Transport trends to alternative fuel: BP

Energy firm’s report sees gas taking increasing share of transport propulsion to 2035

Transport trends to alternative fuel: BP
BP expects gas to be the fuel of choice in 20 years

Trucking industries in advanced economies will leave competition for diesel behind over the next 20 years, a BP research document indicates.

This is expected to be due to increases in fuel efficiency and then a shift to gas, as measured in million barrels per day (mb/d), in Organisation for Economic Co-operation and Development (OECD) countries.

BP Energy Outlook 2035 is the energy supermajor’s fourth in a series and forecasts a slowing of the global general energy consumption growth rate between 2012 and 2035 to 41 per cent from 52 per cent in the previous 20 years.

"This process shows the power of economic forces and competition," BP Chief Economist Christof Rühl says.

"Put simply, people are finding ways to use energy more efficiently because it saves them money.

"This is also good for the environment – the less energy we use the less carbon we emit.

"For example CO2 emissions in the US are back at 1990s’ levels."

The transport sector is expected to continue to play a relatively small role in primary energy growth throughout the forecast, growing steadily but accounting for just 13 per cent of total growth during 2012-35.

"By sector, liquids demand growth to 2035 comes primarily from non- OECD transport (16.6 mb/d) – due to a rapid increase in vehicle ownership – and from non-OECD industry (8.7 mb/d, largely for petrochemicals)," the report states.

"OECD demand declines across all sectors. Outside of transport there are two main drivers: the continued displacement of oil by cheaper alternative fuels, and the closure of uneconomic industrial plants (in refining and petrochemicals) in favour of newer plants in the non-OECD.

"In transport, declines are first driven by vehicle efficiency improvements (despite slow growth in the OECD vehicle fleet) and then by increasing penetration of non-liquid alternative fuels, such as natural gas.

"At the global level, transport demand growth for liquid fuels slows post 2025, as efficiency gains and displacement by gas ramp up, falling below growth in industry between 2030 and 2035."

Among fossil fuels, gas is seen as the fastest growing at 1.9 per cent a year and is the only one to grow more rapidly than total energy.

Oil, growing at 0.8 per cent a year, will show the slowest growth, with coal at 1.1 per cent a year only slightly ahead.

Renewablesare expected to continue to be the fastest growing class of energy, gaining market share from a small base as they rise at an average of 6.4 per cent a year to 2035.

BP Group Chief Executive Bob Dudley says that the Outlook "highlights the power of competition and market forces in unlocking technology and innovation to meet the world’s energy needs. These factors make us optimistic for the world’s energy future."

Dudley adds: "The Outlook leads us to three big 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?"

"On the first question, our answer is a resounding ‘yes’.

"The growth rate for global demand is slower than what we have seen in previous decades, largely as a result of increasing energy efficiency.

"Trends in global technology, investment and policy leave us confident that production will be able to keep pace.

"New energy forms such as shale gas, tight oil, and renewables will account for a significant share of the growth in global supply."

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