Global fundamentals

Society’s progress is intrinsically related to energy. Access to safe, reliable and affordable energy is a critical enabler of higher living standards, including a longer and healthier life. Today a significant portion of the global population still faces serious challenges in accessing energy on a daily basis, negatively impacting health and preventing many from fully realizing their potential. The challenges become even greater considering that by 2040 the global population is projected to grow to 9.2 billion from 7.5 billion today.

Improving access to energy and a growing global economy will lead to better economic opportunities, higher incomes and improved living conditions for many. As countries move up the human development index, the improving living standards are associated with increased energy use. Today, almost 50 percent of the global population lives in countries that rank low to medium on the U.N.’s human development index. Advancing development for nearly half the world’s population creates the potential for significant global energy growth.

Projections

• By 2040, the global population will reach 9.2 billion people, up from 7.5 billion today; India will soon surpass China as the most populous nation, but the most profound growth is in Africa
• Significant increases in prime working-age population in Africa, India and other Asia Pacific (AP) non-OECD countries contribute to the energy needs of these regions 
• The rising youth population in Africa and maturing populations in the OECD and China will also influence the future of the global economy and energy demand
• These demographic trends impact global energy markets with geographic shifts in where and how energy is produced, transported and used

• Economic expansion is a key driver of energy demand. World GDP is projected to nearly double from 2017 to 2040 with the non-OECD growing at more than twice the rate of the OECD
• By 2040, the non-OECD countries will account for about half of global GDP, up from about a third today. China and India’s combined growth is nearly the same as the OECD
• The widespread non-OECD economic expansion suggests continued robust demand for energy in these economies
• GDP for the OECD countries grows at a slower pace but from a much higher base than the non-OECD countries.

• Access to modern energy enables economic progress and improves quality of life. As income grows, it enables a family to own a home, purchase labor-saving appliances, pursue an education, travel, and obtain needed medical treatment 

• As GDP grows faster than population around the globe, average personal incomes rise everywhere, albeit with significant country and regional variations •

• By 2040, China GDP per capita is expected to triple and be at about 75 percent of the OECD 

• Over the Outlook period, India per capita GDP level is likely to grow even faster than China, but remaining below the global average. Africa only achieves an average 50 percent increase

• Even though the average income in the non-OECD countries remains lower than in the OECD, there is already a burgeoning middle class that can afford more than the basic necessities of food and shelter. The Brookings Institution foresees continued rapid growth of the global middle class, with billions more people rising out of poverty by 2030

•  Asia Pacific represents the largest growth, with India and China each expected to have more than 1 billion middle-class citizens by 2030 

• The expanding middle class means billions of people will aim to improve their living conditions and access to energy is a critical enabler for these aspirations

• Technology advances and choices by consumers and businesses to use energy more efficiently can moderate growth in energy demand even as the economy expands 
• Energy intensity measures the amount of energy used to produce a unit of GDP. Global energy intensity is expected to improve at nearly 2 percent per year from 2017 to 2040, more than double the pace of improvement from 2000 to 2017
• Meanwhile, the carbon intensity of energy (energy-related CO₂ emissions per unit of energy consumed) is also expected to trend down as policies drive efficiency and aim for a lower-carbon energy mix in pursuit of national climate policy goals
• By 2040 the combined effects of lower energy intensity and less carbon-intensive energy sources result in a nearly 45 percent reduction in the carbon intensity of the global economy (tonnes energy-related CO₂ emissions per unit of GDP)

• Hypothetically, if energy intensity remained the same over time, global energy demand would grow in lock step with GDP, almost doubling between 2017 and 2040 
• However, global energy demand is projected to grow only by about 20 percent from 2017 to 2040 because continued efficiency improvement lowers the energy intensity of the global economy
• OECD demand is expected to decline about 5 percent from 2017 to 2040 despite about 50 percent GDP growth as efficiency more than offsets the underlying growth drivers
• All of the projected energy demand growth is expected to be from the non-OECD countries, led by China and India. There, the implied energy savings are not enough to offset the inherent demand growth driven by population and economic growth