The global vehicle fleet – commercial vehicles and passenger cars – is expected to top 2.4 billion by 2035, doubling the current 1.2 billion total, according to the 2016 BP Energy Outlook. This is expected to play a major role in the rise of oil consumption over that time.
About two-thirds of the increase in oil consumption reflects higher transport demand, as the number of vehicles outside of the OECD triples over the next 20 years, to around 1.5 billion vehicles, BP Group Chief Economist Spencer Dale said during an online webcast Feb. 10. The impact of this increase in the global car fleet on fuel demand is offset by a large extent by gains in vehicle efficiency, which is assumed to improve even more rapidly than in the past.
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BP forecast that global vehicle fleet growth and increased fuel efficiency will play a major rise in oil consumption through 2035.
The Organization for Economic Co-operation and Development is a forum of 34 member nations promoting policies to improve the economic and social well-being of people around the world.
The non-OECD vehicle fleet is expected to overtake the OECDs fleet in size in the early 2020s, BP stated in its outlook. Growth in mature economies is much slower, as markets such as the U.S. and Japan are close to saturation levels in terms of vehicle ownership, the outlook said.
The company forecasted that the efficiency of the vehicle fleet will increase substantially through 2035, improving by 2 to 3 percent per year, compared with 1.5 percent per year over the past decade. As a result, in 2035, an average passenger car is expected to achieve 50 miles per gallon, compared with only 30 miles per gallon today, the outlook stated.
Those efficiency gains are achieved by substantial improvements in the efficiency of internal combustion engines, including far greater hybridization, smaller vehicle sizes and improved vehicle design, for example using lighter materials to build our cars, Dale said.
He pointed out that the relatively high cost of batteries means the penetration of electricity within transport demand is projected to remain very limited over the outlook. Theres obviously huge uncertainty as to the precise pace at which battery technology improves and is able to start really competing with oil in the transport sector, Dale said. Our central view, based on BPs technology outlook published last year… is we think batteries wont be able to really compete until largely beyond the 2035 outlook. Obviously theres considerable uncertainty there.
Growth in the world economy during the coming decades means more energy will be required, 34 percent more in 2035 than in 2014. Virtually all of the additional energy is consumed in fast-growing, emerging economies, the outlook stated. Energy demand within the OECD barely grows.
The company expects growth in energy demand in China will slow as its economy rebalances toward a more sustainable rate. By the final decade of the outlook, China contributes less than 30 percent of global energy growth, compared with nearly 60 percent over the past decade, the outlook concluded.
BP noted that the sharp slowing in Chinas energy demand growth is partially offset by a pickup in other developing countries. India accounts for more than a quarter of the growth in global energy demand in the final decade of the outlook, double its contribution over the past decade.
BP projects demand for all energy types worldwide will grow an average of about 1.4 percent per year through 2035, compared to 2.3 percent per year during the 2000 to 2014 period, which reflects significantly faster decreases in energy intensity – the energy used per unit of gross domestic product.
Natural gas is set to be the fastest growing fossil fuel to 2035 at 1.8 percent per year, followed by oil at just below 1 percent. The outlook predicts coal demand growth will slow sharply to 0.5 percent per year over the period, significantly below the average growth during the previous 20 years of 2.9 percent per year.
Use of renewable energy is expected to increase by 285 percent over the forecast period, to account for a quarter of primary energy growth out to 2035, while remaining a relatively small share of global energy overall. By 2035, non-fossil fuels will make up 21 percent of global primary energy, compared to 14 percent today, BP suggests.
The European Union continues to lead the way in the use of renewable power, BP noted. However, in terms of renewable energy volume growth until/through 2035, the EU is surpassed by the United States, the outlook forecasts, and China adds more than the EU and U.S. combined.
The outlook notes the world is embarking on a transition to a lower-carbon energy system. It forecasts that carbon emissions will grow an average of 0.9 percent annually from 2014 to 2035, less than half the 2.1 percent average annual increase the previous 20 years – driven by faster efficiency gains and a changing fuel mix.
However, the outlook suggests the level of carbon emissions is expected to continue to grow, increasing 20 percent between 2014 and 2035, creating pressure for more policy action to reduce the growth of carbon emissions.
The 2016 BP Energy Outlook is posted on BPs web site here.