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Fuelling the future: hydrocarbons and renewables – Wood Mackenzie

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Wood Mackenzie expects growth in coal, oil and gas markets between today and 2035

Cost, convenience and availability mean hydrocarbons fuel will maintain their position as the foundation of world energy supply and demand, but environmental policies and the emergence of new technologies will drive growth in alternative sources of energy, according to Wood mackenzie.

In the first of a series covering our hydrocarbons report examining demand through 2035, Wood Mackenzie explores the current state of the market and what energy sources major regions will use to meet their needs over the next 20 years.

The energy world is undergoing profound change due to persistent low prices, new technologies, and mounting concerns over greenhouse gas emissions.

The lasting impact of the financial crisis has impaired the rate of energy demand growth, and the development of new production capacity in coal, gas and oil has led to oversupply.

Even though world primary energy demand is growing, particularly in emerging markets, short-term demand growth will be weaker than expected.

Oil prices will steadily recover, but the deferral of new projects will lead to 4 million b/d (4 per cent of global demand) lost to the market by 2021, which the growth of US tight oil can only partially mitigate, according to Wood Mackenzie.

Historically strong demand growth for gas will ease in the core demand centres. New volumes of LNG will lead to an oversupply in the next few years, and the enormous shale gas resources of the US will contribute to this.

Coal prices will normalise but global demand will remain flat through to 2020 due to declines in Europe offsetting the increase in southeast Asian consumption.

In spite of this, Wood Mackenzie expects growth in coal, oil and gas markets between today and 2035, but the demand for coal and oil will slow in favour of gas and renewable energy.

This trend will be particularly marked in the power sector, and by 2035 wind and solar will represent 11 per cent of world electricity demand, up from 5 per cent today, according to Wood Mackenzie.

Oil and gas operators have so far made limited investments in developing low-carbon technologies, but consumer preferences and policy initiatives like the Paris Agreement will help tip the scales towards growth for renewables.

In some locations, the structural fall in costs for solar and wind capacity has already made these grid-competitive. In this series, Wood Mackenzie will explore how four regions — North America and Europe, Asia, and the Middle East — will meet their unique energy needs and what sources they’ll use to do so.

In addition, are energy companies finally ready, willing and financially able to make renewables a priority?

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Ph: 432-978-5096 Website: www.mapleleafmarketinginc.com

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