Accelerated changes needed to meet 2050 goals, Statoil economist says

July 3, 2017
Changes will need to accelerate to meet higher energy demand in 2050 while addressing growing global climate-change impacts, Statoil's chief economist said.

Changes will need to accelerate to meet higher energy demand in 2050 while addressing growing global climate-change impacts, Statoil's chief economist said.

"We have to keep our eyes open. We have to be honest about a situation where the world might develop in different directions," Eirik Waerness said during a June 22 presentation at the Center for Strategic & International Studies based on the Norwegian multinational company's recently released 2017 Energy Perspectives.

The 60-page forecast uses three scenarios: renewal, which is driven by policies aimed at reducing emissions enough to curb growing climate change impacts; rivalry, where countries increasingly adopt nationalistic policies to protect domestic interests; and reform, which combines market-driven forces and is ruled by constructive markets.

The primary key to meeting global climate targets in 2050 under all three scenarios "is a fantastic improvement in energy efficiency," Waerness said. "We have to have to become, worldwide, much more energy efficient because there will be 2.45 billion more people on Earth. With the next generations being much smarter with much more capital available and more women in the workforce in key countries, the percentage of per capita income growth also will be high."

He said 2050's global economy varies from being twice as large in the "rivalry" scenario or 2.6 times larger with 2.7% annual economic growth in the "renewal" scenario. "With that, the demand for goods, services, and activities that require energy is bound to grow because the world will have at least 3 billion new middle-class consumers," he said.

This will have to be accomplished by becoming more energy efficient, Waerness said. "In the last 25 years, global energy intensity has gone down by an average 0.9%/year as energy demand has grown by 2.1%. Going forward, in a 'renewal' scenario, we have to deliver an energy intensity that is 60% lower than today. That's a 2.8% annual improvement so we more than compensate for the projected economic growth," he said.

The two other scenarios also would deliver deeper energy intensity reductions than have been accomplished in the last 25 years, Waerness said. "Fortunately, we see some signals over the last few years that this actually might happen. It has to," he said. Otherwise, the Earth's population can forget the frequently cited 2° C. global temperature growth limit to manage climate change and keep the planet livable, he said.

Accelerating the change in the global energy mix will be necessary, Waerness said. "In spite of a fantastic revolution in development and costs for renewable electricity from solar panels and windmills-we have 200 times more solar panels now than we had 15 years ago-they still are a sliver of total 2014 energy supplied," he said.

Under Statoil's 2017 forecast, wind and solar would become dominant-at around 50%-for power generation under the "renewable" scenario, largely at the cost of coal. Oil and gas would continue to dominate transportation demand outside of light-duty vehicles. Huge oil and gas investments will be needed under all scenarios to replace production and satisfy higher future demand.

The degree to which countries work together instead of concentrating heavily on their domestic interests could determine how effectively economies grow, technology advances, and global climate change is addressed, Waerness said. "This means adopting a global outlook in which we as countries realize we're all in the same boat in terms of energy and climate policies," he said.

About the Author

Nick Snow

NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.