Cambridge, Mass., September 13, 2010 — As the world puts the economic downturn behind, it will face a major challenge of meeting substantial growth in world demand, said Daniel Yergin, chairman of IHS CERA, in the opening address to the World Energy Congress in Montreal.
Yergin cited the new IHS CERA Energy Scenarios, which show world demand increasing by 32 to 40 percent over the next 20 years. “This demand growth will require investment measured in many trillions of dollars,” he said, “and it will pose a dramatic challenge to all the energy industries.”
The IHS CERA Energy Scenarios are a comprehensive research effort that provides a framework for recognizing and understanding the forces shaping the energy future by examining several possible “futures” ranging from renewed global economic growth and rapid transition to new energy technologies to continued economic turbulence and subpar international cooperation.
Yergin, author of the Pulitzer Prize-winning book The Prize, was addressing the 5,000 delegates to the World Energy Congress, a preeminent gathering of government and corporate leaders that is held once every three years.
“We saw the impact in 2007 and 2008 of a ‘demand shock’ in terms of $147 oil and the economic consequences that went with that,” Yergin said. “Timely deployment of investment is necessary in the years ahead to avoid future demand shocks that can cause crises and disruptions and damage the global economy.
“The scenarios do show continuing decline in energy intensity with the introduction of new, more efficient technologies,” he said. “And there has never been such a great emphasis on energy efficiency around the world as is the case today. That is true whether you’re talking about the United States, or China, or Europe.”
Yergin continued: “Indeed, we are seeing what we call ‘peak demand,’ at least in terms of oil, in North America and Europe. Oil demand will not increase in those regions and is more likely to decrease.
“But it’s a very different picture in emerging markets. Rising incomes and large populations in those countries will be the growth engine for world energy demand in the years ahead. It is very sobering to realize that much of the infrastructure that will be needed in 2030 to meet the energy needs of a growing world economy is still to be built,” he said.
World oil supplies will continue to grow, but oil’s share of the overall energy mix will decline. “Canadian oil sands,” Yergin added, “will make an important and growing contribution to U.S. energy security and the stability of the global petroleum market.
“Demand may pose many puzzles,” he said, “but one thing is clear. The growth in electricity will outpace the overall growth in energy as societies depend more and more upon electricity. This raises the question of future fuel choice for generating additional electricity supplies.”
Yergin noted that one of the most significant changes of the last few years is the emergence of inexpensive, abundant shale gas.
“The development of shale gas has been the single most significant energy innovation so far this century,” he said. “The availability of that gas will provide greater flexibility in meeting the fuel needs of the electric power industry.”