Future projections of critical fossil fuels for the long-term oil tanker market

TAnker owners seek information on the degree and pace of the global economy’s transition to cleaner fuels, in order to make informed strategic decisions. As such, the forthcoming United Nations climate summit is of considerable importance. In its latest weekly report, shipping broker Gibsons said that “the International Energy Agency (IEA) released its annual World Energy Outlook last week, ahead of the upcoming United Nations climate summit, COP26 in Glasgow. The agency notes that national-level commitments to reduce global emissions are now at their highest level ever. To date, more than 50 countries, as well as the entire European Union, have committed to net zero emissions. However, the IEA clearly indicates that much remains to be done beyond the promises currently announced to achieve the goals set by the Paris Agreement. The agency calculates that the overall investment in clean energy would have to more than triple to keep the door open to stabilization at 1.5 ° C ”.

According to Gibson, “The report presents three key scenarios. The Planned Commitments (PPS) scenario takes into account all climate commitments made by national governments by mid-2021 and assumes that these commitments are met in full and on time. In this case, global oil demand peaks shortly after 2025 at 97 mbd against a backdrop of rapid growth in sales of electric vehicles and continuous improvements in fuel efficiency. Oil use declines by around 4 mbd in countries with zero net commitments between 2020 and 2030, but this is offset by an increase of 8 mbd in the rest of the world. By 2050, global demand drops to 77 mbd. However, the IEA stresses that governments must do much more to be able to fully meet their announced commitments. On the supply side, APS assumes that producers with net zero commitments continue to pursue efforts to minimize emissions. This increases their production and financing costs; however, some remain competitive because of their ability to export more in the face of declining domestic demand. For example, the United States exports 3.5 mbd of oil in APS in 2030, compared to 2.5 mbd of oil in the more conservative STEPS scenario, detailed below ”.

“The Stated Policy Scenario (STEPS) is based on the current policy parameters, in other words the measures that governments have actually put in place, as well as specific policy initiatives being developed, including the ‘Fit for 55’ initiative in the EU. In this case, demand peaks in mid-2030 at around 104 mbd, then decreases slightly by 2050. Here, US shale operators choose to prioritize yields over production growth, and oil from tight reservoir satisfies the increasing global demand for oil much less than in the past. . OPEC production increases by around 6 mbd until 2030, and Russian production is maintained, ”Gibson noted.

“Finally, the case of net zero emissions by 2050 (NZE) is hypothetical. It is designed to achieve a specific result and shows a way to achieve it. This case presents an action plan for the next ten years to achieve zero net CO2 emissions by 2050. In the NZE, the demand for oil falls to 72 mbd in 2030 and to 24 mbd in 2050. D ‘ by 2030, 60% of all passenger cars sold globally are electric and no new internal combustion engine cars are sold after 2035. The use of petroleum as a petrochemical feedstock is the only area where demand is increasing ; in 2050, 55% of all the oil consumed in the world is destined for petrochemicals, ”noted the shipping broker.

Gibson concluded that “The latest IEA Energy Outlook should not be viewed as a specific forecast but rather as a set of possible pathways on how energy markets might evolve in the decades to come. Of all the cases, STEPS is the closest to the current reality, but even this case does not completely overcome some challenges, for example the adoption of electric vehicles in developing economies. The upcoming COP26 will provide an overview of the political will to act, in particular on the part of non-OECD economies, which have been hit hard by the pandemic. With the conference starting in less than ten days, all eyes are on Glasgow! “.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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