Introduction
Last week’s column addressed the central dilemma facing Guyana’s continued prosperity and perhaps survival as the region’s fastest emerging Petrostate. That dilemma is, what is the probable shelf life for the continued profitable exportation of crude oil to global markets. A determination of this dilemma is required in order to establish credible performance comparators as of now and after the imminent public auctions of future oil blocks
In the last column I had introduced two proxy indicators for determining such a time frame. These were 1] the United Nations 2050 target for tackling global climate change and environmental transition; and 2] the US, EIA study of long run global primary energy consumption which forecasts a similar 2050-time frame for the shelf life of petroleum as the world’s leading primary energy source.
Renewables baseline projections
Today’s column offers several observations related to the evolution of the primary energy sources that were listed in the US EIA’s projections to 2050 as presented last week. To begin with readers should note that, summarily, because of the rapid growth of electricity generation, renewables [including solar, wind, and hydroelectric power] are projected to be the fastest-growing energy source between 2018 and 2050. Renewables will surpass petroleum and other liquids to become the most used energy source globally, according to the US EIA modeling of its base case.
From a global standpoint, renewable energy consumption increases in the model by 3.1 percent per year between 2018 and 2050. This compares with only 0.6 percent annual growth in petroleum and other liquids Furthermore there is only 0.4% growth in coal, and 1.1% annual growth in natural gas consumption.
Natural gas
The US EIA predicts global natural gas consumption will increase by more than 40 percent between 2018 and 2050 with total consumption rising to nearly 200 quadrillion Btu by 2050. In addition to the natural gas used in electricity generation, natural gas consumption will increase in the industrial sector. Chemical and primary metals manufacturing, as well as oil and natural gas extraction together account for most of the growing industrial demand.
Petroleum
US EIA reveals global liquid fuels consumption will rise by more than 20% between 2018 and 2050, with total consumption reaching more than 240 quadrillion Btu in 2050. Demand in the OECD countries remains relatively stable during the projection period, but non-OECD demand increases 45%.
Coal
Studies indicate that every pathway which preempts negative impacts from climate change requires reduction in coal consumption “Coal is both the largest emitter of energy-related global carbon dioxide and the largest source of electricity generation. Comprehensive, integrated policies addressing emissions from all sources are essential for climate action, but reducing emissions from coal needs to be a first‐order priority.
Coal transition requires a special focus because of coal’s high emissions intensity, growing competition from cost-effective clean energy technologies like renewables, and deep links to jobs and development in coal-producing regions. Coal is second only to oil in the global energy mix, and coal demand – far from declining – has been hovering at near-record highs for the past decade. Today’s global energy crisis has led to modest increases in coal consumption in a number of countries, at least temporarily, mainly in response to sky-high prices for natural gas. Continued high coal use is one of the most visible symbols of the challenge of aligning the world’s actions with its climate ambitions: more than 95 percent of current global coal consumption occurs in countries that have pledged to achieve net zero emissions.
The IEA Coal Transition Exposure Index highlights countries where coal dependency is high and transitions are likely to be most challenging: Indonesia, Mongolia, China, Vietnam, India and South Africa stand out. A range of approaches, tailored to national circumstances, is essential for the power sector, where almost two-thirds of global coal is consumed, and in the industry sector, which accounts for another 30%.,
Nuclear
The International Energy Agency, IEA, unlike the US EIA, is sanguine about nuclear energy’s potential to play a leading role in energy systems, including those dominated by renewables in cuts to carbon dioxide emissions. However, 63 percent of today’s nuclear generation comes from plants older than 30 years.
Significantly, the IEA reports that “today a range of both advanced and emerging economies have recently announced energy strategies that include substantial roles for nuclear power as well as considerable financial incentives to invest in it”.
In the IEA’s global pathway to reach net zero emissions, nuclear energy doubles between 2020 and 2050. By 2050 nuclear accounts for 8% of the global primary energy mix, which is dominated by renewables. This is double the US, EIA forecast
The IEA concludes: momentum is building for nuclear power in many countries amid soaring fuel prices and growing energy security concerns, but success will depend on governments and industry. To that I would add safety concerns and public distrust of radioactive contamination.
Conclusion
This concludes the discussion on the shelf life for ready access to global crude oil sales. Next week I take up the topic of Guyana’s planned public auctions of oil blocks.
