BP Energy Outlook 2035

February 2015

bp.com/energyoutlook
#BPstats

BP p.l.c. 2015

Disclaimer

This presentation contains forward-looking statements, particularly those regarding global

economic growth, population growth, energy consumption, policy support for renewable
energies and sources of energy supply. Forward-looking statements involve risks and
uncertainties because they relate to events, and depend on circumstances, that will or may
occur in the future. Actual outcomes may differ depending on a variety of factors, including
product supply, demand and pricing; political stability; general economic conditions; legal and
regulatory developments; availability of new technologies; natural disasters and adverse
weather conditions; wars and acts of terrorism or sabotage; and other factors discussed
elsewhere in this presentation. BP disclaims any obligation to update this presentation. Neither
BP p.l.c. nor any of its subsidiaries accept liability for any inaccuracies or omissions or for any
direct, indirect, special, consequential or other losses or damages of whatsoever kind in
connection to this presentation or any information contained in it.
Energy Outlook 2035

BP p.l.c. 2015

Contents
Page

Introduction

Global energy trends

Liquid fuels

29

Natural gas

49

Coal and non-fossil fuels

63

Key uncertainties

77

Appendix

93

Energy Outlook 2035

BP p.l.c. 2015

Welcome to the 2015 edition of BPs Energy Outlook.

At a time when our industry is focused on the rapid response to a dramatic fall in oil
prices, it is instructive to look at events from a longer term perspective.
Todays turbulence is a return to business-as-usual. Continuous change is the norm in our
industry. The energy mix changes. The balance of demand shifts. New sources of energy
emerge, such as shale gas, tight oil, ultra-deepwater oil or renewables. Economies
expand and contract. Energy production and consumption are affected by disruptions,
from wars to extreme weather. New policies are created to address climate change or
bolster energy security.
Energy companies need to adapt as BP is doing as I write; and to build strategically for
the longer term we not only need to control capital and costs, but to set a clear direction.
This Outlook is therefore valuable in giving us an insight into the most likely shape of the
future energy landscape and some of the most important changes expected over the next
20 years. Three key features are particularly worth noting.
First, trade patterns are shifting. The strong growth of US tight oil in recent years has had
a dramatic impact, with oil increasingly flowing from West to East rather than East to
West. This is likely to continue, with strong growth in China and India driving energy
demand. We also expect to see the market in gas become more global as liquefied
natural gas (LNG) integrates regional markets and leads to greater congruence in global
price movements.
Energy Outlook 2035

BP p.l.c. 2015

Second, the energy mix continues to shift. Fossil fuels are projected to provide the
majority of the worlds energy needs, meeting two-thirds of the increase in energy
demand out to 2035. However, the mix will shift. Renewables and unconventional fossil
fuels will take a larger share, along with gas, which is set to be the fastest growing fossil
fuel, as well as the cleanest, meeting as much of the increase in demand as coal and oil
combined. Meanwhile, coal is now expected to be the slowest growing fuel, as
industrialization in emerging Asian economies slows and environmental policies around
the globe tighten.
That brings us to the environmental challenge. The most likely path for carbon emissions,
despite current government policies and intentions, does not appear sustainable. The
projections highlight the scale of the challenge facing policy makers at this years UN-led
discussions in Paris. No single change or policy is likely to be sufficient on its own. And
identifying in advance which changes are likely to be most effective is fraught with
difficulty. This underpins the importance of policy-makers taking steps that lead to a
global price for carbon, which provides the right incentives for everyone to play their
part.
It will be a year of debate, not only on the environment, but the economy and energy in
general. We hope that this years BP Energy Outlook 2035 can make a useful contribution
to informing the discussion and shaping a future where energy is sustainable, secure and
affordable.
Bob Dudley
Group chief executive
Energy Outlook 2035

BP p.l.c. 2015

Notes on method and assumptions

This edition updates our view of the likely path of global energy markets
to 2035. The underlying methodology remains unchanged we build a
single most likely view based on assumptions about changes in policy,
technology and the economy.
We focus on the most likely base case as a basis for discussion. But
there are many uncertainties surrounding the base case and in the
process of building the Outlook we explore the impact of alternative
assumptions. Some of those uncertainties are considered in the Key
uncertainties section, although this discussion is by no means
exhaustive.
Unless noted otherwise, data definitions are based on the BP Statistical
Review of World Energy, and historical energy data up to 2013 are
consistent with the 2014 edition of the Review. Gross Domestic Product
(GDP) is expressed in terms of real Purchasing Power Parity (PPP) at 2011
prices. All data sources are listed on page 98.

Energy Outlook 2035

BP p.l.c. 2015

Page

Introduction

Global energy trends

Liquid fuels

29

Natural gas

49

Coal and non-fossil fuels

63

Key uncertainties

77

Appendix

93

Energy Outlook 2035

BP p.l.c. 2015

Global population and increases in income per person

Population

GDP

Billion

Trillion, $2011 PPP

240

Contribution to GDP
growth 2013-35
Trillion, $2011 PPP
90

Income growth
per person

180
60

6
Other

120

4
3

Population growth

30

Non-OECD
Asia

1
0
1975

60

OECD
1995

2015

Energy Outlook 2035

2035

0
1975 1995 2015 2035
8

0
OECD Non-OECD Other
Asia
BP p.l.c. 2015

 underpin growing energy demand

Population growth and increases in income per person are the key
drivers behind growing demand for energy. By 2035, the worlds
population is projected to reach 8.7 billion, which means an additional 1.6
billion people will need energy.
Over the same period, GDP is expected to more than double, with nonOECD Asia contributing nearly 60% of that growth. Globally, GDP per
person in 2035 is expected to be 75% higher than today, an increase in
productivity which accounts for three-quarters of global GDP growth.
China and India are key drivers of non-OECD growth and are projected to
grow by 5.5% per annum (p.a.) between 2013 and 2035. By 2035, they
will be the worlds largest and 3rd largest economies respectively, jointly
accounting for about one-third of global population and GDP.
As Chinas level of productivity catches up with the OECD, its rate of
growth is expected to slow from 7% p.a. in this decade to 4% p.a. in the
decade to 2035. Indias growth moderation is more gradual: slowing
from 6% p.a. in this decade to 5% p.a. in the final decade.
Energy Outlook 2035

BP p.l.c. 2015

Primary energy consumption growth slows...

Non-OECD Asia energy growth

Consumption by region

Thousands

Billion toe

% per annum
8%

18
15

Other

Slower
GDP
growth

6%

12
9

4%

Non-OECD
Asia

Faster
decline in
energy
intensity

2%

0
1965
Energy Outlook 2035

OECD

2000

0%

2035
10

2000-13

2013-35
BP p.l.c. 2015

as the impact of non-OECD industrialization weakens

Primary energy consumption increases by 37% between 2013 and 2035,
with growth averaging 1.4% p.a.. Virtually all (96%) of the projected
growth is in the non-OECD, with energy consumption growing at 2.2%
p.a.. OECD energy consumption, by contrast, grows at just 0.1% p.a. over
the whole period and is actually falling from 2030.
The projected growth rate of global energy consumption is significantly
slower than the recent trend (2.4% p.a. for 2000-13). This slowdown is
most marked in non-OECD Asia, where growth has averaged 7% p.a.
since 2000 and is projected to slow to 2.5% p.a. between 2013 and 2035.
This reflects the end of the phase of rapid growth in energy demand in
developing Asia, centred on China, driven by industrialization and
electrification. Slower economic growth and an accelerated reduction in
energy intensity* (as economic growth becomes less dependent on
heavy industry) play roughly equal parts in explaining the slowing of
energy growth.
* The

amount of energy used per unit of GDP

Energy Outlook 2035

11

BP p.l.c. 2015

The slowdown in demand growth from industry...

