By Irina Slav
Natural gas, helped by gains in energy efficiency, will dethrone oil as the biggest energy source that the United States uses by the end of this year. That’s according to the chief executive of Norway-based risk management consultancy DNV GL, and it would hardly come as a surprise to anyone who’s been following energy developments in the world’s top gas producer. Yet it’s only a part of all the glorious energy developments that the Norwegian company expects for the world in the next couple of decades.
Remi Eriksen told CNBC Europe that “Energy efficiency is going to outpace the growth in GDP (gross domestic product), that’s the main reason why energy demand is peaking. (And) there will be a massive change in technology in the transport sector, not only on the roads but also at sea.”
Meanwhile, gas will overtake oil not just in the United States, but across the world, and this, says DNV GL, will happen sooner than some probably believe: in its Energy Transition Outlook 2018 report, the Norwegian firm forecast that natural gas would become the primary energy source on a global scale by 2026, driving higher investments in pipelines and LNG infrastructure.
All in all, DNV GL said, investments in gas exploration and production will hit an all-time high of US$1.13 trillion in 2025, a year before gas comes to account for a quarter of global energy by 2050. Demand for the fuel will peak around 2034, the Norwegian firm also said.
As a result of this quick rise of gas to prominence, oil demand, DNV GL believes, will peak around 2023, with the shift away from oil also supported by the higher adoption of electric vehicles. The firm’s VP for oil and gas, however, noted that the analysis was more upbeat on EVs than what other researchers predict in the area.
Also in 2026, the Norwegian company expects that demand for transport energy will peak, helped, no doubt, by EVs replacing gasoline and diesel cars. From then on, the future gets increasingly brighter with peak after peak in demand for various primary energy sources until 2050, when half of the world’s energy mix will come from renewable sources, and when electric trucks overtake ICE trucks.
A lot of forecasts for the future of energy are in the same upbeat vein as DNV GL’s, banking on fast adoption of electric cars that has yet to begin as cost parity has not yet become a reality. But the issue of peak oil is no longer subject to debate. Oil will peak, the consensus seems to be, and the only question is when.
Some, like DNV GL and the Carbon Tracker Initiative, see peak oil within five years. The industry, on the other hand, sees peak in oil demand further down the road toward a renewable future. WSJ’s Sarah Kent cites BP as forecasting peak oil around 2035-2040, adding that Shell’s view is closer to that of DNV GL, but only if climate change fighting efforts are increased.
For now, everything is only a forecast. It is difficult to accept as fact that a little more than 20 years from now, half of all vehicles on the world’s roads will be electric, although it is a possibility with the right buyer incentives. What is not so difficult to accept as fact is the rise of gas and the fall of oil. The former will be quicker than the latter, however, and this bears reminding. Whenever oil peaks, it will not put a sudden end to oil consumption. The decline will be gradual, even with billions of EVs and windmills.