Texas Border Business
The US Energy Information Administration recently released its long-term projections for global fuel demand. The International Energy Outlook 2023 (IEO2023) looks at long-term energy trends across the world through 2050. It includes seven scenarios with widely varying assumptions regarding economic growth, zero-carbon technology costs, and oil prices. Of particular relevance to the Texas economy, every case indicates higher worldwide consumption of oil and natural gas in 2050 than in 2022.
The key drivers of energy consumption are population and economic growth. Global population is projected to rise by 1.7 billion, with 94% of the growth in Africa, India, and emerging countries (primarily in the Asia-Pacific region). The forecasts indicate that global gross domestic product (GDP) will more than double by 2050 in all but the Low Economic Growth case — great news in that economic expansion is the only meaningful approach to enhancing opportunity and reducing poverty and related human suffering. Additionally, with higher incomes, more people can afford to drive and fly, use commercial services, purchase goods, and heat or cool their homes and other buildings. In other words, with global progress comes the need for more energy!
Under every IEO2023 scenario, renewable energy consumption increases faster than other energy sources (though starting from a much smaller base), primarily due to increased use for power generation. The non-fossil fuel share of primary energy grows from 21% in 2022 to a range of 29% to 34% in 2050 across the cases. This expansion is very good news for many reasons. Because of this transition to lower-carbon energy sources, the level of CO2 emissions per unit of primary energy is expected to decrease through 2050, but overall emissions nonetheless increase due to rising demand.
As noted, consumption of oil and gas is projected to rise across all scenarios. The usage of coal is up in some scenarios but down in others. Incidentally, coal currently accounts for about one-third of worldwide fossil fuel energy use and comprises over 25% more than all renewables combined. Switching coal for cleaner-burning natural gas would be a giant step in the right direction.
Clearly, a lot can (and will) change in the coming decades. New technologies could be discovered and deployed — better and less expensive batteries, for example, would increase the viability of widespread use of wind and solar generation. Similarly, improved carbon-capture approaches could switch priorities around. Future policy changes are yet another factor. One thing is clear: improving the lives and prospects of a growing global population will require energy — and lots more of it!
Much of this fuel for prosperity will come from Texas, because of its vast resources of both natural gas and low-carbon oil (both onshore and offshore). Stay safe!
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Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com), which has served the needs of over 3,000 clients over the past four decades.
