Report: "Rapid Pivot to Gas" Required to Meet Future Energy Demands
International energy consultancy Xodus Group has released a new analysis indicating that a "rapid pivot to gas" will be required to address rising energy demand in the developing world.
“Recent forecasts take a developed world view showing either a plateauing or fall in energy consumption, but growing populations in developing countries mixed with increasing wealth are much more likely to result in a surge of overall primary energy consumption," said Andrew Sewell, Director of Subsurface at Xodus Group. "We are anticipating an unprecedented decline in oil and coal, but even with energy from renewables modeled to the most aggressive increase, our analysis shows that a much more rapid pivot to gas is required to meet increased demand."
In Xodus' analysis, about $20 trillion would need to be spent on natural gas exploration and production over the next 20 years. The forecast would require significant advancements in technology to produce the gas responsibly, including carbon capture and storage (CCS) of the carbon dioxide produced.
The scenario assumes the phasing out of coal and oil in response to vehicle electrification and environmental pressures, along with a rapid and robust increase in renewable production.
Over the past 25 years, per capita energy consumption outside of the Organisation for Economic Co-operation and Development (OECD) countries has grown at just over two percent annually. In the OECD, average per capita consumption has fallen by about 0.2 percent annually over the same period. These growth rates were used to project future energy demand by region.
The UN projects the OECD population to grow from 1.3 billion people in 2018 to around 1.4 billion people in 2040, whereas the non-OECD population is projected to grow from 6.3 billion to 7.8 billion. Based on these numbers, the overall primary energy consumption will surge from 14,300 million tonnes of oil equivalent (Mtoe) per year to 21,500 Mtoe per year over the same period.
Aggressive growth rates were assumed for renewables, particularly wind and solar at over 1000 percent each by 2040. In addition to sustained installation capacity, the uptime and efficiency of new capacity is projected to keep improving for the next 20 years. “Assuming that natural gas supplies the difference in total demand, we estimate that consumption could grow up to 200 percent by 2040 accounting for half of all primary energy consumption and 73 percent of the fossil fuel component. Energy industries need to consider this potential gas demand spike in the landscape of the necessary decarbonization of our global energy supply, along with the huge exploration and production expenditure it would require," said Sewell.