Energy forecasts show stark alternatives: If it’s not biofuel, it’s going to be oil from tar sands

(from an article by Ayesha Rascoe, “World oil use seen up 27 percent by 2035”)

The U.S. government last week said global oil consumption is likely grow by more than a quarter over the next quarter century, though proposed rules requiring automakers to improve fuel efficiency in the United States were not factored into the forecast.

World oil demand is expected to climb to 112.2 million barrels per day in 2035, the U.S. Energy Information Administration said in its annual international energy outlook. That would be up 27 percent from 88.20 million bpd in 2011 and is an increase of 1.4 percent over last year’s EIA forecast.

“Most of the growth in liquids use is in the transportation sector, where, in the absence of significant technological advances, liquids continue to provide much of the energy consumed,” the EIA said.

The EIA’s projections were based on current government policies and do not include any proposed or potential regulations, including the recently announced U.S. fuel economy standards that would force automakers’ fleets to average 54.5 miles per gallon by 2025.

…Global petroleum consumption could rise 26.9 million barrels per day (bpd) between 2008, the baseline year for the EIA’s forecasts, and 2035. The increase in conventional oil production would meet less than half of this growth at 11.5 million bpd.

OPEC producers are expected to increase spare capacity to maintain their 40 percent share of the world’s liquid fuel production over the next 24 years.

…EIA forecasts production of unconventional sources of liquid fuels, such as biofuels and oil sands, to rise to 13.1 million bpd in 2035 from 3.9 million bpd in 2008.

World oil markets will likely be very tight in the coming decades as the world grapples with rising demand from developing nations, said Howard Gruenspecht, the EIA’s acting administrator.

“Very few producers have the incentive to intentionally build spare capacity, so we’re going to be operating in world where the type of spare capacity we had seen … we’re unlikely to see again,” Gruenspecht said at an event unveiling EIA’s forecast. “There will be a lot of volatility.”

…While fossil fuels will likely remain dominant, renewable energy is projected to be the fastest growing energy segment.

Growing at a pace of 2.8 percent a year, renewable energy could make up 15 percent of total energy use by 2035, up from 10 percent in 2008. (Reporting by Ayesha Rascoe; editing by Alden Bentley and Bob Burgdorfer)

Our Take:

The salient fact here is that, with OPEC countries expected to hold on to their 40 percent of the market, that will allow unconventional fuels space to grow by more than 9 million barrels per day.

It is up to us to decide how much of that will be renewable energy. EIA predicts 15 percent of the market will be renewable 25 years from now, but better energy policies could make that an even bigger number.

Building on the strong base of grain-derive biofuels, biomass-based fuels could win a lot of that market space, if they receive the kind of research and financial support needed.

The question is, do we want to put carbon-neutral, American-made biofuel into our vehicles, or pay the Canadians and Venezuelans to ravage the environment to extract the dirtiest, most carbon-intense form of petroleum?



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