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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Most Energy Will Come From Fossil Fuels, Even In 2040


Which is more plausible: flying taxis, wind turbine arrays stretching miles into the ocean, and a solar roof on every house--or a scorched-earth, flooded post-Apocalyptic world? 

We have no way of peeking into the future, but we can certainly imagine it. There is plenty of information about where the world is headed and regardless of how reliable this information is—or isn’t—we never stop wondering. Will the energy world of 20 years from now be better or worse than the world we live in now? 

The answer may very well lie in the observable trends.

 A Growing Population

The global population is growing, and it will continue to grow in the next two decades. This will drive a steady growth in energy demand, at about 1 percent per year, according to the International Energy Agency.

This modest rate of growth is good news for all who are concerned about the future of the planet. Parts of the world are trying to reduce their energy consumption, and this should have a positive effect on the carbon footprint of humanity. The energy thirst of most parts of the world will continue growing, however, hence the overall growth.

The world’s population is currently growing at a rate of a little over 1 percent annually. This rate of growth has been slowing since its peak in the 1960s and forecasts suggest that it will continue to slow. Growth in energy demand, on the other hand, may at some point stop moving in tune with population growth trends as affluence in some parts of the world grows. The richer people get, the more energy they need. So, to the big question: where will this energy come from?

The Rise of Renewables

For all the headline space they have been claiming, it may come as a disappointing surprise to many that renewable energy, excluding hydropower, to date accounts for just 14 percent of the global primary energy mix.  Related: Is The Aramco IPO The Ultimate Pump And Dump?

Certainly, adoption of solar and wind energy has been growing in leaps and bounds, but unless governments around the world commit a lot more money and effort to renewable energy, by 2040, solar and wind’s share in the energy mix will still only rise to about 16 to 17 percent. That’s according to the only comprehensive report on the future of energy that collates data from all the leading energy authorities in the world, by non-profit Resources for the Future.

The growth in renewables adoption, however, would be a lot more impressive if governments do make serious commitments. Under that scenario, the share of renewables will double to over 30 percent by 2040: that’s the median rate of all authoritative forecasts. Amongst them, the adoption rates of renewables vary between 15 percent and 61 percent by 2040.

Even the most bullish of the forecasts on renewables is still far below the 100-percent renewable future many would like to fantasize about. 

But in 2040, most of the world’s energy will still come from fossil fuels.

EV Energy

Here, forecasters are more optimistic. Again, there is a wide variation between forecasts, but in each and every one of them the share of electric vehicles on the world’s roads in 2040 is a lot higher than the meagre 1 percent of the global car fleet EVs constitute today. Related: Gas Prices Languish As Storage Falls To Near-Record Lows

Government policy will be the key. Bans of internal combustion engines will go a long way toward boosting EV adoption, which is why some forecasters expect electric cars to come to account for more than 50 percent of cars on the road in 2040. Others, however, are more guarded in their forecasts, seeing their share of the global fleet at between 16 percent and a little over 40 percent.

Many pin their hopes for a less emission-intensive future on electric cars. Indeed, as the number of EVs rises, they displace ICE vehicles and, respectively, the emission-causing oil that fuels for ICE cars are made from.  It should be a no brainer that the more EVs we drive, the less emissions we produce. Unfortunately, this is not necessarily the case: China is the world’s biggest EV market, it has the most EVs—including passenger cars and buses—but it is also one of the biggest emitters.

Still, by 2040, if the more optimistic forecasts come true, the world will be consuming less oil than it is consuming now: anywhere from 1.2 million bpd to 20 million bpd less, the latter case envisaging an all-electric global fleet in 2040. 


This Ain’t Your Daddy’s Oil

No, it ain’t. It’s your grandchildren’s oil, for good or for bad. The vision of an oil-free world where renewable power is both abundant and cheap enough to replace all the ways in which crude oil and natural gas are used will in 2040 still be just that--a vision. Even the most optimistic energy scenarios for two decades from now see them as the dominant source of energy, with forecasts ranging between 60 percent and 79 percent. While these extremes are both below the over-80 percent share fossil fuels have in the world’s energy mix, they are well above 50 percent.

Still, there is good news. Fuel efficiency alone will reduce oil demand significantly by 2040. In fact, according to the IEA, demand will plateau at a little over 100 million bpd by the mid-2030s. Combined with the influx of EVs many expect, the world of 20 years from now may indeed be consuming a lot less oil than the world of today. It will, however, likely consume a lot more natural gas. There is simply no way around fossil fuels, not yet. Unless a miracle of politics happens (complete with a ripple effect that will cost millions of people their jobs) in 2040 we will be as dependent on oil and gas as we are but we will hopefully breathe cleaner air.

