BP’s 64th Statistical Review of World Energy sparked some thinking. David Hunter, energy analyst at Schneider Electric comments on the trends:
· The west to east energy supply shift
“In 2014 the US passed both Saudi and Russia to become the largest producer of oil. This western energy revolution is transforming the production landscape and looks to be here to stay, at least in the medium term. US oil production is at a 43 year high, although is likely to tail off later this year as the falling rig count feeds through to production. However the US is taking advantage of its flexibility and efficiency in reducing production cost to respond to global price movements. There is an argument that, as they are so flexible and production wells can be turned on and off so quickly, that this may place a $70 ceiling on oil prices in the near term. Looking further ahead, new export infrastructure will mean we’re going to see more US LNG sent east into Europe and beyond, which will help globalise the gas market further and provide price competition.”
· Emerging economies driving energy consumption
“Significant growth in energy consumption is coming from emerging economies – as they look to connect the one billion people in the world who still don’t have access to energy. It is for this reason that emerging economies will continue to drive global energy consumption increases; whilst China’s energy growth will slow, India is likely to continue to grow rapidly. On the flip side, western de-industrialisation, the increased focus on energy efficiency and maturing populations will contribute to a slow down in energy consumption in the long term.
“China, a dominant force in global energy consumption, is taking its emissions responsibility seriously, partly due to public anger over air pollution. It is looking to mitigate its dependence on coal-fired power. As a result China is piling into renewables, replacing older coal stations with cleaner ones and providing access to more gas through Russian pipelines and other routes.
“For these emerging economies, moving on from fossil fuels will be a huge challenge. Fossil fuels will be an important part of the world’s energy supply for decades to come, however emerging technology (solar, storage etc) and the need for a more dynamic, green, flexible and localised energy system for developed and developing economies alike is a huge opportunity for change.”
· Connecting the one billion
“We still live in a world where one billion live without access to electricity. This access has the power to transform the lives of those people so it is imperative that investment is there to ensure that happens. Schneider Electric is playing a big part in developing localised power in emerging markets. As it stands it has over 230,000 projects focused on increasing this goal and is helping over one million households in emerging economies gain access to energy.”
· Setting a price for carbon
“2014 marked a watershed for the growing acceptance from energy companies for the need to place a price on carbon emissions. A falling oil price, amid dramatic supply shifts from east to west, has set the stage for a transformation of our energy dependencies, and a move to a cleaner solution.
“The lower oil price will present a huge opportunity for governments that subsidise fossil fuels to reduce or remove those subsidies while prices are lower – and also frees up budgets (both domestically and industrially) for investment in energy efficient technology. Governments, and the energy industry as a whole, need to take this opportunity to fix the roof while the sun is shining.”