The BP Energy Outlook 2035 states the U.S. is on the path to energy self-sufficiency, which will be achieved by 2035. By that year, gas and coal production will exceed consumption. During that period, Europe, China, and India will become more dependent on oil imports. This edition of the Outlook is the fourth time BP, plc (NYSE:BP) has published an Outlook, but this is the first instance of BP explaining what changes the company sees as likely in global energy markets.
The Outlook explains there are several reasons behind the future self-sufficiency of the U.S. First, production is going to increase at a rate that far exceeds rising demand, 24 percent to 3 percent. Another factor is that natural gas will become the most consumed fuel in the U.S., probably around 2027. By 2035, it will account for 35 percent of fuel consumed as oil drops from 36 to 29 percent.
Transportation energy needs are going to decline by 18 percent by 2035, and biofuels and natural gas will begin to capture more of oil’s dominant market. U.S. tight oil outputs triple according to the report, and shale oil production more than doubles.
As a result of the increases, imports are going to decline by approximately 75 percent. In 2017, the U.S. should be a net exporter of natural gas. Globally, China will continue to consumer more energy, and its share of the global market is projected to rise from 22 percent to 27.
Bob Dudley, BP Group Chief Executive, said the Outlook invites three major questions. “Is there enough energy to meet growing demand? Can we meet demand reliably? And what are the consequences of meeting demand? In other words, is the supply sufficient, secure and sustainable?” He answers the first with “a resounding ‘yes,’” noting that increased efficiency has slowed the rate of energy growth. “Trends in global technology, investment and policy leave us confident that production will be able to keep pace,” Dudley said.
The second is more mixed, as already described, the need is slipping for the U.S., but at the same time, demand in other areas is rising. Overall, consumption is forecast to rise 41 percent between 2012 and 2035; compared to a 55 percent increase in the past 23 years. Per year growth is estimated to be 1.5 percent globally. Emerging economies are most likely to drive the energy markets. Non-OECD countries are expected to account for 95 percent; of that, demand in India and China comprise half of the increases.
On the other hand, North America, Europe, and Asia will see slow down in energy consumption, which declines as 2035 approaches. Dudley is not necessarily worried with these trends. He explained that, “If the market is allowed to do its work, with new supply chains opening up to these big consuming regions,” there will be no ”cause for concern.”
Regarding sustainability, the report projects global carbon dioxide emissions increase by 29 percent. Emerging economies are the sole forces behind the growth, and declines have been predicted for Europe and the U.S. The trend is not level throughout the period and will ease as natural gas and renewable energy take market share away from coal and oil. Oil has the lowest growth forecast, averaging 0.8 percent per year. Natural gas will be the fastest growing fossil fuel, with demand at 1.9 percent per year.
BP Chief Economist Christof Rühl offered further insight about sustainability. “This process shows the power of economic forces and competition. Put simply, people are finding ways to use energy more efficiently because it saves them money,” Rühl explained. ”This is also good for the environment — the less energy we use the less carbon we emit. For example, CO2 emissions in the U.S. are back at 1990s’ levels.”