Beyond 2035

While the Energy Outlook considers global energy trends over the next 20 years, we also consider some issues and questions that arise beyond 2035

The uncertainty about future energy trends increases substantially much beyond 20 years - this is because there is increasing scope for the existing stock of machines and buildings to be replaced and for new technologies to alter fundamentally the way in which the world uses energy.

There are some important issues and questions relating to the energy transition that occur beyond 2035 - but given the considerable uncertainty, we need to consider a range of possible outcomes and the key factors likely to affect these.

When will global oil demand peak?

The point at which global oil demand will peak depends on GDP growth, efficiency trends and climate polices.

In the base case, oil demand grows throughout the next 20 years, driven by increasing prosperity in emerging economies. But the pace of growth gradually slows, as transport efficiency improves and the degree of fuel switching builds.

A simple extrapolation of these trends would suggest that oil demand may start to decline during the mid-2040s. But it might peak much sooner or later.

If, for example, global GDP growth turns out stronger than a simple extrapolation would imply, or road vehicle efficiency improves less quickly, plausible scenarios suggest oil demand may not begin to fall until the second half of the century.

By contrast, if GDP growth is slower than implied by past trends, fuel efficiency improves more quickly, uptake of alternative fuel vehicles is faster, or climate policies are more stringent, oil demand may start to fall much earlier. Oil demand is declining by 2035 in both the ‘faster transition’ and ‘even faster transition’ climate cases.

Illustrative paths for oil demand under different assumptions (Mb/d)

The point at which global oil demand will peak is highly uncertain. It depends on GDP growth, efficiency trends, climate policy as well as a range of other factors

Although the eventual peak in oil demand will be symbolic of a world transitioning away from oil, it would mark only the first point of decline. Oil is likely to remain a significant source of global energy consumption for many decades.

What role will Africa play in driving energy demand?

The extent and nature of Africa’s economic development is likely to play a key role in determining the strength of global energy demand beyond 2035. The role it plays in driving global energy demand will depend on productivity growth and industrial structure.

Global growth in energy demand is projected to slow as we near 2035 as the stimulus from China and India fades. A simple extrapolation implies that growth in energy demand could slow to around 0.9% p.a. in 2035-2050, compared with 1.3% between now and 2035 and 2.3% in 2000-15.

This projection assumes continued relatively slow growth in Africa. Despite a quarter of the world’s population living in Africa by 2050, it would account for less than 10% of global GDP and energy demand.

Increased productivity?

What happens if Africa’s economy and energy demand grows more rapidly?

Increased African productivity in line with India’s over the past decade could lead to stronger growth in Africa - and hence stronger global energy demand.

If these productivity gains were accompanied by increased industrialization - and hence rises in energy intensity similar to that seen by China at the turn of this century - energy growth beyond 2035 may not slow relative to that expected over the time frame of the Energy Outlook.

How will power demand drive global energy demand beyond 2035?

Growth in energy demand could slow to 0.9% p.a. in 2035-2050

Despite a quarter of the world’s population living in Africa by 2050, it would account for less than 10% of global energy demand

The power sector consumes a growing share of energy and by 2050 could account for all increases in primary energy.

The power sector consumes almost two-thirds of the increase in primary energy over the Energy Outlook period. How important could power be as a source of energy demand growth beyond 2035?

In the Outlook, the relationship between growth in GDP and power demand declines relative to the recent past. Assuming that this weaker relationship persists beyond 2035, a simple extrapolation would imply that power demand consumes 80% of the increase in primary energy between 2035-2050.

But if the pace of electrification is quicker than expected, such that the relationship between economic growth and power demand is close to its recent historical average, then increases in power demand could account for the entire increase in primary energy between 2035-2050.

In contrast, if a combination of abundant supplies of oil and gas, together with faster industrialization in emerging markets, dampens the pace of electrification - similar to that seen over the past 10 years - the contribution of power to primary energy growth beyond 2035 may be similar to that over the Outlook.

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