By Irina Slav for Oilprice.com

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  • Mamdouh Salameh on November 24 2019 said:
    Indeed this will be the case. Hydrocarbons (oil, gas and coal) will maintain their dominance during the 21st century and beyond. Hydrocarbons will still account for 80% of the global primary energy demand in 2040 compared with 84.7% in 2018 according to ExxonMobil’s 2017 “Outlook for Energy: A View to 2040”. Oil will be increasing its share from 34.3% in 2018 to 36.4% in 2040 and natural gas from 23.9% to 24.3% while coal would have its share reduced from 27% to 19%.

    In the medium-period 2018-2022, oil demand is projected to increase by 2.5 million barrels a day (mbd) from 99.8 mbd in 2018 to 102.3 mbd. The outlook for long-term oil demand growth is more optimistic reaching 111.1 mbd by 2040.

    Most of the demand for oil is used for transportation. It is a sector where oil continues to face the weakest competition from alternative fuels. Nevertheless, demand growth is projected to decelerate on the back of efficiency improvements driven by technological developments, a tightening of energy policies and a wider penetration of electric vehicles (EVs).

    There are three pivotal NOs that will continue to govern the global energy scene, namely, NO post-oil era throughout the 21st century and probably far beyond, NO peak oil demand either and NO imminent energy transition from hydrocarbons to renewables. Moreover, oil and gas will continue to be the core business of the global oil and gas industry well into the foreseeable future.

    Renewable energy (including hydro-power) is projected to grow from 10.9% of the global primary energy in 2018 to 14.95% by 2040. This is despite serious environmental policies and government legislations and also despite trillions of dollars being spent globally on renewable energy.

    Hardly a day goes by without another media report about the impending demise of the Internal Combustion Engine (ICE) as petroleum-powered cars and trucks are replaced by super-clean EVs.

    Currently, electric and hybrid cars combined number under 4 million cars out of 1.477 bn ICEs on the roads worldwide, or a negligible 0.27%. The total number of ICEs is projected to reach 2.79 bn by 2040 according to US Research. Even if 200 million EVs were on the roads by then, they could hardly make a dent on the global demand for oil let alone replace it.

    By 2040, the world would be using at least 40.6 billion barrels (bb) of oil annually of which 73% or 29.6 bb will be used to power 2.79 bn ICEs. Bringing 200 million EVs will reduce global oil demand by only 2.1 bb, or 7%. This will neither be the end of oil as some experts are suggesting nor a tipping point.

    A tipping point for oil could only be reached once 1.395 bn EVs (50% of the global ICEs in 2040) are on the roads. This is impossible to achieve within that time frame.

    Furthermore, there will be a need for trillions of dollars of investment to expand the global electricity generation capacity in order to accommodate the extra electricity needed to recharge 200 million EVs. How could such expansion be sourced: nuclear, hydrocarbons or solar?

    It is very probable that oil and natural gas will continue to be the fulcrum of the global economy well into the future.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Lee James on November 24 2019 said:
    Realistically, we will probably still be hung-up on fossil fuel in 2040. This is assuming we still have access to oil, as usual.

    But how do we weigh the chance of significant socio-political disruption to oil supply? With world supply still mostly coming from a turbulent Mid-East, what are the consequences of war and conflict in the region?

    From a risk-management point of view, the world would be wise to decrease dependence on fossil fuel just as soon as we possibly can. We have the usual oil supply and delivery issues, plus we have the problem of what oil producers buy with oil revenue. Weapons are the commodity of choice today.

    So, how are things looking when we peek behind the veil of oil business-as-usual?
  • James Hilden-Minton on November 25 2019 said:
    This is the bedtime story that the fossil industry like to tell itself as it goes to sleep. The IEA reassures it that it will still be loved and valued by all even some 20 years out. It's so big, so power, and gosh darn it the world just needs it. And that will never, ever, ever change. But there is a vilan in this story. They only thing that disrupt this beautiful dream are the scary politicians and hordes of nasty voters who elect them. Only big, bad policy change can blow down the houses that coal, oil and gas have built. So rest easy, little prince, you need only buy off enough politicians and nothing shall prevail against you and your sweet little dream.

    The story that is not told is that year after year renewables, EVs, and other technologies are getting stronger. Even without policy support, they chip away at prices. Only unprofitably cheap natural gas can still keep taking market share from coal, but if either were to capitulate and hold out for higher prices, wind and solar would swoop in. So natural gas can be king, but it must resign itself to prices that fall 10% to 20% every year. Investors must hand over their cash as it to a charity if gas production is to continue climb. Oil too must contend with an EV based price cap that will keep falling year after year. OPEC becomes futile in its efforts to sustain livable prices for oil by cutting production. Demand becomes chronically weak and unresponsive. Fossils can remain king of a pile of dirt just as long as it can tolerate price erosion. How long can weary fossils fight low prices? How long till production gives up the fight? Sleep, little prince.

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