Global Energy Outlook 2019 The Next Generation of Energy A Global Energy Outlook 2019 The Next Generation of Energy Richard G. Newell, Daniel Raimi, and Gloria Aldana Report 19-06 July 2019Global Energy Outlook 2019 The Next Generation of Energy i About the Authors Dr. Richard G. Newell is the President and CEO of Resources for the Future RFF, an independent, nonprofit research institution that improves environmental, energy, and natural resource decisions through impartial economic research and policy engagement. From 2009 to 2011, he served as the administrator of the US Energy Ination Administration, the agency responsible for official US government energy statistics and analysis. Dr. Newell is an adjunct professor at Duke University, where he was previously the Gendell Professor of Energy and Environmental Economics and founding director of its Energy Initiative and Energy Data Analytics Lab. He has also served as the senior economist for energy and environment on the President’s Council of Economic Advisers and was a senior fellow, and later a board member, at RFF. Daniel Raimi is a senior research Associate at Resources for the Future and a lecturer at the Gerald R. Ford School of Public Policy at the University of Michigan. He works on a range of energy policy issues with a focus on oil and gas regulation and taxation and climate change policy. He has published in academic journals including Science, Environmental Science and Technology, Energy Policy, Energy Economics, and Journal of Economic Perspectives, popular outlets including Axios, The New Republic, Newsweek, Slate, and Fortune, and presented his research for policymakers, industry and other stakeholders around the United States and internationally. The Fracking Debate, his first book, combines stories from his travels to dozens of oil and gas producing regions with a detailed examination of key policy issues, and is published by Columbia University Press. Gloria Aldana is research assistant at Resources for the Future. She graduated from Duke University’s Nicholas School of the Environment in 2018 with a master’s degree in environmental economics and policy and a certificate in international development policy from the Sanford School of Public Policy. Her current work at RFF includes energy and climate topics such as carbon pricing, social cost of carbon, and transportation, as well as fisheries and water resources in Latin America. About the Project The Global Energy Outlook project seeks to enhance the comparability of long-term energy outlooks by harmonizing key assumptions underlying these projections. Details on the project, including downloadable data and an interactive visualization tool, are available at www.rff.org/geo. Resources for the Future ii Acknowledgments The authors thank Stu Iler, who initially developed the plat for harmonizing outlooks, and who served as a consultant for this report. They also thank a variety of individuals who assisted by providing data and context from specific outlooks, including Matthias Kimmel and Seb Henbest at Bloomberg New Energy Finance; Christof van Agt at the International Energy Forum; Will Zimmerman and Jorge Leon at BP; Linda Doman and John Staub at the US EIA; Bjrn Otto Sverdrup and Zita Marko Daatland at Equinor; Shigeru Suehiro and Masakazu Toyoda at IEEJ; Wim Thomas and Georgios Bonias at Shell; Tim Gould, Laura Cozzi, and Pawel Olejarnik at the IEA; Todd Onderdonk, Pete Trelenberg, and Filip Schittecatte at ExxonMobil; and Julius Walker at OPEC. About RFF Resources for the Future RFF is an independent, nonprofit research institution in Washington, DC. Its mission is to improve environmental, energy, and natural resource decisions through impartial economic research and policy engagement. RFF is committed to being the most widely trusted source of research insights and policy solutions leading to a healthy environment and a thriving economy. The views expressed here are those of the individual authors and may differ from those of other RFF experts, its officers, or its directors. Sharing Our Work Our work is available for sharing and adaptation under an Attribution- NonCommercial-NoDerivatives 4.0 International CC BY-NC-ND 4.0 license. You can copy and redistribute our material in any medium or at; you must give appropriate credit, provide a link to the license, and indicate if changes were made, and you may not apply additional restrictions. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use. You may not use the material for commercial purposes. If you remix, trans, or build upon the material, you may not distribute the modified material. For more ination, visit https/ /creativecommons.org/licenses/by-nc-nd/4.0/. The data included in this report comes from sources with varying sharing policies. Please check the references for more ination, and email raimirff.org with any questions.Global Energy Outlook 2019 The Next Generation of Energy iii Abstract The global energy landscape has experienced substantial changes over the last 25 years, with much larger changes potentially in store in the future. This report provides an analysis of long-term energy projections from governmental, intergovernmental, and private organizations using a unique ology that allows for “apples-to-apples” comparisons. These projections agree thatabsent ambitious climate policiesglobal energy consumption will grow 20–30 or more through 2040 and beyond, led largely by fossil fuels. This growth is driven by population and economic growth in the global “East,” while energy consumption in the “West” remains roughly flat. The global economy becomes more energy efficient over time, though carbon dioxide CO 2 emissions continue to grow unless there is a shift in current policy and technology trends. Renewable energy, led by wind and solar power, grow rapidly, though they primarily add to, rather than displace, fossil fuels unless more ambitious climate policies are put into place. Electricity plays an ever-growing role in final energy consumption, and while electric vehicles also play an important role in the future of transportation, their effect is more likely to restrain the growth of, rather than lead to a decline in, global oil demand over the next two decades. Under ambitious climate scenarios, the global economy becomes much more energy efficient, global coal consumption declines by more than half relative to current levels, oil use falls by up to 20, natural gas increases modestly, nuclear energy grows by more than 50, renewables more than double, and carbon capture and storage CCS technologies are deployed at scale by 2040. Resources for the Future iv Contents 1. Introduction 1 2. Key Findings 3 3. In Focus 13 3.1. Retrospective Analysis of 2011–2012 Outlooks 13 3.2. Electric Vehicles and Global Oil Demand 17 3.3. Natural Gas and Deep Decarbonization 20 4. Data and s 22 4.1. Harmonization 24 5. Key Statistics 27 References 38 Figures Figure 1. Global Primary Energy Consumption 3 Figure 2. Shares of Global Primary Energy Consumption by Fuel 4 Figure 3. Levels of Global Primary Energy Consumption by Fuel 5 Figure 4. Liquids Consumption in the East and West 6 Figure 5. Coal Consumption in the East and West 7 Figure 6. Global Energy-Related Net Carbon Dioxide Emissions 8 Figure 7. Carbon Capture and Storage 9 Figure 8. Global Electricity Generation by Fuel 10 Figure 9. Global Nuclear and Renewables Electricity Generation 11 Figure 10. Global Macroeconomic Assumptions, 2040 12 Figure 11. Global Primary Energy Consumption in 2035 14 Figure 12. 2011/2012 and 2017/2018 Projections for Shares of Global Primary Energy in 2035 15 Figure 13. EV Share of Global Car Sales in 2040 17 Figure 14. Global Liquids Consumption Under Different Assumptions for EVs, 2040 18 Figure 15. Global Natural Gas Primary Energy Demand 20 Figure 16. Regional Natural Gas Demand under Select Scenarios 21 Cover Photo Credit Emrah Turudu/Getty ImagesGlobal Energy Outlook 2019 The Next Generation of Energy 1 1. Introduction The global energy sector has changed dramatically over the last 25 years, with larger changes possible over the next 25. The magnitude and direction of these changes, however, is highly uncertain. Numerous public and private organizations produce long-term energy projections that vary widely based on their assumptions and ologies. This report provides a unique “apples-to-apples” comparison of these projections, providing the full scope of potential changes to the energy system as envisioned by some of its most expert organizations. The outlooks and major scenarios included are shown in Table 1. Table 1. Outlooks and Key Scenarios Author Outlook Scenarios Years Grubler 1 Historical - 1800–1970 IEA 2 Historical - 1970–2015 BNEF 3 New Energy Outlook 2018 [unnamed central scenario] To 2050 BP 4 Energy Outlook 2018 Evolving Transition To 2040 Equinor 5 Energy Perspectives 2018 Re, Renewal, Rivalry To 2050 ExxonMobil 6 Outlook for Energy 2018 [unnamed central scenario] To 2040 IEA 7 World Energy Outlook 2018 Current Policies CPS, New Policies NPS, Sustainable Development SDS To 2040 IEEJ 8 Outlook 2019 Reference To 2050 OPEC 9 World Oil Outlook 2018 Reference To 2040 Shell 10 Shell Scenarios 2018 Sky To 2100 US EIA 11 International Energy Outlook 2017 Reference To 2050 Note We focus on the US EIA’s 2017 International Energy Outlook because the 2018 edition includes limited data for a limited number of countries. A brief description of our ology is provided in the Data and s section, with select data indicators in the Key Statistics section. For the full ology, dataset, and interactive graphing tools, visit www.rff.org/geo. Resources for the Future 2 Table 2 provides a legend to assist in interpreting the figures included in this report. We use a consistent labeling system as described