BP Statistical Review shows slowing global energy demand

13 June 2017

The 2017 edition of the BP Statistical Review of World Energy shows a number of long- and near-term trends in energy markets—a shift to slower growth in global energy demand, demand moving strongly towards the developing economies of Asia, and a marked shift towards lower carbon fuels as renewable energy continues to grow strongly and coal use falls.

In 2016 global energy demand was weak for the third consecutive year, growing by 1%, around half the average growth rate of the past decade. Almost all this growth came from fast-growing developing economies, with China and India together accounting for half of all growth.

The year’s low prices drove demand for oil higher by 1.6%, while growth in production was limited to only 0.5%. As a result, the oil market returned broadly back into balance by mid-year, but prices continued to be depressed by the large overhang of built-up inventories. Natural gas production was also adversely affected by low prices, growing by only 0.3%. US gas output fell in 2016, the first reduction since the advent of the shale revolution in the mid-2000s.

Renewables were the fastest growing of all energy sources, rising by 12%. Although providing still only 4% of total primary energy, the growth in renewables represented almost a third of the total growth in energy demand in 2016. In contrast, use of coal fell steeply for a second year, down by 1.7%, primarily due to falling demand from both the US and China.

Symbolically, in 2016, coal consumption declined by 53% in the United Kingdom, the country where coal energy fueled the industrial revolution in the 18^th and 19^th century. The UK coal consumption has now gone through a complete cycle, returning to the levels from the 1800s.

The combination of weak energy demand growth and the shifting fuel mix meant that global carbon emissions are estimated to have grown by only 0.1%—making 2016 the third consecutive year of flat or falling emissions. This marks the lowest three-year average for emission growth since 1981-83. However, it is not yet clear how much of this break from the past is structural and will persist, noted BP.

Some of highlights from the BP Statistical Review include:

• Primary energy
  • Global energy demand grew by 1% in 2016—similar to rises of 0.9% and 1% seen in 2015 and 2014 respectively and significantly lower than the 10-year average rate of growth of 1.8%.
  • Almost all growth came from fast-growing developing economies; China and India together accounted for around half of all growth.
  • Indian energy demand grew by 5.4%, a similar rate to that seen in recent years.
  • Chinese energy demand, however, grew by 1.3%. This is close to the 1.2% rise in energy demand in 2015 and around a quarter of its 10-year average growth. Average growth during 2015 and 2016 was the lowest over a two-year period since 1997-98. Despite this slowing, the incremental increase in demand in China made it the world’s largest energy growth market for the 16th consecutive year.
  • Demand from the developed OECD countries remained essentially flat, rising just 0.2%.
• Oil
  • The Dated Brent oil price averaged $44 a barrel in 2016, down from $52 in 2015 and the lowest annual average price since 2004.
  • Global oil consumption grew strongly, rising by 1.6%, or 1.6 million barrels a day (mmb/d), above the 10-year average rate for a second consecutive year. Strong increases in demand were seen from India (up 0.3 mmb/d) and Europe (up 0.3 mmb/d) and while demand from China continued to grow (up 0.4mmb/d) it was lower than in recent years.
  • Weak prices impacted the growth of global oil production which rose by just 0.5%—the lowest increase since 2009—or 0.4mmb/d. Within this total, production from OPEC increased by 1.2 mmb/d, with significant increases seen from Iran (up 0.7mmb/d), Iraq (up 0.4 mmb/d) and Saudi Arabia (up 0.4 mmb/d).
  • In contrast, non-OPEC oil production fell by 0.8 mmb/d, the biggest annual decline for around 25 years. The largest output falls were from the US (down 0.4 mmb/d), China and Nigeria (each down 0.3 mmbd).
• Natural gas
  • World natural gas consumption grew by 63 billion cubic meters (bcm) or 1.5%, slower than the 10-year average of 2.3%.
  • EU gas consumption rose sharply by 30 bcm, or 7.1% - the fastest growth since 2010. Russia saw the largest drop in consumption of any country (-12 bcm).
  • Global natural gas production increased by only 21 bcm, or 0.3%. Declining production in North America (-21 bcm) partially offset strong growth from Australia (19 bcm) and Iran (13 bcm).
  • Gas trade grew by 4.8%, helped by 6.2% growth in LNG imports/exports.
  • Most of the net growth in LNG exports came from Australia (19 bcm out of 21). US LNG exports rose from 0.7 bcm in 2015 to 4.4 bcm in 2016.
• Coal
  • Global coal consumption fell by 53 million tonnes of oil equivalent (mtoe), or 1.7%, the second successive annual decline. The largest declines in coal consumption were seen in the US (-33 mtoe, an 8.8% fall) and China (-26 mtoe, -1.6%). Coal consumption in the UK more than halved (down 52.5%, or 12 mtoe) to its lowest level in our records.
  • Coal’s share of global primary energy consumption fell to 28.1%, the lowest share since 2004.
  • World coal production fell by 6.2%, or 231 mtoe, the largest decline on record. China’s production fell by 7.9% or 140 mtoe, also a record decline. US production fell by 19% or 85 mtoe.
• Renewables, hydro and nuclear energy
  • Renewable power (excluding hydro) grew by 14.1% in 2016, below the 10-year average, but the largest increment on record (53 mtoe).
  • Wind provided more than half of renewables growth, while solar energy contributed almost a third despite accounting for only 18% of the total.
  • Asia Pacific overtook Europe & Eurasia as the largest producing region of renewable power. China overtook the US to be the largest single renewables producer.
  • Global nuclear power generation increased by 1.3% in 2016, or 9.3 mtoe. China accounted for all of the net growth, expanding by 24.5%. China’s increment (9.6 mtoe) was the largest of any country since 2004.
  • Hydroelectric power generation rose by 2.8% in 2016, (27.1 mtoe). China (10.9 mtoe) and the US (3.5 mtoe) provided the largest increments.

Source: BP Statistical Review