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Oil scene: Energy market leading global transition drive

By By SYED RASHID HUSAIN Energy outlooks are interesting documents. Global energy organizations compile and come out with their overview of the energy industry, its trends and future directions.

These provide immense insight into the future of the industry too all from analysts and pundits to a common person.

The World Energy Outlook (WEO) developed each year by the International Energy Agency is one such much sought after document awaited keenly and eagerly by the industry.

OPEC also comes out with its own version disseminating its view of the industry.

Major energy powerhouses and the oil majors also do not lag behind.

BP and ExxonMobil have been involved in similar exercise for decades now.

And these outlooks have their own flavor for they are from industry insiders. And they have business rather than politics as their prime objective and motivation.

They look at things pragmatically, more from a practical view point as they grapple with these issues on a daily basis.

And that not all the documents come up with a consensus opinion on major issues. In fact they differ and disagree too.

Each prism is a different one one has to concede and the long-term picture could definitely be different too. And the overall picture is an evolving one taking time to crystallize.

Only a couple of weeks ago the International Energy Agency came out with a report suggesting that biofuels could contribute significantly to the global energy mix by 2050 emphasizing that its contribution to the energy mix of the transportation sector could go up to 27 percent from the current two percent. And this is a major development- after all transportation is the largest energy consumer consuming almost 70 percent of the total energy used globally.

But not every one agrees to it.

Rob Gardner, manager, Economics & Energy Division, Corporate Strategic Planning Department at the ExxonMobil Corporation , definitely has question marks about this possibility.

Although globally, transportation-related energy demand will rise by nearly 40 percent from 2005 to 2030, with 1.2 billion light duty vehicles, some 400 million more than today, on the streets, yet interestingly as the efficiency improves, the global light duty demand is to flatten and even decline slightly by 2030.

In its vision of 2030, ExxonMobil sets out to answer what types of energy will be used in the world by 2030 and how much? How will demand patterns and source of energy supply evolve in countries around the world? What will be the role of new technologies in affecting the energy mix and overall energy efficiency? Howe much progress will have been made (by then) in curbing energy-related carbon dioxide (CO2) emissions?

Interesting and indeed difficult question for it is not easy to make these projections especially since too many variables and not necessarily the basics of demand supply continue impacting the energy world. And these variables, at time are indeed difficult to identify one has to concede.

Some assumptions were made while undertaking the gigantic task of looking into future.

It included that energy would continue to be required to fuel economic recovery, growth and economic expansion in the otherwise stable OECD economies too, yet the total energy demand of the industrialized world would continue to essentially remain unchanged over the given period up to 2030.

Similarly, it also underlines that the non-OECD energy demand would rise by more than 70 percent in the meantime.

When translated globally, this significant rise in non-OECD demand would take the global energy needs up by 35 percent over the given period.

The documents hence emphasized the world would continue to expand all available energy resources to meet this substantial increase in demand.

A number of factors are causing the global consumption and hence the need for fuel to grow.

Global population has risen almost three times from 2.5 billion in 1950 to almost 7.9 billion by 2030, but in the meantime, the global GDP is projected to be around 20 times higher than the level in 1950.

Now the combined effect on demand has been projected to be six time the levels in 1950. And this needed to be met through increasingly diverse energy mix.

China is leading the demand growth and definitely by far.

Rising prosperity in non-OECD countries has been identified in the ExxonMobil document as the largest influence on demand through 2030. And with China and the US leading global economies by 2030, they together would contribute about 40 percent of the global GDP growth by 2030.

The View to 2030 also highlights the growing disparity in energy consumption patters.

It emphasizes that despite the ongoing progress, about 1.4 billion people some 20 percent of the global population even today lack access to electricity and about 2.7 billion people some 40 percent of the global population, continue to lack access to modern cooking fuels, relying instead on age-old, cumbersome fuel sources to prepare their daily meals.

In the meantime, ExxonMobil projects that the global nuclear capacity is to go up by 70 percent until 2030 though demand for wind and solar energy is also expected to go up significantly during the period under review.

The world is definitely undergoing a change and the energy world is leading this transition.

Although fossil fuel would still be the dominant force, yet alternatives appear going up in their contribution to the energy mix one could say without a fear of denial and specially after tuning to Gardner.

© Arab News 2011