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BP: By 2040, 40% of world energy demand to be met by renewables

JAKARTA ( – The contribution of oil, gas coal and non-fossil fuels are predicted to continue to diminish in line with continued increase contribution of renewable energy, according to BP’s 2019 Energy Outlook.

“By 2040, oil, gas, coal and non-fossil fuels each account for around a quarter of the world’s energy. More than 40% of the overall increase in energy demand is met by renewable energy,” said Spencer Dale, BP Group’s chief economist.

Oil demand grows over much of the outlook, although it plateaus in the later years. All the demand growth comes from emerging economies.

The growth in supply is driven by US tight oil in the early part of the outlook, with OPEC taking over from the late 2020s as Middle East producers adopt a strategy of growing market share.

The transport sector continues to dominate global oil demand, accounting for more than half of the overall growth. Most of the growth in energy demand from transport, which flattens off towards the end of the Outlook, comes from non-road (largely air, marine, and rail) and trucks, with small increases from cars and motorbikes.

After 2030, the main source of growth in the demand for oil is from non-combusted uses, particularly as a feedstock for petrochemicals, BP said in the report.

Natural gas grows strongly over the period, supported by increasing levels of industrialization and power demand in fast-growing emerging economies, continued coal-to-gas switching, and the increasing availability of low-cost supplies in North America and the Middle East.

By 2040, the US accounts for almost one-quarter of global gas production, and global LNG supplies will more than double. The sustained growth in LNG supplies greatly increases the availability of gas around the world, with LNG volumes overtaking inter-regional pipeline shipments in the early 2020s.

Coal consumption flatlines over the Outlook period, with falls in China and the OECD offset by increasing demand in India and other emerging Asian economies. China remains the largest market for coal, accounting for 40% of global coal demand to 2040, the report said.

Renewable energy grows over 400% and accounts for over 50% of the increase in global power generation. This strong growth is enabled by the increasing competitiveness of wind and solar.

Subsidies are gradually phased out by the mid-2020s, with renewable energy increasingly able to compete against other fuels. China is the largest source of growth, adding more renewable energy than the entire OECD combined, with India becoming the second largest source of growth by 2030.

Sectoral Analysis

Power accounts for nearly 70% of the increase in primary energy demand. The mix of fuels used in power generation is set to shift materially, with renewable energy gaining share more quickly than any energy source in history, increasing from 7% today to around a quarter by 2040. Even so, coal remains the largest source of energy in power generation by 2040, accoding to BP.

Transport energy demand grows by only 25% despite total demand for transportation more than doubling, reflecting accelerating gains in vehicle efficiency. The transport sector continues to be dominated by oil (around 85% in 2040), despite increasing penetration of alternative fuels – particularly natural gas and electricity.

This year’s Outlook argues that the penetration of electricity in the transport sector is best measured by considering both the number of electric vehicles (EVs) and how intensively each vehicle is used.

In the evolving transition scenario, the share of EVs in the global car parc reaches around 15% by 2040 – more than 300 million cars in a car parc of almost 2 billion.

However, the share of passenger car kilometers powered by electricity, which also takes account of the intensity with which electric cars are used, is over 30%. The Outlook shows how the interaction of fully-autonomous cars with shared mobility has the potential to substantially boost the intensity with which electric cars are driven.

A key uncertainty in the period to 2040 is the speed with which sales of electric cars increases. To gauge the significance of this uncertainty, the Outlook considers a scenario in which there is a worldwide ban on the sales of cars with internal combustion engines (ICE) from 2040.

This scenario reduces liquid fuel demand by around 10 million barrels a day relative to the evolving transition scenario but, even so, the level of oil demand in 2040 in the ‘ICE ban’ scenario is higher than in 2016.

“The suggestion that rapid growth in electric cars will cause oil demand to collapse just isn’t supported by the basic numbers – even with really rapid growth,” explains Dale. “Even in the scenario where we see an ICE ban and very high efficiency standards, oil demand is still higher in 2040 than it is today.”

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