OPEC says cli­mate ef­fort won’t quench oil thirst

Kuwait Times - - BUSINESS -

A global pact to bat­tle global warm­ing en­tered into force last week, but the lat­est long-term look into the en­ergy mar­ket by the OPEC oil car­tel sees cli­mate change mea­sures fail­ing to quench the world’s thirst for crude.

Each year OPEC re­leases a re­port that looks at how the en­ergy mar­ket will evolve in the com­ing two decades, and yes­ter­day’s re­port slashed es­ti­mates of coal and gas use due to ef­forts to limit cli­mate change, but left oil un­scathed.

The re­port comes as na­tions re­assem­ble to dis­cuss how to make good on their prom­ises to cut plan­et­warm­ing green­house gases fol­low­ing the en­try into force last Fri­day of a worldwide pact to bat­tle global warm­ing. Dubbed the Paris Agree­ment, it is the firstever deal bind­ing all the world’s na­tions, rich and poor, to a com­mit­ment to cap global warm­ing caused mainly by the burning of coal, oil and gas.

The long-term base sce­nario for the evo­lu­tion of the en­ergy mar­ket in OPEC’s re­port takes into ac­count greater mea­sures to limit cli­mate change, but not full im­ple­men­ta­tion of pledges made by coun­tries. In this sce­nario, great­est im­pact will be on the use of coal and then later gas, used par­tic­u­larly in elec­tric­ity gen­er­a­tion, which OPEC said “is not sur­pris­ing given that pol­i­cy­mak­ers are in­creas­ingly en­gaged in cli­mate change mit­i­ga­tion ini­tia­tives”.

The re­port slashed its es­ti­mate of coal de­mand to 91.5 mil­lion bar­rels of oil equiv­a­lent per day (mboe/d) in 2040, from 98.3 in last year’s re­port, al­though that still rep­re­sents a jump from the 77.1 mboe/d of de­mand in 2014.

The es­ti­mate for gas de­mand in 2040 was cut to 101.7 mboe/d from 111.5 mboe/d, but de­mand is still seen soar­ing from the 59.6 mboe/d of de­mand in 2014. Mean­while, the es­ti­mate for 2040 oil de­mand was only trimmed to 99.8 mboe/d, from 100.6 mboe/d.

With de­mand of 85.1 mboe/d in 2014, crude is ex­pected to see the slow­est growth over the next two and a half decades.

Cars driv­ing oil de­mand

“A de­clin­ing share for oil in the en­ergy mix is mainly the re­sult of tight­en­ing fuel ef­fi­ciency stan­dards across most coun­tries of the world,” said the re­port. How­ever, with the num­ber of pas­sen­ger cars on the road ex­pected to dou­ble, and elec­tric ve­hi­cles still only accounting for a sin­gle digit per­cent­age of ve­hi­cles, de­mand for oil is ex­pected to con­tinue to in­crease.

Growth in the aviation and the petro­chem­i­cal sec­tors will also sup­port oil de­mand. Es­ti­mates that see lit­tle im­pact for the oil sec­tor would be wel­comed by the in­dus­try, which OPEC also said in its re­port needs $10 tril­lion of in­vest­ments in or­der to meet fu­ture de­mand. OPEC’s main sce­nario sees over­all en­ergy de­mand grow from 273.9 mboe/d in 2014 to 382.1 mboe/d in 2040, al­though is a drop from the 399.4 mboe/d it fore­cast last year. — AFP

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