Consumption by final sector1

Consumption by fuel
Billion toe

18
15
Other

12

Thousands

Billion toe

18
15
12

3
0
1965
1Primary

Industry

Gas

Oil

3
Coal

Transport

2000

Renew.2
Hydro
Nuclear

0
1965

2035

2000

fuels in power allocated according to final sector electricity consumption

Energy Outlook 2035

12

2035
2Includes

biofuels

BP p.l.c. 2015

is reflected in the slower growth of coal

The fading impact of industrialization is apparent in the split of primary
energy consumption by sector. Industry has been the fastest growing
sector since 2000, averaging 2.7% p.a., but projected growth slows to
1.4% p.a. The other sector (residential, services and agriculture) becomes
the fastest growing sector, averaging 1.6% p.a. 2013-35.
Transport continues to play a relatively small role in primary energy
growth, growing steadily (1.2% p.a.) but accounting for just 15% of total
growth during 2013-35.
Coal suffers a sharp change in fortunes, from being the fastest growing
fossil fuel since 2000 (3.8% p.a.), to the slowest growing fuel from 2013 to
2035 (0.8% p.a.). This reflects the slowing of coal-based industrialization in
Asia, compounded by the effects of environmental regulations and low
gas prices in key markets. Natural gas is the fastest growing fossil fuel
(1.9% p.a.), with oil (0.8% p.a.) marginally ahead of coal.
The fastest fuel growth is seen in renewables (6.3% p.a.). Nuclear (1.8%
p.a.) and hydro-electric power (1.7% p.a.) grow faster than total energy.
Energy Outlook 2035

13

BP p.l.c. 2015

Fossil fuels continue to provide most of the worlds energy...

2013-35 increments by fuel

Shares of primary energy

Billion toe
5

50%

Renew.*

Oil

40%

20%

10%

Coal

30%

Hydro
Nuclear

Gas

Oil

Coal

Gas

Hydro

0%
1965

Nuclear

*Includes biofuels

Energy Outlook 2035

2000

Renewables*

-1
World

2035
14

OECD Non-OECD
BP p.l.c. 2015

even as the mix shifts towards lower carbon fuels

Gas gains share steadily, while the shares of both oil and coal fall.
By 2035 all the fossil fuel shares are clustered around 26-28% with no
single dominant fuel a first since the Industrial Revolution. Fossil fuels
in aggregate lose share but remain the dominant form of energy in 2035
with a share of 81%, down from 86% in 2013.
Among non-fossil fuels, renewables (including biofuels) gain share
rapidly, from around 3% today to 8% by 2035, overtaking nuclear in the
early 2020s and hydro in the early 2030s.
Roughly one-third of the increase in energy demand is provided by gas,
another third by oil and coal together, and the final third by non-fossil
fuels.
In the OECD, declines in oil and coal are offset by increases in gas and
renewables, in roughly equal parts. Growth in non-OECD energy is
evenly spread, with roughly a quarter each for oil, gas, coal and nonfossil fuels.
Energy Outlook 2035

15

BP p.l.c. 2015

The power sector takes an increasing share of energy

Primary inputs to power

Inputs to power as a share of

total primary energy
100%

50%

Oil

75%
40%

Coal
50%
Gas

30%

Renew.

25%

Nuclear
Hydro

20%
1965
Energy Outlook 2035

2000

2035
16

0%
1965

2000

2035
BP p.l.c. 2015

and plays a key role in changing the energy mix

Power generation is expected to account for an ever-increasing share of
primary energy consumption as the world continues on a long-term
trend of electrification: the share rises from 42% today to 47% by 2035.
Power generation is the one sector where all fuels compete and so will
play a major role in how the global fuel mix evolves.

There have been some rapid shifts in fuel shares in power generation in
the past: oil gaining in the 1960s and losing in the 1970s; nuclear picking
up in the 1970s/80s and falling in the 2000s; gas rising through the 1990s
and 2000s. In the Outlook, the largest shifts are the increase in the
renewables share and the decline in the coal share.
The outcome by 2035 is a more balanced and diversified portfolio of
fuels for power generation. Coal remains the dominant fuel, accounting
for more than a third of the inputs to power generation, but that share is
down from 44% today and the gap between the shares of coal and of
other fuels narrows significantly.

Energy Outlook 2035

17

BP p.l.c. 2015

Energy efficiency restrains the growth of emissions

GDP, energy and emissions

Emissions growth 2013 to 2035

Index: 1990 = 100

Billion tonnes CO2

500

35
30
GDP

400

25

Energy
intensity

20
300

15

Energy

10

CO2

200

100
1990

0
2005

Energy Outlook 2035

2020

2035
18

Fuel mix

GDP growth
effect

Projected
growth
BP p.l.c. 2015

 but the changing fuel mix has only a modest impact

Total carbon emissions from energy consumption increase by 25%
between 2013 and 2035 (1% p.a.), with the rate of growth declining from
2.5% over the past decade to 0.7% in the final decade of the Outlook.
Even so, the profile for emissions is well above that recommended by
the scientific community (see pages 84-85).
Continuing declines in energy intensity the broadest indicator of
improving energy efficiency across the economy lead to a marked
widening in the gap between GDP and energy consumption.
Changes in the fuel mix with the shares of gas and renewables
increasing also lead to a divergence between energy consumption and
emissions, but this gap increases only gradually.
Put differently, relative to a no change case: gains in energy efficiency
lead to a far greater reduction in projected emissions than improvements
in the fuel mix.

Energy Outlook 2035

19

BP p.l.c. 2015

Energy supply is boosted by unconventional oil and gas ...

Primary energy production

New energy forms

Billion toe

Billion toe

18

Renewables
in power

Europe

FSU
12

N America

Shale gas

Africa

S & C America
0
1990

Asia Pacific

2005

Energy Outlook 2035

2020

2035
20

12%

Tight oil,
oil sands,
biofuels

Middle East
6

18%

6%

% of total
(RHS)

0
1990

2005

2020

0%
2035
BP p.l.c. 2015

and renewable power, all enabled by technology

World primary energy production grows at 1.4% p.a. from 2013 to 2035,
matching the growth of consumption.
Growth is spread across all regions with the exception of Europe. South
and Central America shows the fastest rate of growth (2.1% p.a.), while
the largest increment comes from Asia Pacific, providing 45% of the
increase in global energy production. North America is the second
largest source of growth, and remains the second largest regional
energy producer.
New sources of energy, aided by improved technology and productivity,
make a significant contribution to supply growth. Renewables, shale gas,
tight oil and other new fuel sources in aggregate grow at 6% p.a. and
contribute 45% of the increment in energy production to 2035.
The growth of new energy forms has been enabled by the development
of technology and underpinned by large-scale investments, and these
conditions are assumed to continue over the Outlook.

Energy Outlook 2035

21

BP p.l.c. 2015

Shale gas and tight oil resources are thought to be abundant

Remaining technically recoverable resources

Billion toe

Billion toe
0

20

Cumulative production 2013-35

40

60

20

40

60

Asia Pacific
North America
S & C America
Africa
Tight oil
Europe & Eurasia

Shale gas

Middle East
Source: Resources data OECD/IEA 2014

Energy Outlook 2035

22

BP p.l.c. 2015

but production remains concentrated in North America

Technological innovation and high oil prices have unlocked vast
unconventional resources in North America, significantly increasing US
oil and gas production and altering global energy balances.
Technically recoverable resources are estimated to be around 340 billion
barrels for tight oil and 7500 trillion cubic feet for shale gas globally. Asia
has the largest resources, followed by North America.

