China, India are driving energy demand growth
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China and India accounted for half of the 1% growth in global energy demand in 2016. This was only around half the average growth rate of the past decade, according to the BP Statistical Review of World Energy released on Tuesday. India maintained its energy demand growth at 5.4%, with the jump in global oil consumption driven primarily by India and Europe.
While low Brent crude oil prices, averaging $44 a barrel in 2016, helped global oil consumption increase by 1.6%, or 1.6 million barrels a day (mmb/d), they also impacted oil production, which rose by just 0.5% , the lowest since 2009. India continued to be the only large economy where demand for crude oil continued to rise; 2016 saw strong demand from India (up 0.3mmb/d) and Europe (up 0.3mmb/d), which supported this increase in consumption. This could help India press its demand for a discount for the large volumes it imports from the Organization of the Petroleum Exporting Countries (Opec) grouping.
The US’s support for coal may have come a tad late in the day, with the review’s 66th annual edition stating that the world has changed for the fuel. Coal’s share of primary energy production was down to its lowest since 2004 due to a fall in consumption by the US and China.
Green energy stepped in to offset the fall in coal usage, ensuring carbon emissions stayed flat for the third year. While providing only 4% of total primary energy, renewables represented almost a third of the total growth in energy demand in 2016. Renewables grew by 12%, becoming the fastest growing of all energy sources, with China contributing over 40% of global growth and surpassing the US to become the largest producer of renewable power. India’s 175 gigawatt push for clean energy from sources such as solar and wind and record low tariffs will also help contribute to low carbon emissions.
2016 was the third consecutive year which saw subdued growth in carbon emissions. China’s carbon emissions are estimated to have actually fallen over the past two years after growing by more than 75% in the previous 10 years. This assumes importance, given China’s aspirations to take over the mantle of global leadership in the fight against climate change following the US’s withdrawal from the Paris climate agreement.