Global energy demand to grow 47% by 2050, with oil still top source: US EIA

Source: By Meghan Gordon and Maya Weber, S&P Global • Posted: Thursday, October 7, 2021

Global energy demand and energy-related carbon emissions will continue to rise through 2050, with oil remaining the largest energy source just ahead of surging renewables, the US Energy Information Administration said Oct. 6 in its latest International Energy Outlook.

The 2050 projection underscores the stark challenges ahead for transitioning away from fossil fuels and curbing global warming emissions.

EIA expects global energy demand to increase 47% in the next 30 years, driven by population and economic growth, particularly in developing Asian countries. This will require increased oil and natural gas production, absent technological breakthroughs or significant policy changes.

Liquid fuel will make up 28% of global energy demand by 2050, compared with renewables at 27%. This assumes a 36% increase in liquid fuel demand and a 165% increase by renewables from 2020 levels.

EIA sees energy-related carbon dioxide emissions continuing to rise through 2050, even as carbon intensity and energy intensity fall in both developed and developing countries.

“We do see a lot of impact from the growth in renewables and such in reducing carbon intensity, Chris Namovicz, EIA’s electricity, coal and renewables modeling team lead, said during a presentation on the outlook. “That being said, demand is still growing and there are still portions of demand that are most economically satisfied through burning of fossil fuels.”

Transportation demand

The IEO’s reference case projections assume current policy, regulatory and technology trends, a compound annual GDP growth rate of 2.8% and 2050 oil prices of $95/b.

Global travel demand is expected to return to 2019 pre-pandemic levels by 2025 for non-OECD countries and 2026 for OECD countries.

Oil products continue to increase and meet most demand for transportation energy over the next 30 years as the need for passenger and freight travel increases along with the growing population, EIA projects.

But electric vehicle adoption will accelerate in both developed and developing countries, causing the gasoline-powered, light-duty fleet to peak in 2023 in OECD countries and peak globally in 2038, the report said.

The plug-in EV share of sales is expected to grow fastest in Europe as a result of policies including EU fuel economy standards and country-level incentives that bring EV costs to near parity with ICE vehicles. EIA projects plug-in EVs will make up 80% of OECD Europe’s light-duty fleet by 2050.

Rising renewables

Natural gas consumption rises by 31% by 2050 in EIA’s reference case, despite being limited by renewable consumption, which grows from 15% to 27% over the period.

EIA projects renewables will make up 90% of added electric generation from 2020 to 2050 in developing regions, where generation growth is seen almost double the pace in OECD regions. In more developed areas with slower growth, the competitive hurdle presented by replacing existing resources is higher, and “renewable generation has less opportunity to grow without policies to encourage it,” the outlook said.

The share of natural gas in global energy use will drop slightly from 24% to 22% over the period, and rising gas prices after 2030 will make existing coal-fired generation more economic, according to the report. EIA sees coal-fired generation declining through 2030, but remaining key to the generation mix, as gas, coal and batteries help support intermittent sources.

Gas exports

Amid growing demand for natural gas in Europe and, particularly, non-OECD Asia, EIA projects US and Russian gas production to grow by 10 Tcf between 2020 and 2050, and Middle East production to grow by 5 Tcf.

Russia, connected to Europe by pipelines and LNG trade, is seen growing the most in net exports, more than doubling over the period, while EIA sees US net exports rising rapidly over the next 10 years before mostly flattening. The US will stay the biggest gas producer, however, reaching nearly 43 Tcf in 2050, according EIA’s reference case.