Although unconventional resources are spread across the globe,

production is likely to remain concentrated in North America. Cumulative
North American production of tight oil and shale gas between 2013-35 is
roughly equivalent to 50% of tight oil and 30% of shale gas technically
recoverable resources. The comparable numbers for the rest of the world
are expected to be just 3% and 1% respectively.
While production increases outside North America, the factors that have
enabled the dramatic growth of North American production are unlikely
to be quickly replicated elsewhere.

Energy Outlook 2035

23

BP p.l.c. 2015

Drivers of tight oil and shale gas supply in the US

Largest oil production increases

US new-well production per rig

Boe/d per rig

Mb/d
0.0

0.5

1.0

1.5

2.0

350

Saudi 1991

250

Saudi 1986
US 2014

200

Saudi 1976

150

Saudi 1990

Saudi 1972
Saudi 2003

100
Tight oil

50

NGLs
Other

0
2007

US 2013
Energy Outlook 2035

Oil

300

Saudi 1973

Saudi 1979

Gas

24

2009

2011

2013

2015

BP p.l.c. 2015

include rapid growth of investment and significant innovation

US oil production growth in 2014 (roughly 1.5 Mb/d) was the largest in
US history, driven by tight oil and NGLs (natural gas liquids). The
increases in US production in recent years have been among the largest
ever seen, with only Saudi Arabia recording larger annual production
growth.
Growth of US tight oil and shale gas has been supported by increasing
investment and rapid technological innovation. Productivity, as measured
by new-well production per rig, increased by 34% p.a. for oil and 10% p.a.
for gas between 2007 and 2014.
Growth in US tight oil is expected to flatten out in coming years,
reflecting high well decline rates and less extensive resources than gas.
In contrast, US shale gas production is expected to grow rapidly over the
Outlook (4.5% p.a.), although growth rates moderate gradually.

Energy Outlook 2035

25

BP p.l.c. 2015

The shifting geography of supply and demand

Primary energy net balances

Asias net imports of energy

Billion toe

Billion toe

2.0
FSU
Africa

S&C America
0

Middle East
N America

-2

-4
1990

Asia

2005

Energy Outlook 2035

2020

1.6

24%

1.2

20%
Oil

0.8

Coal

0.4

-0.4
1990

2035
26

16%

Gas

0.0

Europe

28%

Total as % of primary
energy (right axis)

12%
8%

2005

2020

4%
2035
BP p.l.c. 2015

has big implications for energy trade

Regional energy imbalances production minus consumption for each
region are set to increase markedly over the next 20 years, with
consequent implications for energy trade.
North America switches from being a net importer of energy to a net
exporter this year (2015). Asias imports of energy continue to expand,
accounting for around 70% of inter-regional net imports by 2035.
Among exporting regions, the Middle East remains the largest net
energy exporter, but its share falls from 46% in 2013 to 36% in 2035.
Russia remains the worlds largest energy exporting country.
Asias import dependency rises from 23% in 2013 to 27% by 2035. Oil
accounts for 60% of that rise, with imports accounting for over 80% of
Asian oil consumption by 2035. Asias oil imports in 2035 are almost as
large as OPECs current entire oil production.

Energy Outlook 2035

27

BP p.l.c. 2015

Energy Outlook 2035

28

BP p.l.c. 2015

Page

Introduction

Global energy trends

Liquid fuels

29

Natural gas

49

Coal and non-fossil fuels

63

Key uncertainties

77

Appendix

93

Energy Outlook 2035

29

BP p.l.c. 2015

The global liquids balance reflects shifts

Supply

Demand
Mb/d
115
2035 level

110

Crude

Other

105

NGLs*

Mid East

100
95
90

Other Asia

North
America

India

Other

China

85
80
2013

OECD Non-OECD
decline
growth

2013

Non-OPEC
growth

OPEC
growth

*Natural gas liquids including condensate

Energy Outlook 2035

30

BP p.l.c. 2015

in non-OECD demand and non-OPEC supply growth

Global liquids demand (oil, biofuels, and other liquids) is projected to
rise by around 19 Mb/d, to reach 111 Mb/d by 2035. Growth slows over
the period: from 1.2% p.a. in 2013-20 to 0.7% p.a. for 2020-35.
Demand growth comes exclusively from rapidly growing non-OECD
economies. Non-OECD consumption reaches around 70 Mb/d by 2035
56% higher than in 2013. OECD demand peaked in 2005 and is expected
to fall further (-6 Mb/d) to around 40 Mb/d in 2035, the lowest since 1986.
The increased demand is met initially by supply from non-OPEC
unconventional sources and, later in the Outlook, from OPEC. By 2035,
non-OPEC supply is expected to have increased by 13 Mb/d, while OPEC
production expands by 7 Mb/d.

The largest increments of non-OPEC supply come from the US (6 Mb/d),

Brazil (3 Mb/d), and Canada (3 Mb/d), which offset declines in mature
provinces such as the North Sea. OPEC supply growth comes primarily
from NGLs (3 Mb/d) and crude oil in Iraq (2 Mb/d).

Energy Outlook 2035

31

BP p.l.c. 2015

Asia and the Middle East drive liquids demand growth

Demand by region

Demand by sector

Mb/d

Mb/d
120

120
Other

100

Middle East

80

Non-OECD
transport

100
80

OECD
transport

60

Non-OECD
ind. & other
OECD
ind. & other

India

60

China

40

US

40

20

Other OECD

20

0
1965

2000

Energy Outlook 2035

0
1965

2035
32

Power
2000

2035
BP p.l.c. 2015

with largest growth in transport followed by industry

China is the largest contributor to world demand growth: growing by 7
Mb/d to 18 Mb/d in 2035, surpassing US demand (which falls by 2 Mb/d
to 17 Mb/d). Even so, US consumption per capita is about 3.5 times
greater than China in 2035.
India is the second largest contributor, growing by more than 4 Mb/d,
followed by the Middle East with 4 Mb/d. India overtakes China as the
largest source of demand growth towards the end of the Outlook.
Non-OECD demand growth stems primarily from transport (16 Mb/d)
reflecting a rapid increase in vehicle ownership and industry (8 Mb/d)
largely for petrochemicals. OECD consumption in both sectors declines.
By sector, transport accounts for about 55% of total liquids demand. It
contributes 64% of the total demand increment to 2035, but growth
slows post 2020, due to efficiency improvements and a modest
displacement by natural gas and electricity. Industry has the fastest
growth rate (1.2% p.a.) driven by petrochemicals.

Energy Outlook 2035

33

BP p.l.c. 2015

Vehicle numbers are likely to grow rapidly

Fuel economy of new cars

Vehicle fleet

Transport demand

Billions of vehicles

Litres per 100 km*

Billion toe

20

Non-OECD
OECD

US light vehicles
EU
China

15

10

0
1975

0
1975

Electricity
Coal
Gas
Biofuels
Oil non-OECD
Oil OECD

0
1975

1995

2015

2035

1995

2015

2035

1995

2015

2035

*New European Driving Cycle

Energy Outlook 2035

34

BP p.l.c. 2015

but efficiency improvements limit growth in fuel demand

The global vehicle fleet (commercial vehicles and passenger cars) more
than doubles from around 1.2 billion today to 2.4 billion by 2035. Most of
that growth is in the developing world (88%), while some OECD markets
are already at saturation levels.
Fuel economy has improved in recent years, driven by consumer choice,
tightening policy (e.g. CO2 emissions limits in Europe and CAFE
standards in the US), and improved technology. Efficiency gains are likely
to accelerate over the Outlook, with vehicle fleet fuel economy forecast to
improve by 2.1% p.a. between 2013 and 2035, having improved by about
1.5% p.a. over the past decade.
Efficiency gains limit growth in transport fuel demand. Transport demand
rises by only around 30%, despite a more than doubling of the vehicle
fleet.
Transport fuel demand continues to be dominated by oil (89% in 2035),
but the share of non-oil alternatives increases from 5% in 2013 to 11% in
2035, with natural gas the fastest growing transport fuel (6.3% p.a.).
Energy Outlook 2035

