- Renewable energy should increase 2.8% per year between 2015 and 2040.
- The global carbon dioxide related emissions will decrease to 0.6%, much lower compared to 1.3% between 1990 and 2015.
- Coal consumption will not increase very much, as countries like China and India decrease use.
Before we take a peek at these key takeaways in more detail, it’s important to understand who the EIA is, what information they gather to generate their projections, as well as the different elements of uncertainty tied to the projections.
Who is the EIA?
The EIA is a government run organization that relies on statistics, data and other information to better analyze, disseminate and impart energy related information. The purpose of the information that the EIA provides is to better help policy makers, different markets, as well as the public, to better understand the local and global energy landscape.
In particular, the information that the EIA provides helps us to better understand the impacts or status of our environment and economy.
How do they get their data?
The EIA gathers their data and information from a variety of sources. What makes them different from other statistic gathering organizations is the fact that they have the capability to scrape and look at the information available across the Internet. This includes live, real-time sources. Of course, this means that the EIA also needs to ensure that the data they gather is thoroughly checked for accuracy.
Overall, the EIA utilizes a wide range of sources, both public and private, in order to build their reports. To help, the EIA also includes side cases to try and provide policy makers with more concrete information.
What are the 2017 International Energy Outlook Uncertainties?
As the EIA tries to project data over many years (in this report, 2015 to 2040), the 2017 report comes with a few uncertainties. During the presentation, Meed highlighted the importance of understanding these uncertainties, as they do impact actual results. According to Meed’s presentation, the uncertainties highlighted in the EIA’s International Energy Outlook include,
“The affects of assumptions about economic growth on energy consumption are addressed in the High and Low economic growth cases. World gross domestic product increases by 3.3% per year from 2015 to 2040 in the High Economic Growth Case and by 2.7% per year in the Low Economic Use Case compared with the 3.0% per year in the Reference case.”
Other uncertainties included the fact that the High and Low Oil Price use cases show data that is projected based on the unknown future energy market prices. This 2017 report is also the first to contain information beyond 25 years. It includes projections that fall into 2050. However, this information was not released during the presentation as the EIA feels that it will continue to change and update as the years pass.
2017 International Energy Outlook Report
World Energy Consumption
According to the presentation, the global energy use will rise approximately 28% between 2015 and 2040. The majority of this increase will happen in Non-Organisation for Economic Co-operation and Development (OECD) regions. In fact, Asia is the region predicted to see the most increase in energy use as well as the Middle East and Africa. The reason for this is due to the projected shift in residential access to energy and transportation.
Europe and Eurasia on the other hand will see a very slow increase in consumption. The reason for this is due to the fact that Russia’s population is declining. Older technologies are also being replaced by newer, more energy efficient ones.
Economic Growth and Demand
The countries driving energy consumption into 2040 will also see an increase in economic growth and demand. Therefore, non-OECD countries are estimated to see a larger growth compared to OECD countries. Japan however, is a bit of an outlier. Due to an aging population and aging workforce, the country will see a much slower growth and demand rate.
Consumption by Energy Sector
Through to 2040, the Industrial sector is predicted to consume the largest portion of global energy. Non-OECD countries in particular will again see the largest consumption numbers as their economies grow, (accounting for 90%). This growth is approximately 0.8% larger compared to OECD regions.
Transportation and Buildings are the other two sectors that the EIA projects will see some growth in energy consumption. Transportation is currently projected to grow approximately 1% every year, and Buildings, 1.1% per year.
Coal Remains Flat
Coal is one of the only fuels that the EIA projects will not see much growth in consumption between 2015 to 2040. That being said, energy consumption for Renewables is estimated to increase about 2.8% per year into 2040. This projection makes Renewables the fastest growing energy source. Nuclear is also expected see some growth during this period, although not as much.
Carbon Dioxide Related Emissions
The report found that Carbon Dioxide related to energy emissions will rise in non-OECD regions by approximately 25%. They will, however, remain stagnant in OECD regions. Despite this rise, Carbon Dioxide emissions will continue to be on the decline across the globe as new policies and regulations develop. The reason for this is because most of the world is using less energy in the production of their good and services– which includes non-OECD areas of the world. Overall, this means that less Carbon Dioxide is produced.
Income and Population Growth
Both income and population growth have a large impact on energy demand. That being said, the report indicates that because many countries across the world focus on improving energy efficiency, the demand actually decreases overtime. This is particularly true for countries like India and China.
In Japan however, there will be little to no growth into 2040. The reason of this is because Japan is already one of the most energy efficient countries in the world.
Liquid Fuel Supply
The presentation indicated that liquid fuel use will increase thanks to the growth in non-OECD regions between 2015 and 2040. The region that is estimated to see the most growth is in non-OECD Asia in countries like India and China.
In general, Transportation is the sector that will consume the most petroleum liquids, followed by Industrial. Buildings and Electricity are project to remain fairly flat or stagnant. In OPEC regions, the Middle East will see an increase in oil supply. In non-OECP regions, Russia, Brazil, Canada and Kazakhstan will see an increase in oil supply.
Energy Outlook by Type
Natural gas markets will see a slight increase of 0.9% per year in both non-OECD and OECD regions of the world. Electric and Industrial sectors will see 75% of the increase in consumption. The reason for this is because natural gas is an attractive alternative for power plants thanks to lower fuel costs. The EIA estimates this will help chemical, refinery and metal organizations to expand across non-OECD countries.
The majority of natural gas is projected to come from the Middle East, United States and China. By 2040, 70% of natural gas is expected to come from shale resources, while 50% of natural gas production will come from shales in China.
Non-OECD countries will generate electricity twice as was as OECD regions from 2015 to 2040. The reason for this significant difference is because the Building and Commercial sectors in Non-OECD countries is estimated to increase.
Natural gas and renewables will take over as the leaders in growth for electricity generation. By 2040, the EIA estimates that 57% of the electricity generated in both non-OECD and OECD regions will be from these sources.
Thanks to new technologies, in addition to different global policies and regulations, solar and wind renewable energy will grow considerably by 2040.
By 2040, the EIA predicts that China will own two thirds of the total nuclear capacity increase in the world. Other countries plan to phase out nuclear power capacity and generation, which means that by 2040 the overall total nuclear power generated and consumed will decrease.
As the days, months and years pass, you can be sure that the EIA will continue to update and change their report information as the data becomes available. The most valuable information at our disposable actually comes from the side cases that the EIA presents. This is due to the fact that they help policy makers and the public aware of the short-term and how it might impact the long-term– valuable information in this ever changing economic global landscape.