A few weeks ago I attended an event hosted by a local group called the Women’s Council on Energy and the Environment. The event was titled “BP Presents a Long Term Outlook for Energy” and was led by one of BP’s economists. Although Pike Research is focused on clean technology markets, mostly to the exclusion of traditional energies such as oil, natural gas, and coal, it’s always interesting to keep up on the broader energy trends and ”BP’s Energy Outlook to 2030” provides an opportunity to do just that.
”BP’s Energy Outlook” distinguishes countries primarily by the “OECD” and “non-OECD” designation. Yesterday, I discussed the energy trends for OECD countries. Here’s how it looks like non-OECD countries will fare.
Not surprisingly, non-OECD economies will drive energy demand over the forecast period. In fact, India and China will command the demand for energy over the next 20 years and approximately two-thirds of that will be for the fuel industry. One piece of good news regarding China is that its economy should become less energy intensive by 2020. I think a key part of this will be an increase in investment and planning for the Chinese grid including bringing more renewables and energy storage assets online. China aside, non-OECD countries’ energy intensity will skyrocket.
Overall, BP’s energy and climate change profile of non-OECD countries by 2030 is astounding. These countries will be responsible for the bulk of emissions, particularly India and China. What troubles me is that non-OECD countries will bear the brunt of climate change. It is accepted that wet and rainy regions will experience even more precipitation with climate change and that arid and semi-arid regions will become drier. This means flooding and drought – which will displace people and create even more instability in the food supply. Although more developed countries will have the money required to adapt to these changes, middle income and low income countries may not. What’s more, the opportunity cost of funding large-scale water management projects, as an example, will be much greater for a developing country than for a more developed country.
The “BP Energy Outlook to 2030” is yet another reminder of a trend that is frequently discussed but where we aren’t seeing much effort. Namely, that developing countries are in search of cheap, reliable, and flexible energy right now, which means an overwhelming reliance on fossil fuels. Now that isn’t always a bad thing, if those fuels are used as efficiently as possible. But older technologies are proven and usually cheaper.
Before now, I think I underestimated the veracity of the demand for energy by non-OECD countries. I suspect there will be significant opportunities in non-OECD countries, particularly in Asia, for disruptive technologies at the right price.