35

BP p.l.c. 2015

Petrochemicals are the other key driver of oil demand

Oil demand outside of transport

NGLs production by region

Mb/d

24
20

Mb/d
16

Other

Power

Petrochemicals

Other industry

Other
Middle East

12

US

16

12

8
4

4
0
1965
Energy Outlook 2035

2000

0
1990

2035
36

2005

2020

2035
BP p.l.c. 2015

... aided by strong growth in NGLs supplies

Since the oil price shocks of the 1970s, the use of oil outside of transport
has been concentrating in petrochemicals, where there is limited scope
for substitution by cheaper fuels.
Oil demand in petrochemicals increases by 2.5% p.a. (7 Mb/d) between
2013 and 2035. This continued strong growth reflects the use of oil as a
feedstock, for which there are limited alternatives and little scope for
efficiency gains. This is reinforced by strong growth in supplies of NGLs
which are particularly well suited as a feedstock. By 2035, petrochemicals
account for more than half of industrial oil demand.
Growth in the supply of NGLs stems primarily from the US (3 Mb/d) and
the Middle East (2 Mb/d). This growth is strongest in the next decade,
prompting a surge in petrochemicals demand in the US as well as
continued growth in the Middle East and non-OECD Asia.
Outside of petrochemicals and transport, oil demand is expected to be
broadly stagnant, as the effects of GDP growth are offset by efficiency
gains and displacement by relatively cheaper gas and coal.
Energy Outlook 2035

37

BP p.l.c. 2015

North American supply drives growth initially

Liquids supply by region

Liquids supply by type

Mb/d

Mb/d

120

120

Europe
100

Asia Pacific

80

100

Africa

60

40

S&C America

40

20

Middle East

20

N America
2005

Energy Outlook 2035

2020

Biofuels
Condensate

80

FSU

60

0
1990

Other

0
1990

2035
38

Oil sands
Tight oil
NGLs
Conventional

2005

2020

2035
BP p.l.c. 2015

before Middle East supply growth increases

Liquids supply expands by almost 20 Mb/d by 2035, led by growth in
North America during the early part of the Outlook, before the Middle
East gains ground during the latter part.
North American production expands by 9 Mb/d by 2035, with growth
concentrated in the first half of the Outlook. North American growth
comes from tight oil, NGLs, and oil sands. Outside of North America,
South and Central American production expands by 4 Mb/d by 2035,
largely due to Brazil.
Middle East production expands after 2020, as North American growth
slows. Middle East output increases by a little over 5 Mb/d by 2035.
Conventional crude production is broadly flat and nearly all of the
growth comes from other sources (tight oil, NGLs, biofuels and oil
sands). By 2035, NGLs and tight oil provide 13% and 7% of global supply,
respectively.

Energy Outlook 2035

39

BP p.l.c. 2015

Significant supply disruptions

Projected disruptions

Recent supply disruptions

Mb/d

Mb/d

5
Iran

Libya

2015 Energy Outlook

2014 Energy Outlook

Other
4

3
2

2
1

Historical
average

1
0
1965

0
1Q11

1Q12

Energy Outlook 2035

1Q13

1Q14
40

2000

2035
BP p.l.c. 2015

 are likely to be a durable factor

Since the advent of the Arab Spring in 2011, supply disruptions have
once again become a key feature in oil markets, reaching 3 Mb/d in 2014.
Libyan production fluctuated throughout the year, civil war limited
output from Syria, unrest continued in Nigeria, the Sudans and Yemen,
and international sanctions on Iran limited output.
Total supply disruptions in 2014 were well above the historical average of
roughly 400 Kb/d. The historical high for supply disruptions of a little
over 4 Mb/d was reached in 1991, as a result of the Iraq-Kuwait war and
the collapse of the Soviet Union.
Heightened levels of geopolitical risk and uncertainty suggest that supply
disruptions may well remain elevated through the medium-term.
Accordingly, we have increased the size and duration of our provision for
supply disruptions compared with our previous Outlook (see also the
discussion of geopolitical risks on pages 88-89).

Energy Outlook 2035

41

BP p.l.c. 2015

Tight oil remains a disruptive force in the near term

Tight oil supply growth

Share of global liquids growth

Mb/d

120%

6
5

Other

100%

S&C America

Other

China

80%

NGLs

Canada & Mexico

60%

Tight oil

US

Russia

40%

US

OPEC
crude

20%

0%

-20%
2005-20

Energy Outlook 2035

2020-35

2005-20
42

2020-35
BP p.l.c. 2015

but the market rebalances in later years

Tight oil supply, notably in the US, continues to grow in the first part of
the Outlook. US tight oil output grows by about 3 Mb/d between 2013-35
and accounts for around two-thirds of global tight oil production in 2035.
The strength of tight oil and the relative weakness of demand have
reduced the market requirement for OPEC crude in recent years. This
pressure on OPEC is likely to persist in the early years of the Outlook and
the response of OPEC to this reduction is a key uncertainty.
Further out, as tight oil supply growth slows and demand strengthens,
the call on OPEC crude begins to increase, exceeding the historical high
(32 Mb/d in 2007) by 2030.
OPECs market share by the end of the Outlook is around 40%, similar to
its average of the past 20 years.

Energy Outlook 2035

43

BP p.l.c. 2015

Oil trade patterns change

Regional net imbalances

Net exports

Mb/d
75
50

Mb/d
Middle East
Europe
Africa
N America

FSU
Asia Pacific
S&C America

China

US

India

0
-2
-4

25

-6
0

-8
-10

-25

-12
-14
1985 1995 2005 2015 2025 2035

-50
1985 1995 2005 2015 2025 2035
Energy Outlook 2035

44

BP p.l.c. 2015

 as Asias imports grow and the US becomes self-sufficient

Regional trade imbalances increase and become more concentrated. In
particular, Asias imports account for nearly 80% of inter-regional net
imports of oil by 2035, up from around 60% today. The Middle Easts
share of inter-regional net exports falls from 55% in 2013 to a touch
below 50% by 2035. North America becomes a net oil exporter over the
next few years.
In the US, the increase in tight oil production coupled with declining
demand transform its reliance on oil imports. Having imported well over
12 Mb/d 60% of its total demand in 2005, US is set to become selfsufficient by the 2030s.
Chinas import requirement more than doubles to around 13 Mb/d,
accounting for around three-quarters of its total oil consumption. China
surpasses the US as the largest consumer of liquid fuels by the end of
the Outlook.
Indias import requirements also grow rapidly, with imports accounting
for almost 90% of its total oil demand by 2035.
Energy Outlook 2035

45

BP p.l.c. 2015

Refiners are challenged by alternative supplies

Global liquids supply growth

Growth in refining spare capacity

Mb/d, cumulative from 2013

Mb/d, cumulative from 2005

20

Other
NGLs

15

Biofuels
Crude oil

10

0
2015

2020

Energy Outlook 2035

2025

2030

2006

2035
46

2008

2010

2012

2014

BP p.l.c. 2015

... and already ample spare capacity

Of the 20 Mb/d increase in the supply of liquids to 2035, about 8 Mb/d
comes from NGLs, biofuels and other liquids that do not require
refining.
Chinas demand for liquids grows by 7 Mb/d to 2035. If they follow the
pattern of the past two decades, Chinese crude runs will grow by a
similar amount, leaving crude run growth outside China of only 4 Mb/d
over more than 20 years.
Global spare refining capacity is already 7 Mb/d above its recent low
(2005) and, in recent years, a net 1 Mb/d additional capacity has been
added each year.
This Outlook therefore suggests a long period of volatile margins, with
large capacity reductions required in disadvantaged refining centres.

