(EnergyAsia, January 19 2012, Thursday) --- Global energy demand will grow by an average annual rate of 1.6% or a total 39% over the next 20 years fuelled by economic and population growth in non-OECD countries, said BP’s latest Energy Outlook 2030.

But it’ll grow at a “slowing annual rate” due in part to increased energy efficiency and strong growth for renewable energy.

Like other forecasters, the UK major said almost all the growth will come from non-OECD countries as the developed world will see a small rise of just 4% in its energy use over the period.

Fossil fuels remain dominant at 81% of global energy demand by 2030, but down from about 87% from current levels.

BP said it expects increased fuel-switching, with more gas and renewables use replacing coal and oil.

“That gradual switching should see renewables, including biofuels, continue to be the fastest growing sources of energy globally, rising at an annual clip of more than 8%, much quicker even than natural gas, the fastest growing fossil fuel at about 2% a year over the period to 2030,” it said.

Presenting the 2030 Energy Outlook, BP chief executive Bob Dudley said:

“This report is by turns challenging, fascinating and stimulating for anyone in the energy business. It helps us to be both realistic and optimistic. It shows there are things we can’t change - like the underlying drivers of energy demand - and things we can change – like the way we satisfy that demand.

“The main message is that we need to have an open, competitive energy sector, which encourages innovation and thereby maximises efficiency in order to enjoy energy that is sufficient, secure and sustainable into the future.”

BP chief economist Christof Rühl argues that the impact of globalisation and competition will continue to deliver a remarkable convergence in energy intensity around the world, a measure of energy use per unit of national economic output.

The growth of unconventional supply, including US shale oil and gas, Canadian oil sands, and Brazilian deepwaters, against a background of a gradual decline in oil demand, will see the Western Hemisphere become almost totally energy self-sufficient by 2030. This means that growth in the rest of the world, principally Asia, will depend increasingly on the Middle East in particular for its growing oil requirements.

Oil, the world’s leading fuel today, will continue to lose market share throughout the period although demand for hydrocarbon liquids will still reach 103 million b/d in 2030, up by 18% from 2010. This means the world will still need to bring on enough liquids - oil, biofuels and others - to meet that forecast 16 million b/d of extra demand by 2030 and replace declining output from existing sources.

While coal is expected to continue gaining market share in the current decade, growth will wane in the 2020-30 decade.

BP expects gas demand growth to remain steady, and non-fossil fuels to contribute nearly half of the growth after 2020.

Power generation is expected to be the fastest growing user of energy in the period to 2030, accounting for more than half the total growth in primary energy use.

BP said the power sector will experience the greatest changes in the fuel mix: renewables, nuclear and hydro-electric will account for more than half the growth in power generation.

The report also examines several important facets of the global energy story: the pathways for economic development and energy demand in China and India; the factors impacting the energy export prospects of the Middle East; and the “drivers” of energy consumption in road transportation.

In China, growth of energy use is expected to slow significantly after 2020 as the economy matures. Although India’s population is on track to exceed China’s, its energy growth path is unlikely to replicate China’s energy intensive growth path.

It will more than double its energy use to 2030, heavily based on coal, but this will still result in consumption of some 1.3 billion tonnes of oil equivalent (toe), or just over one quarter of China’s total.

There will remain a heavy reliance on higher oil exports from Middle East OPEC countries to meet demand.

BP said its analysis suggests that the Middle East countries have the capability to bring on the required new production to meet global demand, even though the region’s energy use per capita is expected to remain more than three times as high as the rest of the non-OECD world.

BP also expects to see steady progress in longstanding efforts to displace oil with gas and to improve the efficiency of energy use within the region. Saudi Arabian, Iraqi, and regional production of gas-related liquids will dominate supply growth as the region’s share of global oil supply rises to 34% by 2030.

Transportation is likely to be the slowest growing sector for global energy consumption.

BP said significant improvements in fuel efficiency, including hybridisation of vehicles will partly offset continued strong growth in vehicle sales in emerging markets. Hybrid vehicles (including plug-ins) offer consumer flexibility and appear capable of meeting anticipated fuel economy targets in 2030.

Oil is likely to account for 87% of transport sector energy use, down from 95% today, with biofuels filling most of the gap, and accounting for seven per cent of transport sector energy use.

Global carbon dioxide emissions are likely to rise by about 28% by 2030—slower than the current rate of energy demand growth due to the rapid growth of renewables and natural gas. If more aggressive policies than currently envisioned are introduced, BP said global CO2 emissions could begin to decline by 2030.

BP said that by 2030, today’s energy importers will need to raise imports by 40%, but the experience will vary by region. In North America, efforts to reduce dependence on foreign supplies should show impressive results in the next couple of decades. Bolstered by supply growth from biofuels as well as unconventional oil and gas, North America’s energy deficit will turn into a small surplus by 2030.

But, Europe’s energy deficit remains at current levels for oil and coal but will increase by some two thirds for natural gas, supplied by LNG and pipelines from the Former Soviet Union.

China’s energy deficit across all fuels will widen by more than a factor of five and India’s, mainly of oil and coal, will more than double in the period to 2030.