OPEC: Oil will reign as the world’s primary energy source for decades to come

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As many governments around the world push for a ‘net zero carbon’ economy by mid-century, oil-exporting countries predict that oil, natural gas, and other fossil fuels will provide. still the bulk of the world’s energy until 2045.

The Organization of the Petroleum Exporting Countries, commonly known as OPEC, stated in its Global Oil Outlook 2021 that to meet a growing population, the world will need 28% more energy by 2045 – and much of that energy will continue to come from oil and natural gas.

Despite efforts to meet net zero carbon emissions targets, oil will still provide more than a quarter of the world’s energy by 2045, according to OPEC forecasts. (Organization of the Petroleum Exporting Countries)

The report stands in stark contrast to the ambitious goals of many countries, which are pushing for a ‘net zero’ energy economy by 2050, where all carbon dioxide emissions from the use of fossil fuels are either replaced by a carbon-free source, including renewable energies or nuclear. energy, or otherwise addressed through other carbon reduction means, such as reforestation.

“They have these incredibly ambitious and necessary net zero goals, and yet in the short term we don’t have a situation where you can have renewables providing something close to 100 percent of the electricity production that people need, ”said Helima Croft, Managing Director of RBC Capital Markets at an event hosted by the Atlantic Council World Energy Center.

According to OPEC, global oil consumption is expected to increase by 31% by 2025, then fall to 28% over the next two decades. (Tim Boyle / Getty Images)

While developed regions like the United States and Europe may progress to move closer to net zero, the OPEC report showed that developing countries in Asia and Africa are likely to depend on oil and gas. natural in the future. The United States, the European Union, Japan, the United Kingdom, Canada and Brazil have all set net zero carbon emission targets for 2050, OPEC noted. China has set a target of zero net carbon emissions for 2060.

Meanwhile, efforts to phase out fossil fuel production will primarily affect the developing world, OPEC Secretary General Mohammad Barkindo said at the Atlantic Council event.

“We have over 800 million people who do not have access to energy,” said Barkindo, adding that 600 million in Africa do not have reliable access to electricity. “All sources of energy will be needed for the foreseeable future.”

Although the OPEC report forecasts strong growth in so-called renewable energies, which now represent only 2.5%, solar and wind power should only represent 10% of global energy by 2045, at barely half a decade before the “net zero” calendar targets. for much of the developed world.

In fact, global oil consumption will increase even slightly in the near future, reaching 31% by 2025, before falling back to 28% over the next two decades, according to OPEC plans.

“Demand for energy and oil increased dramatically in 2021, following the massive decline in 2020, and continued expansion is expected in the longer term,” the report said.

Croft noted that President Joe Biden’s administration has asked OPEC to release more oil into the market to reduce the current spike in gas prices, which she says will increase political pressure to lean more on US domestic oil production.

“I thought it was pretty amazing,” Croft said of the administration’s request for an additional 400,000 barrels of oil production per month from OPEC countries. “Opponents will say we have a domestic oil industry that can meet short-term energy needs while we focus on long-term political goals.”

Indeed, half a dozen U.S. Republican senators wrote to Biden last month urging him to increase domestic oil production instead of importing more oil from OPEC.

“Your administration’s request to OPEC + will strengthen their economies, while weakening ours,” says the letter, led by U.S. Senator John Barrasso of Wyoming, the top Republican on the Senate Energy and Resources Committee. natural. “We call on your administration to stop making these misguided demands on the international energy community and immediately resume solid federal oil and gas leasing here at home.”

The OPEC report showed that coal, currently the world’s second-largest energy source, will lag behind natural gas over the next 25 years, with its share of the energy economy dropping from 26 percent to 17 percent. While natural gas, with its lower carbon emissions, will be widely used to replace coal and its higher emissions in the energy mix, its percentage increases only slightly, from 23% to 24%, by 2045.

In addition, the OPEC report also questions the increased use of electric and alternative fuel vehicles, which are expected to only account for a quarter of all vehicles on the road by 2045.

OPEC predicts that electric vehicles and other alternative fuels will account for less than a quarter of all vehicles by 2045. (Organization of the Petroleum Exporting Countries)
OPEC predicts that electric vehicles and other alternative fuels will account for less than a quarter of all vehicles by 2045. (Organization of the Petroleum Exporting Countries)

OPEC’s forecast stands in stark contrast to a report released earlier this year by the International Energy Agency, which paved the way to net zero that governments need stronger commitments if they are to. achieve these goals.

“The commitments made by governments to date – even if fully met – are well below what is needed to bring global energy-related carbon dioxide emissions to net zero by 2050.” , said the International Energy Agency report.

To meet these net zero targets, the agency said all new investments in fossil fuels must be stopped, that by 2035 no sales of new internal combustion engine cars and by 2040 the global sector of electricity will reach zero net emissions.

“We were surprised by this report. The challenge of decarbonization cannot be met by stopping investments in industry, ”said Barkindo. “OPEC and IEA agree on the fundamentals of supply and demand. We both agree that there will be a strong demand for oil in order to fight energy poverty. “

Edited by Matthew B. Hall and Bryan Wilkes


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