Energy Outlook 2035

47

BP p.l.c. 2015

Energy Outlook 2035

48

BP p.l.c. 2015

Page

Introduction

Global energy trends

Liquid fuels

29

Natural gas

49

Coal and non-fossil fuels

63

Key uncertainties

77

Appendix

93

Energy Outlook 2035

49

BP p.l.c. 2015

Non-OECD leads the growth in natural gas demand

Demand by region

Demand by sector

Bcf/d

500
400

Bcf/d
500

Other non-OECD
China

400

Middle East

300

300

OECD

200

200

100

100

0
1965
Energy Outlook 2035

2000

0
1965

2035
50

Transport
Other
Power
Industry
Power

2000

2035
BP p.l.c. 2015

with increasing usage in power and industrial sectors

Global natural gas demand is expected to grow by 1.9% p.a. over the
Outlook, reaching around 490 Bcf/d by 2035.
Growth is driven by non-OECD demand, which grows 2.5% p.a., adding
123 Bcf/d. OECD grows more modestly (1.1% p.a.), adding 42 Bcf/d.
Increased usage by the power and industrial sectors account for over
80% of total demand growth, with power showing the largest gain of 75
Bcf/d (2.3% p.a.), followed by industry (61 Bcf/d, 1.8% p.a.).
In the non-OECD, power and industry add almost 50 Bcf/d each to
demand. In the OECD, growth in power sector demand (25 Bcf/d) is more
than twice that of industry (12 Bcf/d).
Transport is the fastest growing sector, albeit from a very small base,
with its share of total natural gas consumption rising to 3% by 2035.

Energy Outlook 2035

51

BP p.l.c. 2015

Non-OECD also provides the largest supply increment

Gas production by type and region

Shale gas production

Bcf/d

500
400

Bcf/d
120

Non-OECD other
Non-OECD shale
OECD shale
OECD other

80

300

200

40

100
0
1990

Rest of world
China
Europe & Eurasia
Canada & Mexico
US

2005

Energy Outlook 2035

2020

% of total gas
production
(right axis)

0
1990

2035
52

2005

24%

16%

8%

2020

0%
2035
BP p.l.c. 2015

while OECD shale gas has the fastest growth

Around half of the increase in global gas supply comes from non-OECD
conventional gas (82 Bcf/d or 1.5% p.a.), driven in particular by the
Middle East and Russia. Almost 80% of non-OECD growth is from nonshale sources.

OECD shale gas grows much faster at 5% p.a., adding 52 Bcf/d and
accounting for around a third of the increase in global gas supply to
2035.
Shale gas production is dominated by North America, which currently
accounts for nearly all of shale gas supply and continues to account for
around three-quarters in 2035.
However, growth in shale gas outside North America accelerates and by
the 2030s overtakes North American growth (in volume terms). China is
the most promising country outside North America, accounting for 13%
of the increase in global shale gas. By the end of the Outlook, China and
North America account for around 85% of global shale gas production.

Energy Outlook 2035

53

BP p.l.c. 2015

Regional imbalances increase significantly

Regional net imbalances

Production and trade growth

Bcf/d

Bcf/d
120

80
40

FSU
Middle East
N America
Asia Pacific

500

Africa
S & C America
Europe

450

400

LNG

Pipeline

-40

350
-80
-120
1975

300
1990

Energy Outlook 2035

2005

2020

2013
Consumed Exported
2035
production locally
production

2035
54

BP p.l.c. 2015

with Asia overtaking Europe as the key importing region

Net inter-regional imbalances more than double by 2035. Growth in gas
traded across regions accounts for around a third of the increase in total
gas consumption.
The expansion of trade is driven by Asia Pacific, where net imports
nearly triple and account for almost 50% of global gas net imports by
2035. Asia Pacific overtakes Europe as the largest net importing region in
early 2020s. The growth of shale gas means North America will switch
from being a net importer to a net exporter in the next few years.
A vast majority (87%) of the increase in gas traded across regions
reflects increased supplies of LNG (liquefied natural gas). Pipeline
supplies grow much more slowly with new pipelines being
commissioned from Russia and Central Asia.

Energy Outlook 2035

55

BP p.l.c. 2015

LNG supply is poised for a growth spurt

Global LNG supply

Global LNG demand

Bcf/d

Bcf/d
80

80

Other

Other

Africa
60

Australia

60

US

Europe

Russia
40

40

Qatar

20

0
1990

S & C America
Asia Pacific

20

2005

Energy Outlook 2035

2020

0
1990

2035
56

2005

2020

2035
BP p.l.c. 2015

supporting the expansion of Asian imports

The LNG market is poised for a growth spurt with a slew of new projects
adding 22 Bcf/d by 2020. LNG supply grows 7.8% p.a. between 2013-20.
Overall, LNG supply grows by 48 Bcf/d by 2035, with Australia (16 Bcf/d)
and the US (14 Bcf/d) each contributing around a third of that increase.
African LNG supply, led by East Africa, increases by 12 Bcf/d. As a result,
Qatar, which has the largest market share today, is overtaken by Australia
(24% share of the market by 2035), Africa (21%), and the US (18%).
Asia is the largest destination for LNG, with its share in global LNG
demand remaining above 70%. By 2035, China becomes the second
largest LNG importer (12 Bcf/d), just behind Japan (13 Bcf/d).
Europes share of global LNG imports rises from 16% to 19% between
2013 and 2035, with an additional 10 Bcf/d of LNG demand.

Energy Outlook 2035

57

BP p.l.c. 2015

LNG becomes the dominant form of traded gas

Asian LNG imports and
price differential

Shares of global gas consumption

$/mmBtu

40%
Total trade

30%
Pipeline

20%

10%

0%
1990

LNG

2005

Energy Outlook 2035

2020

2035
58

80%

Asia Pacific as % of
total LNG imports

75%

Asia-Europe price
spread (right axis)

70%

65%

60%

55%

-2
2004

2007

2010

2013
BP p.l.c. 2015

with supplies pivoting towards large Asian markets

Global trade grows by 2% p.a. over the Outlook, causing the share of gas
consumption supplied via traded gas to increase marginally.
Traded gas supplied via pipelines declines as a share of consumption,
reflecting the pivoting of import demand away from the US and Europe
and towards Asia.
In contrast, gas supplied via LNG grows by 4.3% p.a., more than twice as
fast as total trade. As a result, LNG becomes the dominant form of traded
gas by the end of the Outlook.

The greater ability of LNG supplies to respond to varying movements in

demand and supply across the world means that gas deficit regions such
as Asia Pacific are able to attract larger LNG supplies by paying a
premium over other markets.
In the long run, increased LNG supplies lead to more integrated markets,
with gas prices moving in greater unison across regions.

Energy Outlook 2035

59

BP p.l.c. 2015

Growth in LNG leads to more diversified gas supplies

Sources of gas supply
Europe

Bcf/d

China

Bcf/d

60

60

Net pipeline imports

Net LNG imports

Production
40

40

20

20

0
1995

2005

Energy Outlook 2035

2015

2025

2035

1995
60

2005

2015

2025

2035

BP p.l.c. 2015

for both Europe and China

Europes gas imports currently account for around 50% of its total gas
consumption. Over 80% of these imports are via pipeline, the vast
majority of which are from Russia.
European domestic production declines by 2% p.a. over the Outlook, so
that, even with only modest demand growth (0.8% p.a.), almost threequarters of Europes gas needs are met by imports by 2035. Growth of
LNG means these imports are more diversified, with pipelines
accounting for around two-thirds of imports and LNG the remainder.
China, by contrast, enjoys strong growth in gas production (5.1% p.a.)
across all types of supply. Shale gas makes a significant contribution to
growth (10 Bcf/d, 33% p.a.), with most of that increase coming in the last
decade of the Outlook.
Nonetheless, Chinese demand growth requires a rapid expansion of
imports (7.6% p.a.) via both LNG and pipelines. LNG overtakes pipeline
supplies as the dominant form of Chinese gas imports by the 2030s.