below, which includes distinct line types for different scenario types. For “Reference” scenarios, which assume no new policies, and for Equinor’s Rivalry scenario, assumes continued geopolitical challenges, we use a dashed line this set includes EIA Reference, Equinor Rivalry, IEA CPS, IEEJ Reference, and OPEC Reference. For “Evolving Policies” scenarios, which assume that policies and technologies develop according to recent trends and/or the expert views of the organization producing the outlook, we use solid lines this set includes BP Evolving Transition, Equinor Re, ExxonMobil, and IEA NPS. For “Ambitious Climate” scenarios, which are built around achieving climate goals that extend beyond the 2015 Paris Agreement to limit global mean temperature rise to 2 Celsius or lower by 2100, we use dotted lines this includes Equinor Renewal, IEA SDS, and Shell Sky. For additional detail on scenarios, see Table 5. Table 2. Legend for Different Scenario Types Reference Evolving Policies Ambitious Climate EIA Reference BP Evolving Transition Equinor Renewal Equinor Rivalry Equinor Re IEA SDS IEA CPS IEA NPS Shell Sky IEEJ Reference ExxonMobil OPEC ReferenceFinally, figures and tables in this report frequently refer to regional groupings of “East” and “West.” Those regional groupings are described briefly in Table 3. Table 3. Regional Definitions for “East” and “West” “East” Africa, Asia-Pacific, Middle East “West” Europe, Eurasia, North America, South and Central AmericaGlobal Energy Outlook 2019 The Next Generation of Energy 3 2. Key Findings Global primary energy consumption has grown rapidly over the past 25 years, reaching 546 quadrillion Btu qBtu in 2015, more than 190 qBtu higher than 1990 levels. Over the next 25 years, growth is projected to slow, increasing by roughly 110 to 160 qBtu in Evolving Policies scenarios, and declining by as much as 4 qBtu under Ambitious Climate scenarios Fig. 1. Figure 1. Global Primary Energy Consumption The IEA CPS shows the highest consumption in 2040 at 767 qBtu, an increase of 41 over 2015. OPEC and the IEEJ project consumption of roughly 720 qBtu in 2040, similar to the absolute levels of growth from the previous 25 years. Evolving Policies scenarios project moderately slower growth, led by the IEA NPS 703 qBtu, ExxonMobil 681 qBtu, and Equinor’s Re Scenario 659 qBtu. Under two of three Ambitious Climate scenarios IEA SDS and Shell Sky, global energy consumption is roughly flat to 2040. In the IEA SDS, demand is 544 qBtu in 2040, while Equinor Renewal projects consumption falling to 534 qBtu in 2040. On the other hand, under Shell’s Sky, demand grows to 711 qBtu by 2040, higher than any Evolving Policies scenarios. BP and EIA do not include non-marketed traditional biomass e.g., wood and dung, making comparison to other organizations difficult. Using comparable historical data, BP and EIA respectively project growth from 2015 to 2040 of 139 qBtu and 116 qBtu, with EIA’s slower energy demand growth reflecting its assumptions of slower population and GDP growth relative to other outlooks see Table 9. Figure 1 350 400 450 500 550 600 650 700 750 800 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 IEA Historical BP EIA Equinor Rivalry Equinor Re Equinor Renewal ExxonMobil IEA CPS IEA NPS IEA SDS IEEJ OPEC Shell Sky qBtuResources for the Future 4 Fossil fuels, which made up 82 of global primary energy in 2015, dominate across Reference and Evolving Policies scenarios, ranging from 74 to 79 in 2040 Fig. 2. Under Ambitious Climate scenarios, fossil fuels decline to 60 to 62. Figure 2. Shares of Global Primary Energy Consumption by Fuel Note The scenarios are ordered in decreasing shares of fossil energy. BP and EIA exclude non-marketed biomass energy, while other outlooks include this in renewables. Liquid fuelsprimary oilcontinue to be the single largest fuel source in the energy mix across most outlooks, though its share shifts from 32 in 2015 to between 28 and 32 in Evolving Policies scenarios. Under Ambitious Climate policies, liquids still account for 26 to 27 by 2040, but of a smaller aggregate energy base in the case of IEA SDS and Equinor Renewal. Natural gas becomes the second largest source in most outlooks, rising from 21 in 2015 to between 21 and 27 by 2040. Coal loses market share across all projections. Under Ambitious Climate scenarios, coal declines from 28 of the mix in 2015 to between 12 and 17 by 2040. Under Evolving Policies, it falls to 20 to 22. Renewablesled by wind and solargrow under all projections, though the rate of growth varies widely. Under Reference scenarios, renewables increase from 14 of the mix in 2015 to between 16 and 17. Under Ambitious Climate scenarios, they become the largest source of global primary energy, overtaking petroleum to reach as high as 31 in 2040. Projections for nuclear’s share of the mix also vary substantially, and is highest under Ambitious Climate