Battle of energy soothsayers: what awaits the hydrocarbon market in the next quarter century

Experts from the Alliance of Oil Exporters predict a steady increase in demand and supply for hydrocarbons until 2045. Thus, demand for crude oil in 21 years should increase by more than 13% – to 110 million barrels per day. True, its share in the global energy balance will still decrease by almost 2 percentage points: from the current 30.8% to 29%. This will happen, first of all, due to the displacement of cars with internal combustion engines by electric vehicles.

It is worth noting here that even such a slight increase in oil consumption is possible only with an investment volume of at least $12.5 trillion, or $10 per new barrel. Meanwhile, as OPEC worries, investment in the industry continues to fall. What does the energy crisis promise?

But the situation with gas in OPEC is predicted with a greater degree of optimism. Demand for natural gas should grow by 28.5% to 5,290 billion cubic meters per year. Accordingly, the share in the energy balance will increase to 24.3%. That is, together oil and gas will continue to occupy leading positions in energy consumption in the world. By the way, Gazprom is confident that in 2049 the demand for gas will generally increase by 43%.

OPEC forecasters are aware that the alliance’s position is being invaded by competitors who are not members of it. By 2030, production in the United States could increase from today’s more than 13 million barrels per day to 16 million. An increase in oil production is also expected on the shelf of Guyana, as well as in Canada. Rapid growth in production was also noted in Brazil. But this country joined OPEC+ on January 1 of this year.

But the successes of non-OPEC+ members in 2030 will come to an end. As a result, in 2045 the leading position in the oil market will be taken by OPEC (39%). And OPEC+ is more than half.

We can only hope that OPEC does not collapse within the next 25 years. And then, at the end of last year, Angola, as you know, left the organization.

It’s more difficult with coal. Now this solid fossil fuel accounts for 26.1% of the global energy balance. Moreover, 80% of the above share is provided by four countries: India, China, Russia and the USA. In India, 72% of electricity is generated from coal-fired power plants, in China – 60%, in Russia – 22%. In the USA – 17%.

Nevertheless, OPEC forecasters foresee a reduction in global coal consumption of up to 16% in 2045.

In general, OPEC visionaries believe in a long life for fossil fuels, provided, of course, that this is ensured by sufficient investment. The same cannot be said about IEA specialists who protect the interests of energy-consuming countries, mostly deprived of hydrocarbons.

They place the peak in demand for fossil energy resources only in 2030. Afterwards, a decline in consumption should begin. First in OECD countries. And then, from 2040, in developing economies. The head of the IEA, Fatih Birol, never tires of repeating that sooner or later, we will have to abandon fossil energy sources as soon as possible, otherwise we will not be able to stop anthropogenic CO2 emissions, and therefore we will not be able to stop global warming.

Last year, the European Commission even adopted a specific plan for implementing this forecast. By 2030, with increasing annual rates, energy consumption in EU countries should fall by 11.7% to the 2022 level. Previously, it was based on 9%.

The debate between soothsayers, green advocates and defenders of traditional energy seems endless. Only real and irreversible warming on planet Earth can judge them.

But every two years they try to force seemingly irreconcilable energy prophets to come to an agreement at climate summits. In 2021, the 27th was held in Glasgow. The 28th Conference of the Parties to the UN Framework Convention on Climate Change (COP28) – from November 30 to December 12, 2023 in Dubai (UAE).

The city in a country that lives primarily on oil revenues was clearly not chosen by chance. Adherents of “green” energy apparently planned to win on the opponent’s field. Their ultimate goal was most succinctly expressed by UN Secretary-General Antonio Guterres, who warned oil exporters: “Whether you like it or not, the phase-out of fossil fuels is inevitable. Let’s hope it doesn’t happen too late.”

However, OPEC Secretary General Haitham Al-Ghais suggested not throwing out the baby (fossil fuel) with the bathwater (limiting temperature rise to 1.5°C). In his opinion, the world should focus on emissions, not fossil fuels themselves.

As expected, we did not reach a common denominator. The text of the agreement took a whole day longer to agree on. But they still called in the final document for a “move away” from the use of fossil fuels. The phrase “phasing out” hydrocarbons was not written down, but by 2050 the world should achieve zero greenhouse gas emissions through a complete transition to renewable energy sources.

Russian participant in COP28, presidential climate adviser Ruslan Edelgireev, repeated Vladimir Putin’s promise to achieve carbon neutrality in the country no later than 2060. That is ten years later than in the rest of the world.

So, it turns out that not in a long-term forecast, but in an official UN document, it is prescribed by 2050 to abandon the production and use of all hydrocarbons, and also, apparently, uranium, and transfer the energy sector exclusively to green rails.

Let’s figure out what exactly we are talking about.

In general about renewable energy sources (RES). In a number of European countries they already provide up to 50% of electricity production. However, now renewable energy sources are mainly wind and solar installations. Their main drawback is not only the instability of the sources – wind and sun do not always provide adequate power; the problem is also that sufficiently durable energy storage devices have not yet been designed. Meanwhile, hydrocarbons can be stored for years and even decades.

Therefore, it is no coincidence that consumers in a number of countries plan to supplement long-standing renewable energy sources with, for example, hydrogen energy. In principle, it is already in use. But in small volumes due to the high cost of production (1 kg of hydrogen produced from gas or oil costs at least 2 euros, and by electrolysis of water – 10 euros) and many technical problems. The fact is that hydrogen is explosive and in its pure form quickly corrodes steel pipes. Therefore, it must be stored either bound with other elements or in a liquefied state at minus 253 degrees Celsius. Which makes its use on site, as well as transportation, even more expensive. Although in Germany, for example, hydrogen in the gaseous state has been added to gas pipelines in small quantities for several years as an experiment.

Of course, all of the above problems can be largely solved by 2050. However, it is unlikely that there will be a solution to the main hydrogen problem. To completely eliminate fossil fuels, hydrogen must be generated not from coal, gas or oil, as is mostly done today, but through the electrolysis of distilled water. According to expert estimates, 10 liters of water are required to produce 1 kg of hydrogen. According to the International Renewable Energy Agency, running trucks and key industries on such hydrogen will require 25 billion cubic meters of fresh water per year, equivalent to the consumption of a country with a population of 62 million people. So the planet can quickly be deprived of all drinking water.

So hydrogen in the 21st century is not an alternative to, for example, natural gas. There is a lot of it in ready-made form in space. Therefore, in order to transition to a universal energy alternative, it will be necessary to build capture installations on the Moon and Mars. But so far Elon Musk has not formulated such a goal.