EIA Modelled Reference Case Forecast; Non-OECD Nations To Witness Higher Energy Consumption

  • Sep 29, 2019 AEST
  • Team Kalkine
EIA Modelled Reference Case Forecast; Non-OECD Nations To Witness Higher Energy Consumption

The world energy consumption is estimated by the United States Energy Information Administration (or EIA) to grow by nearly 50 per cent between 2018 to 2050 under the reference case model.

The higher energy demand is estimated by the EIA to come from the countries that are not part of the Organization for Economic Cooperation and Development (or non-OECD) amid higher economic growth anticipation.

What is a Reference Case?

Reference case projections are modelled projections under various alternative assumptions. The Reference case demonstrates ongoing trends and relationships among demand & supply, and prices ahead.

The Reference case acts as the baseline to compare other cases which include different assumptions about the determinants of the energy system such as economic drives, governmental policy changes, etc., to anticipate the potential impact of those assumptions.

The anticipated changes that are modelled under the reference case are as below:

  • The estimation of regional economic and demographic trends.
  • Planned changes in infrastructure.
  • Incremental cost and performance improvements in know technologies

However, the reference case does not consider a change in national boundaries, international agreements, disruptive economic events, technological breakthroughs.

EIA Economic Projections Under the Reference Case

EIA anticipates that the combined gross domestic product (GDP) would grow by an average of 3.8 per cent a year in non-OECD against the combined gross domestic product (GDP) average growth of 1.5 per cent a year, which in turn, would mark higher energy consumption in non-OECD countries as compared to the OECD countries.

The GDP per person is anticipated by the Reference case to increase similarly in OECD and non-OECD regions in absolute terms; however, the proportional increase in GDP per person is estimated by the EIA to be higher in non-OECD countries between 2018 to 2050.

In non-OECD regions, countries such as India, China, other Asia is estimated to grow at an average of near or over 4 per cent.

The higher GDP growth would lead to higher energy consumption in the non-OECD countries.

EIA Energy Projections Under the Reference Case

The energy consumption in the non-OECD countries increases by nearly 70 per cent between 2018 to 2050 against the consumption increase of 15 per cent in OECD countries.

The strong economic growth along with increased accessibility to marketed energy coupled with rapid population growth in the non-OECD is anticipated to lead the higher consumption.

In OECD countries, slower population and economic growth, improvements in energy efficiency, and less growth in energy-intensive industries is anticipated by the EIA to lead towards slower growth in energy consumption.

On the regional basis in non-OECD countries, Asia is anticipated to witness highest energy consumption, and in Asia, India and China are anticipated by the EIA to contribute substantially in the energy consumption.

EIA Reference case Sector Wise Energy Consumption Forecast

Among various sector taken into consideration by the EIA, the industrial sector is anticipated to dominate the energy consumption in both OECD and non-OECD. The industrial sector is anticipated to show over 50 per cent of end-use energy consumption during the period 2018 through 2050.

As per the EIA, the world industrial sector energy use would surge by over 30 per cent from 2018 to 2050 to stand at 315 quadrillion British thermal units by 2050.

The industrial sector energy consumption in non-OECD nations would grow by over 1.0 per cent per year under the Reference case against the growth of 0.5 per cent per year in the OECD countries.

End-use Consumption

The end-use fuels are those used in the industrial, transportation, and buildings sector and exclude fuels used for electric power generation.

The higher energy density and effective cost along with the chemical properties of liquid fuels would support the demand, and the liquid fuels would continue to dominate the industrial feedstock.

The electricity use in the residential and commercial building sector is anticipated by EIA to increase amid growing income and population.

Electricity Generation

The net electricity generation in both OECD and non-OECD nations are anticipated to witness an increase. The net electricity generation in non-OECD is estimated to increase on an average of 2.3 per cent a year from 2018 to 2050 against the 1 per cent increase in OECD countries.

The electricity consumption is estimated to mark a substantial increase in the industrial and residential sector. The electricity use in the building sector is expected to witness an increase amid a rise in personal income and the continuation of urban migration in non-OECD countries.

In the building sector, particularly the residential building electricity consumption is anticipated to increase by over 100 per cent from 2018 to 2050.

The electricity consumption of the transportation sector is anticipated by the EIA to increase threefold between 2018 to 2050 amid an estimated increase in plug-in or electric vehicle penetration into the global market.

However, transportation would still account for less than 6 per cent of total delivered electricity consumption in 2050.

Which Fuel would Witness a Demand Boom?

Fossil fuels contribute the most in the energy generation sector, and under the Reference case of EIA, natural gas and renewable energy sources would account for most of the growth in energy generation.

Also Read: Fossil Fuel Demand Turns All Eye’s On WHC, WPL, And WOR

Under the Reference case, the renewables (including hydropower) are the fastest-growing source of electricity generation during the forecasted period of 2018 to 2050, and EIA anticipates an average increase of 3.6 per cent for the renewable energy resources for energy generation.

By 2050, the United States, China, India and OECD Europe are anticipated to have around 75 per cent of the world’s renewables generation amid demand for alternative and new energy resources.

Also Read: ASX-Listed Alternative Energy Stocks Under Investors’ Lens as Oil Risk Surmounts

Natural gas generation is estimated to grow by an average of 1.5 per cent per year from 2018 to 2050, and nuclear energy generation is anticipated to increase by 1.0 per cent a year.

Also Read: Australia Set to Surpass Qatar Over LNG Exports; Domestic Natural Gas Conditions To Derail the Projections?

By 2025, the renewable energy sources are estimated by the EIA to replace coal as the primary source of electricity generation, and by 2050, the renewables would account for over 50 per cent of the total world electricity generation.

Also Read: How Would the Coal Demand Dilemma Shape the Australian Coal Industry Ahead?

To wrap up- the world energy consumption is anticipated to increase in both OECD and non-OECD nations; however, non-OECD countries are estimated to witness relatively higher consumption against OECD nations amid rapid economic growth, income and population.

The industrial sector is estimated to dominate the energy consumption demand amid improved economic figures and sales during the projection period of 2018 to 2015, and renewable energy generation sources and natural gas are expected to dominate the energy generation space to replace coal as the primary energy generation raw material.


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