Energy Outlook 2035

61

BP p.l.c. 2015

Energy Outlook 2035

62

BP p.l.c. 2015

Page

Introduction

Global energy trends

Liquid fuels

29

Natural gas

49

Coal and non-fossil fuels

63

Key uncertainties

77

Appendix

93

Energy Outlook 2035

63

BP p.l.c. 2015

Growth in coal consumption slows in the non-OECD

Ten year increments by region

Consumption by region
Billion toe

Billion toe

1.2
Other

India
3
2

LNG

Other

1.0

India

0.8

China
OECD

0.6

Russian pipeline

0.4

China

FSU pipeline

0.2
1

Conventional

0
1965
Energy Outlook 2035

0.0
OECD

2000

-0.2
1975

2035
64

1995

2015

2035
BP p.l.c. 2015

whilst OECD consumption declines

Global coal demand grows by 0.8% p.a. between 2013 and 2035, making
it the slowest growing fuel. Non-OECD consumption increases (1.1 Btoe),
partially offset by declines in OECD consumption (-0.4 Btoe).
China continues to lead the growth in consumption (390 Mtoe) even
though its growth rate declines from 8.3% p.a. during 2000-13 to 0.8% in
2013-35. Chinese coal consumption peaks in 2025 and then declines
slightly in the final decade of the Outlook.
India increases coal consumption by 360 Mtoe by 2035, making it the
second largest growth market. Increases in power sector demand
account for almost 70% of Indias consumption growth.
The decline in OECD consumption is led by the US (-220 Mtoe) and the
European Union (-150 Mtoe). This reduction is concentrated in the power
sector, where environmental policies and ample supplies of gas
encourage gas to displace coal.

Energy Outlook 2035

65

BP p.l.c. 2015

Coal loses market share in China

Coal share by sector in China

Inputs to power in China

100%

100%

Oil

75%

75%

Power

Coal
50%

50%
Transport

25%

0%
1965
Energy Outlook 2035

Industry

Gas

2000

Renew.
Nuclear

25%

Other

2035
66

0%
1965

Hydro

2000

2035
BP p.l.c. 2015

as the country transitions to cleaner fuels

Growth in Chinese coal consumption is led by demand in the power
sector (1.4% p.a.) followed by industry (0.4% p.a.). These two sectors
account for 97% of Chinas coal consumption by 2035.
Growth slows considerably in all sectors, from the highs during 2000-13
when power sector consumption grew by 10% p.a. and industrial
consumption by 7% p.a..

The share of coal as a source of energy declines across all sectors in

China. In power generation, the largest coal consuming sector, coals
share declines from 77% in 2013 to 58% by 2035, as renewables and
nuclear gain share. The loss of market share in industry is more modest,
falling from 59% to 46%.
As a result, China records the steepest decline in the share of coal in
primary energy between 2013 and 2035. Nevertheless, in 2035, China still
has the highest coal share in primary energy at 51%.

Energy Outlook 2035

67

BP p.l.c. 2015

The share of power generated by non-fossil fuels increases

Share of world power generation

Growth of non-fossil power

Thousand TWh

40%

Total non-fossil

30%

Nuclear

Nuclear

1
0

Renewables
0%
1990

Hydro

3
Hydro

2005

Energy Outlook 2035

Non-OECD
Renewables

20%

10%

OECD

2020

2035
68

-1

19912013

20132035

19912013

20132035

BP p.l.c. 2015

driven by the rapid growth of renewables

Until recently, the share of non-fossil fuels in global power generation
was declining as nuclear and hydro struggled to keep pace with the
growth of global power generation, and renewables were too small to
make a material difference.
Looking ahead, the shares of nuclear and hydro continue to decline, but
the scaling up of renewables is sufficient to lift the aggregate non-fossil
share from 32% in 2013 to 38% by 2035.
Within the OECD, renewables dominate the growth of non-fossil power,
and contribute 90% of the net growth in power generation from all
sources.
The growth of non-fossil fuels in the non-OECD is broader based. The
increase in renewable power is roughly the same in volume terms as in
the OECD. But there are also significant increases in nuclear and hydro.
Renewables account for 16% of the growth in power generation in the
non-OECD.

Energy Outlook 2035

69

BP p.l.c. 2015

The falling cost of renewables

Cost* of new grid-scale power generation, North America example
$2014/MWh

300

Solar PV

Onshore wind

Gas CCGT

2015 2035

2015 2035

Coal

250
200
150
100
50

0
2015 2035

2015 2035

* Levelized cost per MWh of building and operating a plant over its lifetime. Solar and wind costs exclude
the cost of grid integration, and exclude any subsidies or tax incentives. Gas and coal costs in 2035 include
the cost of carbon at an assumed price of $40/tonne.

Energy Outlook 2035

70

BP p.l.c. 2015

keeps a lid on the growth of the subsidy burden

The rapid growth of renewables currently depends on policy support in
most markets, as renewables tend to be more expensive than coal or
gas-fired power. As renewables grow in volume, the burden of this policy
support can become a constraint on growth. To maintain rapid growth,
the costs of renewable power need to keep falling, reducing the subsidy
required per unit of power.
The cost of renewables are expected to fall significantly over the Outlook,
due to technological advances, learning-by-doing, and economies of
scale. Both solar PV and wind appear to be following well-established
learning curves, with costs falling rapidly as production increases.
Onshore wind power in the best locations is increasingly able to
compete with new conventional fossil power plants, even without
subsidy and allowing for grid integration costs. Solar PV is also likely to
become competitive across an increasing number of market niches. But
even by 2035, grid-scale PV still requires a material carbon price to
compete with efficient gas combined cycle generation.
Energy Outlook 2035

71

BP p.l.c. 2015

Europe leads the way in terms of renewables share

Renewables share of power

Renewables growth 2013 to 2035

Thousand TWh
1.2

40%

EU
30%

US

0.9

China
20%

0.6

10%

0.3

0%
1990

0.0
2005

Energy Outlook 2035

2020

China

2035

72

EU

US

OECD
Asia

India

BP p.l.c. 2015

but China is the largest source of growth

Falling costs enable renewables to continue to gain share in Europe and
encourage the spread of renewables to other regions. The European
Union (EU) has led the way in promoting renewable power, but the size
of the subsidy burden has become a constraint on growth in some
markets. Falling costs will relax this constraint.
By 2035, the share of renewables is likely to be stretching the ability of
grid systems to handle intermittent sources of power in a number of EU
markets, adding a technical constraint to the growth rate of renewables.
Outside the EU, renewables are still scaling up the US does not reach
the current EU level of renewables penetration until 2030, and it takes
even longer for China. However in terms of volume growth between 2013
and 2035, the EU is surpassed by China, and almost matched by the US.

