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 Louisville Chapter (KY)

Guy Caruso's Presentation on Global Energy Supply and Demand

(L to R): Eric Yussman, Louisville Chapter President; Guy Caruso, USAEE Distinguished Lecturer; Tracy Terkelsen, Louisville Chapter Treasurer.

 

On September 30, 2015, Guy Caruso, former Administrator of the Energy Information Administration and now a senior adviser in the "Energy and National Security Program" at the Center for Strategic and International Studies in Washington, D.C., discussed the geopolitics of energy.  The USAEE-Louisville chapter is very grateful the national USAEE arranged for two “distinguished lecturer” speakers to visit us in recent years: ExxonMobil’s Todd Onderdonk in 2013 and Mr. Caruso this year.

Caruso touched on global energy supply and demand, along with the technology and politics that shape the energy industry. Among Caruso’s key points:

The U.S. is heading towards 90% energy self-sufficiency, which will necessitate that policies based on “resource scarcity” need to be revisited. Net energy imports, as a percentage of U.S. total supply, are near a 20-year low due to the rapid increase in natural gas and oil production from shale and other tight resources. The U.S. is forecast to soon become a net exporter of natural gas.  The abundance of North American energy has major potential geopolitical implications for global oil producers. It complicates Saudi role as market balancer and accelerates internal pressures for reform in Iran and Mexico. Low prices combined with sanctions put pressure on Russian finances.

Caruso noted China is the main driver of increasing global energy demand in the current decade, but India is forecast to take over in the 2020s as the principal source of growth. The share of fossil fuels in world primary energy demand will fall gradually, though they remain dominant in 2040, each accounting for roughly one-quarter of demand. Oil production growth is robust in the U.S., Canada, Brazil & the Middle East. Crude oil output declines to 2040; all of the net growth in oil production comes from unconventional oil (including tight oil) and natural gas liquids. But the short-term picture of a well-supplied oil market should not obscure future risks, as demand rises and reliance grows on Iraq and the rest of the Middle East. Growth in world oil demand is such that, for each barrel of oil no longer used in Organization for Economic Cooperation and Development (OECD) countries by 2040,  two more barrels of oil are consumed in the rest of the world.  Developing unconventional and technically-challenging resource prospects will translate to higher prices.  

The share of liquefied natural gas (LNG) will rise in global gas trade, pushed by a near-tripling in liquefaction sites: LNG brings more integrated and secure gas markets, but only limited relief on prices. Global coal demand growth slows rapidly (particularly in the OECD power sector) due to more stringent environmental policies, underlining the importance of high-efficiency plant as well as carbon capture & sequestration to coal’s future.

Renewables supply half of the growth in global power demand; wind and solar PV subsidies decline from 2030 as costs fall & recent higher-cost commitments expire. Renewables overtake coal as the largest source of world power generation by 2035; natural gas also sees an increase in market share. Hydropower has accounted for the majority of avoided emissions from renewables to date, but wind, solar and bioenergy together avoid nearly as much by 2040. Also by 2040, an expanded nuclear fleet saves almost four years of current CO2 emissions and, for some countries, improves energy security and balances of energy trade.

Caruso discussed the goal of international climate negotiations: holdng the increase in global average warming to below 2 degrees Celsius. Current investment in low-carbon mitigation is inadequate to meet the 2 degrees Celsius target, in that the entire global CO2 budget through 2100 will be exhausted by 2040. The United Nations Climate Change Conference in Paris this December must send a strong signal for increasing low-carbon investment four times beyond current levels. While OECD countries are decarbonizing, investment in non-OECD countries is mainly focused on meeting growing power demand. 


About USAEE-Louisville: We host 4-6 events per year and draw 20-40 attendees. to our events. Our goals, simply are teaching and networking: provide a forum for professional communication and exchange of experience, as well as educate the community about the energy industry. Our speakers cover the array of issues--economics, public policy, technology, environment--affecting the energy industry. Our events attract a wide array of local expertise in the energy industry, in addition to folks from non-energy fields. Attendees represent, among others, the local utility (LG&E/KU) as well as energy consultants/providers such as Fellon-McCord, Atmos, Genscape, Constellation, and Schneider.

--- Contributor: Eric Yussman, President, USAEE-Louisville Chapter
Eric.Yussman@lge-ku.com

 

 

 

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