By Mark Milke
and Ven Venkatachalam
Canadian Energy Centre
When the International Energy Agency (IEA) called for an immediate halt to all new oil and gas investment worldwide in May, it appears they neglected to account for two important realities: Africa and Asia.
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Those two continents have been in population and economic booms for decades. The forecast is for more of the same, to at least 2050. This is relevant given that the IEA and others would like to see oil and natural gas exploration, extraction and consumption stopped dead around the world sooner than later.
The problem for the IEA and others who engage in what amounts to magical thinking: African and Asian demand for oil and natural gas soared in the last three decades. Absent a miracle transformation of technology – which a leading expert on energy transitions doesn’t see – consumers, businesses and governments in those two continents, and everywhere else, will need oil and gas as far as the demographic and economic eye can see.
To grasp Africa and Asia’s appetite for energy, consider both continents’ massive populations and economic growth.
In 1990, Africa’s population was 630 million people. That doubled to 1.3 billion by 2019 and is forecast to double again to 2.6 billion by 2050. In Asia, the population grew from 3.2 billion in 1990 to 4.6 billion by 2019, and the forecast is for another 950 million people in Asia by 2050. From 2019, Africa and Asia will add nearly 2.3 billion people to the planet by 2050.
Between 1990 and 2019, the gross domestic product (GDP) of the emerging economies in Africa and Asia combined grew, on average, above four per cent annually. The 10 largest African economies increased their collective GDP from $346 billion in 1990 to $1.8 trillion in 2019. In Asia, the GDP of the top 10 economies rose from $4.6 trillion in 1990 to $27.8 trillion in 2019.
That growth required energy. Between 1990 and 2018 (the most recent year available), the total annual consumption of oil and natural gas in Africa rose by 177 per cent. In Asia, the annual consumption of oil and gas between 1990 and 2018 rose by 189 per cent.
Past performance is no guarantee of future returns. It’s possible all the forecasts for African and Asian population and economic growth turn out to be wrong, that both continents suddenly cease growing, though we’re aware of no such predictions.
If Africa and Asia do zoom ahead, consumers, businesses and governments will need much more oil and natural gas.
That this is likely – renewable energy sources won’t yet meet the need in India, Nigeria, China or South Korea, among other nations – comes from a leading expert on energy transitions, Vaclav Smil, professor emeritus of the environment at the University of Manitoba.
Can other energy sources replace oil and natural gas?
As Smil noted in a 2018 interview, “In the past, humanity has typically adopted energy sources that have greater ‘power density,’ packing more punch per gram and requiring less land to produce.”
Smil noted that ignoring energy density by moving to all-renewable sources of energy could require countries to “devote 100 or even 1,000 times more land area to energy production than today … [which] could have enormous negative impacts on agriculture, biodiversity, and environmental quality.”
Given Smil’s caution, how likely is it that the public and policy-makers in Africa and Asia will cease oil and natural gas usage or halt it at current demand? This is especially relevant given that as even the IEA admits, 700 million people worldwide don’t have access to electricity and 2.6 billion people don’t have access to energy to cook a meal.
It shouldn’t be assumed that population and economic growth in Africa and Asia can magically be delinked from oil and natural gas. The growing economies of those two regions will be hard-pressed to find energy sources as efficient for their needs as oil and gas.
Mark Milke and Ven Venkatachalam are with the Canadian Energy Centre, an Alberta government corporation funded in part by carbon taxes. They are authors of the report Supersized: Demand for Oil and Gas in Africa and Asia.
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