China to lead global energy demand growth through 2020

China will continue to be the driving force for global energy demand through 2020, but its energy growth will slow significantly as it transitions to a more sustainable pattern of economic growth, according to a report released on Wednesday.

The BP World Energy Outlook by British oil giant BP Plc projected that China’s energy consumption would grow 1.5 percent each year through 2040, less than one-quarter of its growth rate over the past 20 years.

The projection was made under a scenario, where there is no major “shock” to government regulations and energy technologies, Spencer Dale, chief economist at BP, told an event to introduce the report in Beijing on Wednesday.

“China is the world’s largest consumer of energy and has been the most important source of growth for global energy over the past two decades, but as China transitions to a more sustainable economic growth model, its energy needs will change,” the report read.

Apart from slower growth in energy demand, China’s energy mix will also change significantly, driven by its shifting economic structure as well as a commitment to move to cleaner, lower-carbon fuels, it added.

“It seems increasingly likely that China’s consumption of coal has peaked,” the report said, adding that renewable energy would overtake oil to become the second-largest energy source in China. Renewable energy, nuclear and hydropower would account for more than 80 percent the increase in China’s energy demand out to 2040, according to the report.

Trends in China also reflect global patterns, with slowing demand growth and an increasingly diversified mix, according to Dale. “There is no other country that determines the trends of energy like China,” he said.

Energy demand will increase by only around one-third, or about 1.3 percent annually, over the next 25 years, according to the report, adding that renewable energy will be the fastest-growing energy source, accounting for 40 percent of the growth in demand.

“The energy mix by 2040 will be the most diversified the world has ever seen,” the report said.

Most of the demand would be driven by emerging economies, such as China and India, as demand for energy within the Organisation for Economic Co-operation and Development is projected to be flat.

But with slowing demand in China, India would surpass China as the world’s largest growth market for energy after 2020, propelled by robust economic growth and industrialization, it said.