As the developed world enjoys an energy production renaissance, developing countries – particularly in Asia – look to lead global energy consumption growth and are expected to burn lots of coal along the way.

The US Energy Information Administration Thursday released its International Energy Outlook that forecasts energy balances and consumption trends out to 2040. “Fossil fuels still contribute 80% of the world’s energy in 2040,” EIA Chief Adam Sieminski said during a launch briefing held at the Center for Strategic and International Studies in Washington DC.

“Coal grows faster than petroleum consumption until after 2030, mostly due to increases in China’s consumption of coal, and slow growth in oil demand in OECD member countries,” according to Sieminski’s slide presentation.

Additional highlights from the research include:

• China and India per capita GDP growth more than offsets declining energy intensity
• Non-OECD Asia accounts for 60% of the world increase in energy use
• China’s energy demand expected to be twice that of the US by 2040
• Renewable energy (excluding biofuels) and nuclear power are the fastest growing sources of energy consumption – oil remains the largest total source, but its global market share declines
• Post-2030, China’s economy shifts from manufacturing-based to service-based. As a result, coal use – for things like iron production – begins to decline
• Total liquids supply in 2040 reaches 115 million barrels per day. “This is more of a demand story than a supply story,” said Sieminski, referring to increased vehicle fuel efficiency and the potential for other fuels like natural gas to penetrate transportation markets, as well as residential and industrial sectors.
• Non-Opec liquids production growth is led by five countries: Brazil, Canada, Kazakhstan, US and Russia – Though “Brazil needs to better organize their upstream sector in order to make this forecast a reality,” said Sieminski.
• By 2040 non-petroleum liquid fuels (biofuels) output is forecast to reach 5 million b/d, which is about 4% percent of the world total
• Non-OECD countries account for 70% of natural gas output growth during the reference period
• Natural gas and renewables are the fastest growing power generation sources, but coal still holds the largest share in 2040

Jokingly, Sieminski ended his formal comments with a “why we will be wrong” disclaimer, explaining that “we know laws/policies will change and we know technology will advance, we just don’t know how.”

Some examples of these wildcards include:

• Economic uncertainty in the US, China and Europe
• When Japanese power demand and related fuel consumption will normalize following the Fukushima nuclear plant disaster
• Social unrest in the Middle East/North Africa and elsewhere
• Shale gas and oil growth rates
• Climate policies

As is often the case with these events, some of the most colorful commentary came from the Q/A portion. When asked what these forecasts mean for commodity prices and markets, Sieminski said “reference case forecasts are a good base to inform direction, but not great for predicting prices.”

“The only way to rebalance supply and demand in oil markets is with a price response,” he said, explaining how oil price increases encourage consumers to use less oil. “That took me about 2 minutes to explain, but at congressional hearings you only get about 15 seconds,” Sieminski said.

“As non-Opec liquids output increases and demand remains flat [in developed countries] we could see static or weakened oil prices. But shortages could change this.” Market forces are currently having a modulating effect on oil prices, but geopolitics are adding upside, he said.

Asked about his favorite technology uncertainty, Sieminski chuckled and ran through several by fuel type. For coal, the question is whether carbon capture can be made to work commercially on a large scale. The same could be said for natural gas, in addition to how – or if – companies can properly manage fracking. He pointed to prevailing trends like using less water to complete wells and the potential for waterless fracking.

With regard to nuclear technology, Sieminski mentioned small modular reactors and waste disposal advancements as things that could help the industry move forward. And regarding technologies that could impact oil production or consumption, he said “it’s not so much in oil itself, but what technological developments could take market share from oil, like advanced batteries for vehicles or LNG for long-haul transport.”