26 June 2023 (Lloyd's List) WORLD energy markets are struggling to respond to a succession of crises, according to Nick Wayth, chief executive of the London-based Energy Institute, known as EI. These crises have revealed just how vulnerable individual economies are to supply and price shocks.
Speaking ahead of the release of the EI Statistical Review of World Energy for 2022, Wayth commented that as the world emerged from the pandemic and its impact on demand, 2022 witnessed energy markets again in crisis, with the Ukraine conflict “upending assumptions” about supply across the world. That precipitated a price crisis and profound cost-of-living pressures across many economies.
The EI Statistical Review, which had been published annually since 1952 by BP, was passed on in February this year to the EI and its partners KPMG, an audit and tax advisory service, and Kearney, a management consultant. Data gathered from many sources on energy consumption and emissions identified five key themes.
First, transport demand patterns continued to return post-Covid, however there were major variations across geographies and fuel types. China’s zero Covid policy acted to depress demand for jet fuel.
Second, the situation in Ukraine and curtailment of Russian supplies to Europe precipitated record international gas prices in Europe, together with unprecedented shifts in global oil and gas flows.
Third, solar and wind led a strong deployment of renewables in the power sector, with the largest-ever increase in newbuilding capacity for these energy sources.
Fourth, in spite of a record share of renewable energy in power generation (12%), fossil fuels’ dominance of total consumption (82%) was unchanged because primary energy consumption continues to grow.
Fifth, again in spite of the share of renewable energy in power generation, global energy-related emissions were up by 0.8% over 2021.
Simon Virley, KPMG’s head of energy and natural resources, said the fact that fossil fuels’ share of world energy consumption remains “stubbornly stuck” at 82% “should act as a clarion call” for governments to inject more urgency into the energy transition.
The review highlighted increasing consumption of oil in 2022, although the increase is slowing. Production was up by 3.8m barrels per day, with the largest increases coming in Saudi Arabia and the United States; Nigeria and Libya saw the steepest declines.
Global natural gas demand declined by 3% in 2022, with production relatively constant compared with 2021. Japan replaced China as the world’s largest liquefied natural gas importer, accounting for almost 60% of global LNG demand growth. The Asia-Pacific region accounted for 65% of global LNG demand, although there was a decline against 2021, while European demand was strongly higher.
Coal consumption was up 0.6% on 2021, reaching the highest level since 2014. Growth in demand largely came from China (up 1%) and India (4%), offsetting declines in North America (down by 6.8%) and Europe (3.1%).
Global coal production increased by more than 7% compared with 2021, with China, India and Indonesia accounting for 95% of the increase in production. Turning to electricity generation, the dominant fuel for power remains coal, with a share of 35.4% only marginally down from 35.8% in 2021.
