As the world puts the economic downturn behind, it will face a major challenge of meeting substantial growth in world demand, according to Daniel Yergin.
Speaking at the World Energy Congress in Montreal, the chairman of energy analysts IHS CERA warned that global demand for energy would likely leap 32-40% over the next 20 years.
“This demand growth will require investment measured in many trillions of dollars and it will pose a dramatic challenge to all the energy industries,” he told some 5,000 energy sector leaders and policymakers.
Yergin, author of the Pulitzer Prize-winning book The Prize, said: “We saw the impact in 2007 and 2008 of a ‘demand shock’ in terms of $147 oil and the economic consequences that went with that.
“Timely deployment of investment is necessary in the years ahead to avoid future demand shocks that can cause crises and disruptions and damage the global economy.
“The scenarios do show continuing decline in energy intensity with the introduction of new, more efficient technologies.
“And there has never been such a great emphasis on energy efficiency around the world as is the case today. That is true whether you’re talking about the United States, or China, or Europe.”
Yergin added: “Indeed, we are seeing what we call ‘peak demand,’ at least in terms of oil, in North America and Europe. Oil demand will not increase in those regions and is more likely to decrease.
“But it’s a very different picture in emerging markets. Rising incomes and large populations in those countries will be the growth engine for world energy demand in the years ahead. It is very sobering to realize that much of the infrastructure that will be needed in 2030 to meet the energy needs of a growing world economy is still to be built.”
Yergin said world oil supplies would continue to grow, but oil’s share of the overall energy mix is set to decline.
“Demand may pose many puzzles,” he said, “but one thing is clear. The growth in electricity will outpace the overall growth in energy as societies depend more and more upon electricity. This raises the question of future fuel choice for generating additional electricity supplies.”
Turning to the shale gas revolution that has had a dramatic impact in the US over the past few years and is set to do the same in Europe and other regions, Yergin added: “The development of shale gas has been the single most significant energy innovation so far this century.
“The availability of that gas will provide greater flexibility in meeting the fuel needs of the electric power industry.”
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