What Lies Ahead for Hydrocarbons in the Global Energy Mix?

Abstract

Special Section: The Value and Future of Petroleum Engineering Continual change is an indisputable feature of the oil and gas industry. The industry that exists today bears little resemblance to the one that existed 40 years ago. Forty years from now, energy demand, consumption habits, technologies to produce and deliver energy, and regulations will again have changed in ways known and unknown. One of the big drivers in the shift moving forward is climate change, and the downward pressure on carbon emissions needed to achieve goals outlined in the Paris Agreement, an intergovernmental climate deal aimed at taking steps to limit the increase in global warming. World energy demand will continue to rise, and fueling the world will require abundant resources from a variety of sources. The transition is already under way to diversify the fuel mix, and hydrocarbons remain in a position to meet the needs of a changing environment, whatever they may be. The New Energy Landscape In January, the US Energy Information Administration (EIA) released its 2019 Energy Outlook, a collection of modeled projections of what may happen in the energy sector given certain assumptions and methodologies. Its reference case projection is the agency’s best assessment of how US and world energy markets will operate through 2050, assuming improvement in known energy production, delivery, and consumption technology trends. The outlook focused on US oil and gas production in the near term, but it also discussed the changing mix in energy sources expected to materialize over the next couple of decades. Renewable energy will become a larger part of the mix. Driven by solar and wind, renewables today make up nearly 20% of electricity generation, a change that has resulted in the overall carbon dioxide intensity of the electric power sector declining by 25% from the mid-2000s to today. EIA projects this downward trend to continue through 2050. While increased renewable use has led to reduction in CO2 intensity in some areas, some are questioning whether that reduction is enough. During an EIA webcast panel discussing key findings from the outlook, moderator Jason Grumet, founder and president of the Bipartisan Policy Center, said that based on the scenarios outlined in the Paris Agreement and a report by the UN Intergovernmental Panel on Climate Change released last year, the energy industry will need to innovate to reduce emissions to levels needed to limit global warming.