Oil derricks like
this one outside of Williston, North Dakota, are part of a shale oil
boom that has helped put the United States on track to overtake Saudi
Arabia as the world's leading oil producer.
U.S.
imports of oil are on track to fall from 10 million to 4 million
barrels per day, Fatih Birol, IEA’s chief economist and the main author
of the report, told a London news conference. However, he added,
increased domestic production, including biofuel, only accounts for 55
percent of huge reduction in imported oil. The other 45 percent is due
to the ramping up of improving federal fuel efficiency standards for
cars and trucks.
According to IEA, by 2020,
America’s oil production will reach 11.1 million barrels per day, up
from 8.1 million in 2011. Saudi Arabia’s production, meanwhile, will
decline from 11.1 million to 10.6 million barrels per day. The renewed
U.S. reign at the top of world oil producers may be short-lived. By
2025, IEA projects, U.S. production will slip back to 10.9 million
barrels per day, but Saudi Arabia’s will have increased only to 10.8
million barrels per day.
The picture on natural
gas is even more dramatic. By 2015, the U.S. should be producing 679
billion cubic meters (bcm) of natural gas, up from 604 bcm in 2010. That
will be enough to edge out Russia, where production will be increasing
too, but projected only to reach 675 bcm in three years. By 2020, the
spread between the two nations will widen, with U.S. production of 747
bcm, well ahead of Russia’s forecast 704 bcm. The U.S. should become a
net gas exporter by 2020, the report adds.
No Country an Island
“The
global energy landscape is changing rapidly, recasting the roles of
countries and fuels,” van der Hoeven said. What is happening in North
America will certainly affect other countries worldwide, she added. “No
country is an energy island.” For example, as America’s need for
imported oil declines, Asia is rapidly taking up the slack. The report
estimates that by 2035, fully 90 percent of Middle East oil exports will
head for Asia. That’s a shift that will require Asian countries to put
more resources toward keeping strategic shipping routes of oil secure.
“There is a major new trade axis building between the Middle East and
Asia,” Birol said.
Indeed, Iraq alone will see its exports to Asia jump from 50 percent of output to 80 percent. (Related: “
Iraq Poised to Lead World Oil Supply Growth, but Obstacles Loom”)
The IEA reiterated its forecast last month that Iraq’s production of
oil would jump from 3 million to 8 million barrels per day by 2035,
helping the war-torn country leapfrog over Russia to become the world’s
second largest exporter of oil, after Saudi Arabia.
Another
effect of the altered energy landscape are large variances in natural
gas prices. A few years ago, global prices of natural gas changed little
from region to region. But natural gas prices in Europe are now five
times higher than in the U.S., and Asia’s are eight times greater.
However, van der Hoeven said, as more gas becomes available globally for
exports, that should push prices down outside the United States, too.
Demand Still Growing
The
overall demand for energy worldwide should grow by a third between now
and 2035, the report said, from 12,380 million tons of oil equivalent
(Mtoe) in 2010 to 16,730 Mtoe in 2035, an increase driven by the rise in
living standards in China, India and the Middle East. The share of
demand for energy in the developing world will jump from 55 percent in
2010 to 65 percent in 2035, powered by China, which will see its demand
for energy increase by 60percent over that period. (Related: “
Pictures: A Rare Look Inside China’s Energy Machine”)
Demand
for energy in the mostly wealthy developed countries that make up the
Organization for Economic Cooperation and Development (OECD) will
essentially be flat, IEA projects. Use of coal and oil to meet that
demand should drop to just 42 percent from 57 percent today.
The
IEA chided world governments for failing to do enough to improve energy
efficiency, saying that two-third of the economic potential to improve
efficiency is not being realized. If those efficiencies were tapped, it
said, total energy demand between now and 2035 could be halved, without
any decline in living standards.
Globally, demand
for fossil fuels will continue to grow in absolute terms through 2035,
but together their total share of the energy mix should drop from 81
percent to 75 percent. Worldwide demand for oil is forecast to grow to
99.7 million barrels per day in 2035, up from 87.4 million last year,
with China alone accounting for half that amount.
By
2035, the IEA said, the price of oil is expected to be $125 per barrel
in inflation-adjusted terms, though the nominal price is enough to
induce sticker shock in 2012: $215.
Global
natural gas demand should increase by 50 percent to 5 trillion cubic
meters (tcm) in 2035. Within OECD countries, gas is overtaking coal as
the fuel of choice for generating electricity. In the U.S., for
instance, the amount of electricity generated by coal has fallen from 50
percent to 32 percent in just a few years. Although use of coal will
continue to fall in the U.S., Europe and Japan, overall demand for coal
should still grow by 21 percent through 2035, because of increasing use
in China and India.
particularly Germany and Japan, are cutting back on nuclear power in
the wake of the 2011 accident at Japan’s Fukushima Daiichi nuclear
plant, nuclear power is still expected to account for 12 percent of
global electricity generation by 2035, thanks to increased use of
nuclear power in China, Korea and Russia.
Electric
generation from renewables should grow from 20 percent in 2010 to 31
percent by 2035, IEA projects. Within OECD countries, most of that
growth comes from increased wind energy production, while in non-OECD
countries, hydro power is the main source of clean energy. Growth in
demand for renewables, including biofuels, are still largely driven by
government subsidies, the report said. Last year, those subsidies
totaled $88 billion, a 24 percent increase from 2010.
Overall
demand for electricity will skyrocket by more than 70 percent by 2035,
reaching 32,000 Terrawatt hours (TWh), with almost all that increase
coming from non-OECD countries, with China and India alone accounting
for half of it. Prices for electricity overall should increase 15
percent by 2035, but some regions will pay much more than others. In the
U.S., for instance, average household electricity prices in 2035 should
be around 14 cents per kilowatt hours (kWh), while Europe’s will
average closer to 25 cents per kWh. That big difference in the cost of
electricity will likely give American industry a competitive advantage
over European rivals, Birol said.
Amid its
forecast for rising energy demand and production, the report,
unsurprisingly, does not paint an optimistic picture of efforts to
contain greenhouse gas emissions. IEA projects that energy-related
carbon dioxide emissions will rise from an estimated 31.2 gigatonnes
(Gt) last year to 37 Gt in 2035, which could cause a long-term average
temperature increase of 3.6 degrees Celsius. In a nonbinding accord
signed in 2009 in Copenhagen, nations agreed that the scientific view
was that the temperature rise should be limited to 2 degrees Celsius,
but efforts to forge a global agreement to cut fossil fuel emissions
have been unsuccessful. (Related: “
IEA Outlook: Time Running Out on Climate Change
This story is part of a special series that explores energy issues. For more, visit The Great Energy Challenge.
Sources: Thomas K. Grose in London For National Geographic News
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