Four large-scale shifts in the global energy system set the scene for the World Energy Outlook 2017: the rapid deployment and falling costs of clean energy technologies, the growing electrification of energy, the shift to a more services-oriented economy and a cleaner energy mix in China, and the resilience of shale gas and tight oil in the United States. These shifts come at a time when traditional distinctions between energy producers and consumers are being blurred and a new group of major developing countries, led by India, moves towards centre stage. How these developments play out and interact is the story of this year’s Outlook. With the US accounting for 80% of the increase in global oil supply to 2025 and maintaining near-term downward pressure on prices, the world’s consumers are not yet ready to say goodbye to the era of oil. Up until the mid-2020s demand growth remains robust in the New Policies Scenario, but slows markedly thereafter as greater efficiency and fuel switching bring down oil use for passenger vehicles (even though the global car fleet doubles from today to reach 2 billion by 2040). Powerful impetus from other sectors is enough to keep oil demand on a rising trajectory to 105 mb/d by 2040: oil use to produce petrochemicals is the largest source of growth, closely followed by rising consumption for trucks (fuel-efficiency policies cover 80% of global car sales today, but only 50% of global truck sales), for aviation and for shipping. Once US tight oil plateaus in the late 2020s and non-OPEC production as a whole falls back, the market becomes increasingly reliant on the Middle East to balance the market. There is a continued large-scale need for investment to develop a total of 670 billion barrels of new resources to 2040, mostly to make up for declines at existing fields rather than to meet the increase in demand. Even greater upside for US tight oil and a more rapid switch to electric cars would keep oil prices lower for longer. We explore this possibility in a low oil price case, in which a doubling of the estimate for tight oil resources, to more than 200 billion barrels, boosts US supply and more widespread application of digital technologies helps to keep a lid on upstream costs around the globe. Source: International Energy Agency (IEA), 11/14/2017.

TCGR Note: In general, TCG/TCGR agrees with the trend factors surrounding IEA’s analyses. However, as well as with all forward looking analyses the devil is in the details of the assumptions used. For instance, the rate of EV/hybrid penetration into the transportation sector will have a large influence on the supply/demand picture. Will 900 million electric cars be sold by 2040? For more information on how these trends will shape the catalysis industry in the medium-term, look for the 17^th Biennial Edition of “The Intelligence Report: Business Shifts in the Global Catalytic Process Industries, 2017-2023.”