Continued from part one.
Bearing in mind the rising proportion coming from emerging markets, it is no surprise that ExxonMobil says industrial production, particularly of raw materials such as steel, cement, plastics and chemicals will drive energy growth of about 30 percent, and that transportation, particularly of light and heavy duty vehicles, will drive energy demand growth of 45 percent.
Much of this growth will be in Asia, Africa and the Middle East with transportation efficiencies helping to offset rises in demand in North America and Europe, even as the per unit of GDP energy demands in mature markets declines.
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Diesel will be the largest beneficiary of growth in transportation demand, the world’s largest oil company believes, with continued high capital cost and range restrictions hindering the uptake of hybrid and electric vehicles even through to 2030.
Already, internal combustion energy efficiencies are more than mitigating the gradual reduction in upfront vehicle costs, while extending the range advantage of conventional autos over new technologies. Only by 2030-40 will hybrids really make a significant dent in the uptake of internal combustion power plants.
Global industrial energy demand is set to continue strongly as emerging markets mature, urbanize and rise in prosperity. The rate of rise and point at which economies mature, though, will differ due to their starting points and demographic changes.
ExxonMobil believes China, the world’s second-largest consumer of energy and for the last 10 years the source of much of global demand for metals, energy and raw materials, is set to decline as its demographics change and its economy matures.
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Quoting the ExxonMobil report, “The Outlook for Energy: A View to 2040,” over the next 30 years, (energy) demand (will) shift from China toward India and other expanding industrial areas, such as Southeast Asia, the Middle East and Africa.
As economies in developing countries grow, so does their need for energy to fuel industries. Developing countries (will) make up 70 percent of global industrial demand by 2040. In India, industrial demand for energy will nearly triple. Latin America, Africa and the Middle East see their industrial demand increase between 70 percent and 90 percent.
Global electricity demand is expected to grow by 85 percent through 2040, but with the growth coming largely from non-OECD emerging markets. Where OECD markets may see growth of some 25 percent, increased urbanization in countries such as China and India will double demand in China and quadruple demand in India by 2040.
Fuel use will vary by region, though with nuclear and renewables providing a larger share in emerging markets than in the OECD.
As someone who has been through several “peak oil” scares over the years, the question springs to mind: will the world be able to provide the energy for 9 billion people by 2040, particularly in view of Exxon’s bullish predictions on GDP and consumption growth?
Taking the oil giant at their word, it would seem the answer will be ‘yes,’ although we aren’t privy to the details of “from where” the following chart suggests oil and liquids supply from current conventional sources will remain much the same, but growth will be from a number of areas, with shale oil providing only a part of it.
So can we make any deductions from this as to metals demand during this period?
By. Stuart Burns