Energy Outlook 2035

73

BP p.l.c. 2015

Nuclear and hydro generation grow steadily

Nuclear generation by region

Hydro generation by region

Thousand TWh

Thousand TWh

5
4
3

Other
China

Other Asia
Europe

Brazil
Europe

0
1965

0
1965

Energy Outlook 2035

China

North America

North America

2000

Other

2035
74

2000

2035
BP p.l.c. 2015

led by the non-OECD, particularly China

Despite losing share in the global power sector, nuclear and hydro are
still expected to grow by 1.8% p.a. and 1.7% p.a. over the Outlook.
Global nuclear growth is driven by China with an estimated growth rate
of 11% p.a. adding over 1000 TWh by 2035. This is an ambitious target,
roughly equivalent to completing a new 1 GW reactor every 3 months for
the next two decades.
Nuclear capacity in Europe and North America declines as ageing plants
are gradually decommissioned, and the difficult economics and politics
of nuclear energy stunts new growth. Japan is assumed to restart its
reactors gradually from 2015 but is not expected to recover to preFukushima level of nuclear power generation by 2035.
Global hydro growth is also driven by the non-OECD, with China and
Brazil projected to grow by 450 TWh (1.4% p.a.) and 250 TWh (1.9% p.a.)
respectively. Africa is the fastest growing region at 3.8% p.a., adding 150
TWh over the period.

Energy Outlook 2035

75

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Energy Outlook 2035

76

BP p.l.c. 2015

Page

Introduction

Global energy trends

Liquid fuels

29

Natural gas

49

Coal and non-fossil fuels

63

Key uncertainties

77

Appendix

93

Energy Outlook 2035

77

BP p.l.c. 2015

Exploring the impact of alternative assumptions

Low GDP growth

Climate policies

- what if growth in China and India

- what if policymakers take more

slows more rapidly than assumed?

actions to reduce emissions?

pages 80 to 83

pages 84 to 87

Geopolitics

Chinas electrification

- what are the implications of

- what if Chinas electricity use

pages 88 to 89

pages 90 to 91

heightened geopolitical risks?

follows a different path?

BP p.l.c. 2015

illustrates the uncertainties around the Outlook

This Outlook presents a single most likely view, constructed to
highlight the main trends which are likely to shape energy markets over
the next two decades. We believe this provides a robust basis for
discussion.
Building that single point projection necessarily requires making choices
about assumptions which are inherently uncertain. By exploring the
impact of alternative assumptions we can illustrate some of the
uncertainties around the Outlook, adding to the richness of the debate.
We have chosen four key uncertainties to explore here, which are
described in more detail in the following pages. This is not an exhaustive
list by any means there are many other uncertainties surrounding the
Outlook.

Energy Outlook 2035

79

BP p.l.c. 2015

Low GDP growth

The future path of growth in non-OECD Asia

GDP and energy demand in
base and low case

Differences from base case in 2035

%

Index: 1990 = 100

500

0%
Low case

400

-5%
GDP
-10%

300

-15%

Energy

200

100
1990

-20%

GDP
Energy
demand

-25%
2005

Energy Outlook 2035

2020

World

2035
80

OECD

Non-OECD Other
Asia
BP p.l.c. 2015

Low GDP growth

is a major source of uncertainty for energy demand

The future growth paths of China and India represent a major source of
uncertainty. Our low GDP case assumes China and India grow at an
average rate of 4% p.a. over the projection period, compared with 5.5%
p.a. in the base case. It also includes the trade and other spill-over effects
of lower growth in these two countries on the rest of the world.

It is based on the recognition that prolonged periods of growth above

the global average are rare, and it is possible that the high growth rates
seen in these countries in recent years may slow more rapidly than
anticipated.
In the low growth case, GDP in non-OECD Asia is 25% lower than in the
base case by 2035, and world GDP is 13% lower. World GDP grows at a
little below 3% p.a., compared with 3.5% p.a. in the base case.
World energy consumption grows at 1% p.a. rather than 1.4% p.a. By
2035, global energy demand is 8.5% (1.5 billion toe) lower than in the
base case. This is roughly equivalent to the total energy demand of the
entire European Union in 2035.
Energy Outlook 2035

81

BP p.l.c. 2015

Low GDP growth

Demand growth is slower for all fuels...

Global CO2 emissions
from energy use

Energy demand by fuel in 2035

% difference from base

Billion tonnes CO2

0%

42

-2%

36

Base
Low
GDP

30

-4%

24

-6%

18
-8%

12

-10%

-12%

0
1965

Oil

Gas

Energy Outlook 2035

Coal

Nuclear Renew.
& hydro
82

2000

2035
BP p.l.c. 2015

Low GDP growth

resulting in lower carbon emissions

Within the fossil fuels, coal demand shows the largest decline versus the
base case (-11%), followed by oil (-9%) and gas (-6%). These differential
impacts reflect the fuel mix in China and India (the focus of the slower
grow), and assumptions about how quickly supplies would adjust.
The lower price of fossil fuels and increased financial pressures
(particularly in non-OECD Asia) that come with slower economic growth
mean that the growth of renewables, nuclear and hydro also decline.

In the low growth case, carbon emissions in 2035 are 9% lower than in
the base case; equivalent to 4 billion tonnes of CO2.
This would still leave the path of emissions above the IEAs 450 Scenario
(see following page). Indeed, the increase in financial pressures in nonOECD Asia may complicate the process of reaching a political consensus
on carbon reduction policies.

Energy Outlook 2035

83

BP p.l.c. 2015

Climate policies

Carbon emissions are rising too fast for comfort

Emissions by sector

Options that achieve equal CO2

emissions reductions*

Billion tonnes CO2

42

Abatement option

Change required

Replace coal with gas in

power (% of total power)

1%

Add CCS to coal power

plants (% of total power)

0.7%

Increase renewables power

generation

11%

Increase nuclear power

generation

6%

Improve vehicle efficiency

12

2%

Improve other sector

energy efficiency

1%

Improve efficiency of
electricity production

1%

36
30

Other
Transport
Industry
Power

24

IEA 450
Scenario

18

0
1965

2000

Energy Outlook 2035

* Normalized for a 1% swing in the coal/gas mix in power

generation, equivalent to 110 Mt CO2. Estimates are based
on energy shares in 2013.

2035
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Climate policies

...which could trigger additional abatement policies

Global CO2 emissions from energy use grow by 25% (1% p.a.) over the
Outlook. Emissions remain well above the path recommended by
scientists, illustrated by the IEAs 450 Scenario. In 2035, CO2
emissions are 18 billion tonnes above the IEAs 450 Scenario.
The projections are based on our view of the most likely evolution of
carbon related policies, but future climate policies are a key uncertainty
in the Outlook. There are a number of options open to policy makers if
they decide to further abate carbon emissions.
The table considers a list of potential options, with a comparison of the
extent of change required to achieve the same emissions savings as a
1% shift in the coal/gas mix of the power sector.
The list is not exhaustive. The options include those that: limit
emissions from coal in the power sector; increase non-fossil fuel use;
and improve energy efficiency.

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Climate policies

There are many ways to further mitigate carbon emissions

Options to save 2 billion tonne CO2 emissions in 2035 versus base case
Reducing carbon intensity in power
% share of power generation
40%

Energy efficiency gains

% p.a.
4

2000-13

2013

2013-35 base case

2035 base case

30%

2035 lower CO

20%

10%

0%

Gas

Energy Outlook 2035

Coal with Renewables

CCS

Nuclear

86

2013-35 lower CO

Road
transport

'Other'
sector

Power
plants
BP p.l.c. 2015

Climate policies

all of which involve significant challenges

The charts show the change required for each option to achieve a 2
billion tonne CO2 saving in 2035 relative to the base case roughly 10%
of the gap between projected emissions and the IEA 450 Scenario in
that year.
No single change or improvement is likely to be sufficient, and none of
these options are easy. The required improvement in vehicle efficiency
by 2035, for example, is almost 50% more than the efficiency gain which
is already in the base case. That is a considerable challenge.

