OPEC report predicts that coal will lose some share due to the Paris climate push, but oil and gas together will retain a 52.7pc share by 2040, exactly the same as today.
Oil demand will continue rising as if nothing had really changed CREDIT: OPEC
The Opec cartel is taking a brave bet that global oil demand will keep rising fast for another 25 years, convinced that fossil fuels will retain their overwhelming dominance over world energy deep into the 21st century.
The Gulf-led group has based its strategic planning on assumptions that the Paris climate accords that came into force last week will largely fail.
It brushes aside warnings that fast-moving technology for electric vehicles and power storage may soon transform the energy landscape beyond recognition.
The group’s 2016 World Oil Outlook released today estimates that crude demand will rise by a further 16.4m barrels per day (b/d) to over 109m b/d by 2040, driven by economic booms in China, India, and the emerging economies.
Opec will enjoy the lion’s share of the expanding market, boosting its output of oil and liquids by 12.6m b/d. Production from the rest of the world will peak within a decade and then go into gentle decline.
The long-range forecast shows the Middle East strengthening its position at the epicentre of the oil industry, as output from US shale and Russian fields reach a plateau, and high-cost drilling in the Arctic and ultra-deep waters disappoints. Oil prices will double to $92 in today’s money by 2040.
The outlook is a far cry from the bombshell warnings by Shell last week that global crude demand could peak within five years, chiefly due to vaulting gains in fuel efficiency and the switch to zero-emission vehicles.
There is already a move in the German parliament with cross-party support to prohibit sales of the petrol and diesel cars by 2030, a move that could set off an avalanche. Volkswagen, Mercedes, and BMW are already joining the race for the electric car market.
Opec says it welcomes the climate deal and will play a part in delivering its goals, but the report’s base case explicitly assumes that countries will not meet their pledges – or even come close – and that business will continue more or less as usual for the oil sector.
It estimates that fossil fuels will make up 77pc of total energy demand in 2040, with solar, wind, and geothermal accounting for a still risible 4.7pc.
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