Energize Weekly, June 20, 2018
Energy consumption grew worldwide 2.2 percent in 2017, about an 80 percent increase year-over-year, and the fastest growth in four years as emission of the greenhouse gas, carbon dioxide also rose for the first time since 2014.
Consumption of natural gas and oil rose, and for the first time in five years, consumption of coal also increased, according to the recently released BP Statistical Review of World Energy.
“At first blush, some of last year’s data might seem a little disappointing,” Spencer Dale, BP’s group chief economist, said in an analysis, but added, “I would caution against being too alarmed by the recent data.”
Dale said recent years reflected the impact of both short-run economic cycle, as well as underlying structure changes in a global energy transition. Energy consumption was hampered by a weak economy and falling output from some of China’s most energy-intensive sectors. “Those factors were unlikely to persist,” Dale said.
Dale said the signs of progress came in the fact that 60 percent of the increase in primary energy was in natural gas and renewable energy.
A major point of concern is the lack of progress in the utility sector globally in shifting away from coal and other fossil fuels, Dale said.
Natural gas was the single largest source in the growth of energy consumption, rising by 96 billion cubic meters (bcm), or 3 percent. That is the fastest growth since 2010.
“The single biggest factor driving global gas consumption last year was the surge in Chinese gas demand, where consumption increased by over 15 percent, accounting for around a third of the global increase in gas consumption,” the BP review said.
Consumption was also up in the Middle East and Europe. U.S. consumption fell by 1.2 percent. An increase in gas exports was spurred by Australian and U.S. liquefied natural gas (LNG) and Russian pipeline exports.
China’s energy consumption rose by 3.1 percent in 2017. and it remained the largest growth market for energy for the 17th consecutive year.
In million tons oil equivalent (Mtoe), natural gas rose 83 Mtoe. That was followed by renewable energy, including biofuels, at 72 Mtoe, a nearly 15 percent jump. The rise in renewables was largely due to strong growth in wind and solar power.
After natural gas and renewables, oil showed the strongest growth with demand increasing 1.8 percent or 1.7 million barrels a day (Mb/d)—similar to growth in 2016 and greater than the 10-year average of around 1.1 Mb/d.
“To put the recent strength of oil demand in context, average growth over the past five years is at its highest level since the height of the commodity super-cycle in 2006-07,” the review said. The 10-year average annual growth in oil demand is 1.2 percent.
Coal consumption increased by 25 Mtoe, or 1 percent, the first growth since 2013. Consumption was driven primarily by India, which used 18 Mtoe, with Chinese consumption also up slightly. Demand among the 37 industrialized nations in the Organisation for Economic Co-operation and Development (OECD) fell by 4 Mtoe, the fourth year in a row with a decline.
“After several years of freefall, the coal market experienced a mini-revival last year, with both global consumption and production increasing,” Dale said. He called this “a step back.”
Still, coal’s share in primary energy fell to 27.6 percent, the lowest since 2004.
The result of this rising fossil fuel consumption was a rise in carbon emissions. “The backward step in last year’s data is most stark in carbon emissions from energy consumption, which are estimated to have increased by 1.6 percent in 2017. That follows three consecutive years of little or no growth in carbon emissions,” Dale said
Some short-term factors may have exaggerated the rise in emissions, including a rise in industrial activity in the OECD and a “bounce back” in power demand in China that was filled by coal in the short run, Dale said.
“My guess is that some of the deterioration in 2017 relative to the previous three years will persist, but not all of it,” Dale said.
“I am more worried by the lack of progress in the power sector over the past 20 years, than by the pickup in carbon emissions last year,” he said.
Renewable power grew by 17 percent, higher than the 10-year average and the largest increment on record equal to 69 Mtoe. Wind provided more than half of renewables growth, while solar contributed more than a third despite accounting for just 21 percent of the total.
There has, however, been a lack of progress in the power sector over the last 20 years for even with the growth in renewable generation and policy efforts to move away from coal and to clean generation, there has been no improvement in the fuel mix in the last two decades.
Coal-fired generation’s share of the power sector in 2017 was 38 percent, the same as it was in 1998, according to the review.
“The power sector really matters. It’s by far the single biggest market for energy: absorbing over 40 percent of primary energy last year,” Dale said. “It’s at the leading edge of the energy transition, as renewables grow and the world electrifies.”
Global power generation was up 2.8 percent in 2017, close to the 10-year average, with almost all the growth coming from the developing world. Renewables accounted for nearly half of the growth in power generation while coal accounted for 44 percent. Renewables total share of generation rose to 8.4 percent from 7.4 percent.
“This is one area where at the global level we haven’t even taken one step forward, we have stood still: perfectly still for the past 20 years,” Dale said. “This . . . should serve as a wakeup call for all of us.”
