Suddenly, the likelihood of increasing supplies of gas has become a hot topic. Shale gas, of which there are certainly large reserves, is now being exploited in the USA to the extent that prices there have dropped to well below the level on the other side of the Atlantic. What effect this will have on the global energy supply in the medium to long term is unclear: enthusiasts see this as a new dawn for energy supplies, while others believe it may be a short-term blip which will do little to alter the fundamental tightening of the supply of oil and gas.
But, whatever the answer turns out to be – almost certainly not at one extreme or the other – this is a game-changer. In case we needed reminding, it shows once again that we cannot make straight-line projections from the current state of knowledge. Technologies change, discoveries are made, and previous assumptions are overturned. This unpredictability makes life more challenging while providing more opportunities. And it is humankind’s ability to seize those opportunities and turn them to (generally) good use which has enabled the development of the complex and advanced societies enjoyed by the current club of industrialised countries.
BP published its annual Statistical Review of World Energy in June last year. This month, it has released its Energy Outlook 2030, which provides some very interesting (and perhaps sobering) insights into the mid-term trends in energy use. There will be those who criticise the report because of its source, but we should remember that a major energy company like BP has an excellent insider’s view of the market and would be quite happy to make its profits from renewable energy if that’s where the long term market lay. The fact remains that world energy use will continue to be dominated by fossil fuels for the foreseeable future. Supporters of renewable energy do themselves no favours if they refuse to accept the reality. Only if reliable, cost-effective and efficient alternatives can be developed will the situation change.
The context is of a growing world population, with the increase coming almost entirely from non-OECD countries. A further 1.4bn people are expected to be alive in twenty years. But at the same time, and in contrast to the economic doldrums which most rich countries find themselves in, economic growth in emerging and developing countries is expected to surge ahead. As the world population grows by about 20%, overall real world GDP (at Purchasing Power Parity rates) should double and the non-OECD countries will be the major part of the world economy from around 2020.
That won’t mean that poverty has been eliminated, but it will mean that there will be many more prosperous people around. Not only will they demand a secure energy supply, but their taxes will give governments the resources to build infrastructure for rich and poor alike. They will be investing overwhelmingly in power plants which burn coal or gas, with some additional nuclear stations.
As the world population grows (albeit at a declining rate) and the global economy outpaces it, overall energy use, unsurprisingly, is expected to grow another 39% over the period. But with the massive Chinese and Indian economies now using energy increasingly efficiency, the energy intensity overall will decline, following the pattern seen earlier in Europe and North America. BP expects the US, Chinese, Indian and world economies to converge at an energy intensity of around 0.1 toe (tonne of oil equivalent) per thousand dollars of GDP (PPP rates), with the trend continuing downwards thereafter.
The BP analysis highlights an interesting fact about the likely mix of primary energy sources. From an initial domination by coal, following the Industrial Revolution, oil took the largest share over the last half century (and still does, but by a small margin). But the projection is for coal, oil and gas to take roughly equal shares of the total by 2030, and together comprise about 80% of the total. Hydro, nuclear and renewables (including biofuels), on the other hand, are seen as having about equal shares of the remainder. Hydro and nuclear show little growth, while use of renewables expands significantly from a low base (but still only about 7% of the total).
Although carbon intensity in non-OECD countries will decline, much of the additional energy to fuel growth will come from coal. Overall, it is expected that global carbon dioxide emissions will be 27% higher in 2030 than today. OECD emissions should be 10% lower, but this will be overshadowed by growth in emerging economies. The overall trend is still upwards at that point, albeit at a lower rate.
As for transport, oil is still expected to be dominant, but reaching a plateau of demand in the 2020s. Biofuels are forecast to provide 9% of transport fuel energy by 2030, up from 3% currently. Also, to quote directly from the report “Rail, electric vehicles and plug-in hybrids, and the use of compressed natural gas in transport is likely to grow, but without making a material contribution to total transport before 2030.” So much for the envisaged revolution in road transport.
There is plenty more food for thought in the document, but no space to deal with it all now. Clearly, it represents just one view (but a highly informed one) and other assumptions would give different results. But it is worth looking at energy policies in the harsh light of this particular slice of reality. The EU has a current target of a 20% reduction in emissions (against a 1990 baseline) by 2020, which would probably put it on course to make its contribution to the 10% reduction in OECD emissions by 2030 envisaged in the BP report. But, in a world where non-OECD countries continue to increase their emissions and contribute an increasingly dominant share of the total, the chances of significantly decarbonising the world economy by mid-century look remote.
Since Europe will become a less and less important player in a world dominated by China, other large emerging economies and the USA, politicians need to face up to the question of whether current climate change policy is really worthwhile. Subsidising inefficient energy technologies in Europe in the absence of radical policy changes elsewhere will simply accelerate relative economic decline while making precious little difference to atmospheric carbon dioxide levels.
As fossil fuels dominate energy supplies over the next few decades, the continuing evolution of climate systems and (hopefully) improving scientific knowledge should help us finally understand what the real drivers of climate are. A richer, more capable society will then be able to decide how to adapt, or possibly influence weather patterns, at least regionally. Until then, we need to break the spiral of investment in unnecessarily expensive and ineffective climate change mitigation policies and focus on developing better means of energy generation and use.