The International Energy Agency (IEA) on Friday said plastics and other petrochemical products will drive global oil demand to 2050, offsetting slower consumption of motor fuel.
Despite government efforts to cut pollution and carbon emissions from oil and gas, the Paris-based agency said it expected the rapid growth of emerging economies, such as India and China, to propel demand for petrochemical products.
Petrochemicals that are derived from oil and gas feed-stocks form the building blocks for products that range from plastic bottles and beauty products to fertilisers and explosives.
Oil demand for transport is expected to slow by 2050 due to the rise of electric vehicles and more efficient combustion engines, but that would be offset by rising demand for petrochemicals, the IEA said in a report.
“The petrochemical sector is one of the blind spots of the global energy debate and there is no question that it will be the key driver of oil demand growth for many years to come,” IEA Executive Director, Fatih Birol, told Reuters.
Petrochemicals are expected to account for more than a third of global oil demand growth by 2030 and nearly half of demand growth by 2050, according to the world’s energy watchdog.
Global demand for petrochemical feed-stock accounted for 12 million barrels per day (bpd), or roughly 12 percent of total demand for oil in 2017. The figure is forecast to grow to almost 18 million bpd in 2050.
Most demand growth will take place in the Middle East and China where big petrochemical plants are being built.
Oil companies such as Exxon Mobil and Royal Dutch Shell plan to invest in new petrochemical plants in the coming decades, betting on the rising demand for plastics. Plastics use has come under increased scrutiny as waste makes its way into the oceans where it harms marine life, prompting several countries to ban, partly ban or tax single use plastic bags.
But the IEA report said government efforts to encourage recycling in order to curb carbon emissions would have only a minor impact on petrochemical growth.
“Although substantial increases in recycling and efforts to curb single-use plastics take place, especially led by Europe, Japan and Korea, these efforts will be far outweighed by the sharp increase in developing economies of plastic consumption,” it said.
Under the IEA’s most aggressive scenario, recycling could hit around 5 percent of high-value chemical demand.
Petrochemical plants mainly run on light oil products such as naphtha and liquefied petroleum gas (LPG). But natural gas is becoming an increasingly favoured feed-stock, particularly in the United States where shale gas production has risen.
The report said petrochemical projects would account for 7 percent of the roughly 850 billion cubic metres (bcm) in gas demand increase between 2017 and 2030, and 4 percent of the increase projected for 2050.
Agency Report