Business Outlook 2019

3.4 The Continued Importance of Oil and Gas in a Lower-Carbon Economy

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OGUK recognises the need to transition to a lower-carbon economy, however it is clear that both oil and gas will play a vital role within this transition, globally and in the UK.

Within the International Energy Agency (IEA) Sustainable Development Scenario, 3 which is compliant with the aims of the Paris Agreement, oil continues to be the greatest energy source in the short to medium term. Although a gradual decline can be seen over time, oil continues to account for almost 25 per cent of global energy demand in 2040 in this scenario.

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Figure 5: IEA Sustainable Development Scenario

16,000

Oil

Gas Coal

Bioenergy Nuclear

Hydro Other Renewables

4

14,000

5

12,000

10,000

6

8,000

6,000 Equivalent)

7

4,000

2,000

Energy Demand by Source (Million Tonnes of Oil

8

0

2000

2017

2025

2030

2035

2040

Source: IEA

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Almost all future energy scenarios, including that seen in Figure 5, show gas demand remaining strong until at least 2040, when it could be expected to meet at least 25 per cent of global energy demand. This is the result of increasing demand within developing economies and the continued displacement of coal-fired power from electricity generation amidst efforts to reduce carbon emissions. Gas will continue to provide an economical, flexible and relatively low-carbon fuel source, with its relative importance in the future energy mix continuing to increase.

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3 www.iea.org/weo/weomodel/sds/

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