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BP: 2016 Energy Outlook

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BP has published its 2016 Energy Outlook. The 2016 edition was launched in London by Spencer Dale, BP’s Group Chief Economist, and Bob Dudley, Group Chief Executive.

Fossil fuels

As reported in the 2016 edition of the BP Energy Outlook, gas will be the fastest growing fossil fuel, increasing 1.8%/y and oil will grow steadily at 0.9%/y, although its share of the energy mix continues to decline. Growth of coal is projected to slow sharply, such that by 2035 its share in the energy mix is at an all time low, with gas replacing it as the second largest fuel source.

Global demand for energy is anticipated to increase by 34% between 2014 and 2035, or by an average of 1.4%/y. This growth in overall demand includes significant changes in the energy mix, with lower carbon fuels growing faster than carbon intense fuels as the world begins to transition to a lower carbon future.

“In the middle of a downturn in oil and gas prices, it is important not only to adapt to the current tough conditions, but also to prepare for the next set of challenges. Energy is a long wavelength industry and we need a long term perspective of how the energy landscape we operate in is likely to evolve,” commented Bob Dudley.

“As this year’s Outlook demonstrates, the world is going to continue to demand growing supplies of energy but the mix of those supplies is changing and becoming less carbon intense. However, further policy action may be necessary to meet international targets to limit carbon emissions.”

Non fossil fuels

Non-fossil fuels are projected to grow even faster than anticipated in last year’s Outlook. Renewables, including biofuels, are projected to grow at around 6.6% per year, and as a result their share in the energy mix increases from 3% today to 9% by 2035.

Driving demand

According to the report, income and population are the key drivers behind the growing demand for energy. By 2035 the world’s population is anticipated to reach nearly 8.8 billion, meaning an additional 1.5 billion people will need energy. Over that same period, GDP is expected to more than double, with China and India accounting for half of the projected increase.

Supply increases

The supply of natural gas grows robustly, driven by strong increases in shale gas production around the world – this is projected to grow at 5.6%/y. The share of shale gas in total gas production rises from 10% in 2014 to nearly 25% by 2035.

Global liquids supply will expand by nearly 19 million bpd by 2035, led by growth in non-OPEC supply, particularly US shale oil. OPEC is likely to act to maintain its market share of around 40%.

Carbon emissions

The growth of carbon emissions over the next period of the Outlook is anticipated to halve (relative to the previous 20 years), thereby growing at 0.9%/y.

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