Despite demand for oil perhaps flatlining in many parts of the world over the coming decades, it will continue growing in Southeast Asia until at least 2040, according to a new report from the International Energy Agency.
The main drivers of this growth will be the rapid population growth of the region, paired with increasing urbanization and growing levels of shipping and plastics production there — if the International Energy Agency (IEA) report is to believed.
Going by the report, oil usage in the region will climb to around 6.6 million barrels a day by 2040 — up from around 4.7 million barrels per day as of right now. The IEA report also predicts that the number of road vehicles in the region will increase by two-thirds by 2040, to around 62 million.
Reuters provides more: “But oil will continue to meet around 90% of transport-related demand in Southeast Asia, especially for trucks and ships, Keisuke Sadamori, the IEA’s director of energy markets and security, said at the Singapore International Energy Week. ‘Unless there are any drastic technological changes that can decarbonize these areas, we do not expect oil demand to fall,’ he said.
“Oil demand from the petrochemicals sector, one of the largest users of the fossil fuel, will also grow fairly substantially, Sadamori said. Oil can be used as a raw material for plastics and textiles. The IEA expects electricity to account for only 1% of transport energy demand in 2040, saying there will be only about 4 million electric cars in a total passenger vehicle stock of 62 million.
“Meanwhile, Southeast Asia’s overall energy demand is expected to climb nearly 60% by 2040 from now, led by power generation, as rising incomes in the region spur more people to buy electric appliances including air conditioners, the IEA said. The region will have universal access to electricity in the early 2030s and is expected to install more than 565 gigawatts (GW) of power-generation capacity in 2040, from 240 GW today, the agency said. Coal and renewables account for almost 70% of new output, it added.”
To be more specific there, coal will account for around 40% of growth and renewables will roughly quadruple by 2040 — renewables thus becoming the second biggest source of electricity in the region after only coal.
The report notes, though, that: “Apart from the mounting import bill, the region’s increasing dependence on imported energy raises significant energy security concerns.”
That is something that’s very true. … The report presents a scenario that’s dependent upon continued access to cheap fossil fuels — something that is going to become less and less true as time goes by. The looming issue of American retreat from the region also raises a number of questions — will China allow the current situation to remain in place? Or are big changes coming? I’ll note that I’m a bit skeptical of the view presented in the IEA report.