STEPS Seminar Spotlights Global Energy Future with BP Outlook 2035
What will the world’s energy mix look like in 2035?
A large contingent of ITS-Davis faculty, staff, researchers, and students gathered March 2 to hear Mark Finley, BP’s General Manager of Global Energy Markets and U.S. Economics, outline the company’s world energy predictions for the next 20 years in a special seminar hosted by UC Davis Sustainable Transportation Energy Pathways (STEPS).
Finley provided a forecast of world energy trends and policies, while also acknowledging market uncertainties. His presentation is based on BP’s Energy Outlook, a publication produced annually for the last 63 years that provides a statistical review of the world’s energy sources, and projections and models for those sources in the near future.
“The review represents our best efforts to articulate what we think is the most likely trajectory for the world’s energy systems between now and 2035, taking into account the evolution of the world’s economy, and changes in the world’s technology and government policy,” said Finley.
Finley focused on analyzing the growth of the world’s economy and the shifts in global trade patterns. China is expected to continue its exponential growth of energy demand, representing the biggest national growth over the next 20 years, followed by Europe and North America. World energy demand will be strongest in Asia, which will account for more than 60 percent of global economic growth. Accompanying this trend is a reverse shift in energy flow from West to East, due to the rise in the West of oil and natural gas production, improving energy efficiency and alternative and renewable energy sources— as well as slower income and vehicle growth.
The world’s energy mix is more diverse than it has ever been, and will continue to diversify over the next 20 years, Finley noted. Coal consumption is projected to continue slowing down, due to the availability of cheap natural gas and renewable energy, as well as policies toward reducing coal usage. While oil is expected to remain as the dominant primary energy source, BP predicts a steady loss of oil’s market share as renewables surpass nuclear and hydroelectric energy.
Shale gas production will continue to grow, especially in North America, with China becoming a significant production player. U.S. shale oil production is expected to grow as well, with the nation becoming an exporter of natural gas in 2016, and net oil exporter in 2031. Indeed, the U.S. is expected to become the world’s leading producer of liquid fuels, as well as the leading producer of natural gas.
The U.S. also is predicted to become energy self-sufficient by 2021, and, over the next 20 years, to become the global leader in energy production. The nation’s energy consumption is projected to increase by only one percent, whereas production will increase by 32 percent.
Finley cited two uncertainties in BP’s predictions:
- While China and India are predicted to see major Gross Domestic Product growth, a lower GDP scenario would result in a lesser demand for fuels, and a decrease in carbon emissions. (Even in this scenario, however, emissions would greatly exceed the levels needed to limit climate warming to limit climate warming to two degrees Celsius, according to the Intergovernmental Panel on Climate Change.)
- Climate policies could alter predictions, especially if policy makers adopt stronger policies to reduce emissions.
The talk quickly evolved from a traditional lecture to a lively discussion and Q&A, in which ITS-Davis professors, researchers and students posed questions about BP’s analysis process and the origins of the statistical review publication.
Finley concluded his presentation with three key takeaways:
- Continuous energy change is the norm for energy markets, with the growth in renewables and decline of coal and oil leading to a fast-changing energy mix
- Energy trade patterns are switching from West to East instead of the historic opposite
- Reducing carbon emissions will require action on many fronts, with no silver bullet to fix the problem
To learn more about BP and their statistical review, visit their website, or read the full report.
Mark Finley has spent more than 30 years in the public and private sector working as an energy economist. In 2001 he joined BP’s Economics team. He has served as the chairman of the U.S. Conference of Business Economics, chair of the American Petroleum Institute’s Committee on Economics and Statistics, vice president of the International Association of Energy Economics, and was a 2013 Senior Fellow of the U.S. Association for Energy Economics. He sits on the external advisory board of the University of Michigan Energy Institute, and is an elected member of the Council on Foreign Relations.
Photo credit: Gene Ang
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