Each option has its own challenges: cost, technological limits, slow
turnover of existing capital stock, the ability to implement policy
globally and inertia in behavioural change. A comparison of the
required change relative to recent history and to the most likely
outcome may provide some guidance. But given the complexities, it is
difficult to pick winners.
A meaningful global carbon price would provide the right incentives for
the most cost-effective decisions and investments to be made.
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Geopolitics

Heightened risk perceptions can have important implications

Geopolitical risk

Alaska - oil production

Eurasia Group Risk Index

46

Mb/d
3
2

44

1
0

42
2005

2008

2011

1975 1980 1985 1990 1995 2000

2014

France - nuclear power

China - oil imports

Share of energy consumption

40%

Mb/d
8
6
4
2
0
-2
1973

20%
0%
1965
Energy Outlook 2035

1980

1995
88

1983

1993

2003

2013

BP p.l.c. 2015

Geopolitics

for both energy supply and demand

Geopolitical risks which on some measures have increased in recent
years have potentially important implications for energy markets.
On the supply side, the level of disruptions to oil in recent years has been
well above the historical average. We have marked up the likely
incidence of supply disruptions over the medium term (see pages 40-41).
Changing perceptions of geopolitical risks may also spur policy choices
that lead to lasting changes to energy demand as well as supply.
Historical examples include: the French decision to increase its
dependence on nuclear energy, and the approval of the Trans-Alaska
pipeline in the US (both following the early 1970s oil shocks); and Chinas
acceptance of growing oil imports to fuel economic development (after
an extended period of policy focused on maintaining self-sufficiency).
We have built substantial evolution of both energy markets and policy
into this Outlook, but heightened geopolitical risk perceptions could drive
additional policy interventions beyond those anticipated.

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China electrification

The path of electrification in China

Electricity consumption per capita

Impact on global fuel demand

Effect of +/-20% change in China
power relative to base case

MWh
10

+20%

Total

Renew.

Hydro

-20%

Nuclear

Coal

Gas
0
China China
2013 2035
Energy Outlook 2035

0%

EU Japan
2013 2006
90

2%
4%
% change, +/-

6%

BP p.l.c. 2015

China electrification

has significant implications for global energy

The future path of electrification in China is a key uncertainty. Chinas
power sector accounted for nearly 30% of global energy growth over the
past decade. In our base case, Chinas per capita electricity consumption
grows by 3.2% p.a. reaching 7.7 MWh by 2035.
A sensitivity band around that base case can be constructed by looking
at the per capita electricity consumption of the EU and Japan at the point
where their GDP per capita broadly matched that projected for China in
2035 (2006 for Japan, 2013 for the EU).
A +/-20% change in Chinas power generation (assuming no change in
the shares of fuels in Chinese power) would change global energy
demand in 2035 by +/-2.7%. That is roughly equivalent to two years of
global energy growth, or an energy market the size of Japan.
There is no impact on global oil demand and little impact on gas from
this sensitivity. There is a significant impact on global coal use (+/-5.8%),
and similar magnitude impacts on nuclear, hydro and renewables. The
impact on carbon emissions is +/-1.6% (+/-0.7 billion tonnes of CO2).
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Conclusion
Continuous change is the norm for energy markets
Changing energy mix
- gas fastest growing fossil fuel, coal the slowest
- continued rapid growth in renewables

Changing energy trade patterns

- increasingly flowing from West to East

Changing the carbon emissions path?

- no silver bullet, need action on many fronts
- let the market pick the winners

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Page

Introduction

Global energy trends

Liquid fuels

29

Natural gas

49

Coal and non-fossil fuels

63

Key uncertainties

77

Appendix

93

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Key changes versus last years Outlook

Changes in 2035 levels versus the January 2014 Outlook
Revised down

Revised up

Coal

N America fossil fuel supply

Oil

Gas

Asia Pacific fossil fuel supply

Transport consumption
Inputs into power generation

Biofuels
Other

Renewables

Non-OECD industrial demand

N America industrial demand
-250 -200 -150 -100 -50

50 100 150 200 250 300

Mtoe
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result in little net change in total energy

Our aggregate projection for world energy demand and supply is little
changed since our previous Outlook down by about 0.6% in 2035.
North Americas oil and natural gas supply outlook has been revised
higher yet again (14%) due to the continued evolving expectations for
shale gas and tight oil. Increased oil supplies enable higher oil
consumption, particularly in the transport sector.

Asia Pacific fossil fuel supply is down in 2035 largely as result of slower
growth of coal production in China.
Coal consumption in the power sector has been revised down, roughly
balanced by upwards revisions to gas and renewables. Fuel switching in
the US and China explains the majority of the changes.
Non-OECD industrial consumption is lower, as a result of slower
economic growth and faster efficiency gains.
North American industrial demand is higher in 2035 supported by
increased availability of domestic oil and gas supplies.
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Comparison with other outlooks: the key difference

Growth of energy consumption, 2010-2035
Billion toe

Billion toe

Non OECD

OECD

0
BP

IEA NP

Energy Outlook 2035

IEA CP

EIA

Other
Coal
Liquids

BP
96

IEA NP

Nuclear
Gas

IEA CP

EIA

BP p.l.c. 2015

lies in different views on non-OECD prospects

Our Outlook is based on a most likely assessment of future policy
trends. In that respect it differs from the energy projections published by
the IEA and the EIA, which are based on specific policy scenarios and
which make no judgements about the likelihood of those scenarios.
Our policy assumptions are closest to those in the IEAs New Policies
Scenario (NP), which assumes that announced national policy
objectives are implemented. Yet our outcomes are closest to the IEAs
Current Policies Scenario (CP) and the EIAs reference case, both of
which assume no change in policy settings.
Our Outlook shows more growth in non-OECD energy demand than the
IEA NP; it also shows more growth for fossil fuels, especially for coal.
This probably reflects differing views on the outlook for rapidly
industrializing economies, in particular on the speed with which they can
move to a less energy-intensive growth path.

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Data sources
BP p.l.c., BP Statistical Review of World Energy, London, United Kingdom, June 2014
Energy Information Administration, Drilling Productivity Report, Washington, D.C., United States, 2014
Energy Information Administration, International Energy Outlook, Washington, D.C., United States, 2013
Energy Information Administration, Short-Term Energy Outlook, Washington, D.C., United States, 2014
Energy Security Analysis, Inc., Wakefield, MA, United States
Eurasia Group, New York, United States
European Environment Agency, Monitoring CO2 from new passenger cars in the EU, Copenhagen, Denmark, April 2014
ICIS ATEC 4th Update , Vergiate, Italy, 2014
IHS Automotive, International Database World Car and Truck Data 1970-2023, Englewood, CO , United States, Dec 2014
International Council for Clean Transportation, Global passenger vehicle standards, Washington D.C., United States, 2014
International Energy Agency, CO2 Emissions from Fuel Combustion, Paris, France, 2014
International Energy Agency, Energy Balances of Non-OECD Countries, Paris, France, 2014
International Energy Agency, Energy Balances of OECD Countries, Paris, France, 2014
International Energy Agency, World Energy Outlook 2014, Paris, France, 2014
Mitchell, B.R., International Historical Statistics 1750-2005, Palgrave Macmillan, New York, United States, 2007
Oxford Economics Ltd, Oxford, United Kingdom
UN Population Division, World Population Prospects: The 2012 Revision, New York, United States, 2013
US Environmental Protection Agency, Light-Duty Automotive Technology, Carbon Dioxide Emissions, and Fuel Economy
Trends: 1975 through 2012, Washington D.C., United States, March 2013
World Bank, Global Purchasing Power Parities and Real Expenditures, Washington D.C., United States, 2014

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