Hard after appeals for “a shift away from fossil fuels” preceding the United Nations Climate Summit Sept. 23, the US Energy Information Administration published International Energy Outlook 2019 projecting further growth in the use of oil and natural gas under current policies and regulations. EIA’s Sept. 24 report usefully outlines the challenge facing urgent response to climate change.
The UN secretary-general heralded the climate meeting with a call for “action portfolios” that include “accelerating the shift away from fossil fuels and towards renewable energy, as well as making significant gains in energy efficiency” and “transforming industries such as oil and gas, steel, cement, chemicals, and information technology.” Before “transforming” the oil and gas industry into paralysis, the goal of too many political agendas and activist tactics, international leaders should study EIA’s projections.
Impressive renewable growth
In a world expected to need 50% more energy in 2050 than it did in 2018, demand for oil and gas continues to increase in the reference scenario EIA published. Renewable energy grows fastest among primary energy forms, increasing 3%/year to claim top ranking in primary consumption by 2050. Activists at the UN meeting will welcome that impressive growth. But they’ll feel differently about EIA’s projection of a 20% increase in use of oil and other liquids over the forecast period, during which the oil-liquids share of an expanding market declines 5 percentage points to 27%. The consumption growth rate for natural gas exceeds that of liquids, 1.1%/year vs. 0.6%/year. With consumption growing by 40% during 2018-50, gas holds its share of energy consumption at 22%.
In the transportation market, focus of most policy attention, alternative energy grows rapidly. Still, EIA says, “refined petroleum and other liquids remain dominant.” The liquid-fuel share of energy consumption for transportation falls in EIA’s projection from 94% in 2018—but only to 82% in 2050. And the consumption rate grows.
Also contrary to activist hopes, gasoline remains the primary transportation fuel, accounting for 32% of the market sector in 2050. And jet fuel demand more than doubles during the period. Rates of consumption of natural gas and electricity for transportation quadruple during 2018-50 but start from low bases.
Notwithstanding rapid growth in energy forms favored by advocates of aggressive climate mitigation, therefore, “Fossil fuels continue to meet much of the world’s energy demand” through midcentury, EIA says.
And investment in oil and gas production, which activists try in many ways to impede, must continue. To meet oil demand at rates projected in the reference case, output of crude, lease condensate, and natural gas plant liquids and other liquid fuels must increase by a projected 30% to 127 million b/d in 2050. That’s 9%/year growth needed atop natural declines.
EIA describes its reference case as “a reasonable baseline case to compare with cases that include alternative assumptions about economic drivers, policy changes, or other determinants of the energy system to estimate the impact of these assumptions.” It thus provides needed perspective for popular goals such as quickly shifting to zero-emission transportation and ending net growth in carbon emissions.
In EIA’s reference case, carbon intensity—units of emissions per units of economic growth—continues to decline worldwide. Energy-related carbon-dioxide emissions nevertheless increase—by an average 0.6%/year during the forecast period. That’s one-third the rate of 1990-2018 but still represents growth.
Reversing that trajectory requires accelerating already rapid growth in renewable energy—the market share of which grows to 27% in 2050 from 15% in EIA’s projection—and steepening the decline in fossil-energy share to 69% in 2050 from 80% in 2018.
Moderating transition
To some extent, policies will make that happen. But cost will rise as cheap energy is forced to give way to more-expensive alternatives and as wealth generation from resource development is constrained.
Economic pain imposed by governments inevitably meets political resistance, which will moderate energy transition. If this were not so, the UN would not have sensed the need for a climate summit.