Expert: It's necessary to avoid creating excess capacity in the energy sector

16 february 2017

"Forecasting for the energy sector must be based on precise projections of the global economic growth," said the Chief Adviser to the Head of the Analytical Center Leonid Grigoriev speaking in Riyadh at the 7th IEF-IEA-OPEC Symposium on Energy Outlooks.

Citing the Forecast of the Development of the Energy Sector in Russia and the World until 2040 developed by the Analytical Center for the Government of the Russian Federation and the Energy Research Institute of the Russian Academy of Sciences, Mr. Grigoriev noted, "In our forecast we not only estimate the average GDP growth for the entire period until 2040, but also take into account GDP growth trajectories over shorter periods, including business cycles and possible shocks, for example in Europe, Africa or the Middle East." The expert believes it is important to try and avoid creating excess capacity in the energy sector while having enough reserve capacity to respond to fluctuating demand and various geopolitical factors.

The recent agreement to limit production has already improve the overall situation not just int he oil market but in the global economy overall. However, in the future it's not only demand for oil and natural gas that's going to be growing but competition as well. "At the same time, we need to take into account the huge amounts of gasoline, diesel fuel and electricity consumption in industries not related to transport and by households. Rising prices will not necessarily result in a transition to more progressive types of resources in those sectors," Mr. Grigoriev believes. The growing middle class is also making a contribution to rising energy consumption as people are buying and using more cars, air conditioning systems and other amenities that consume energy. Climate change forecasts must take into account projected production and consumption of energy-intensive goods by calculating per capita emissions, Mr. Grigoriev is sure. "Russia exports about 5% and produces about 10% of global primary energy. This 5% difference includes not only consumption within the country but also production of such huge amounts of energy intensive experts (metal, petrochemical products, fertilizers, paper), that it contains 1% of global greenhouse gas emissions. So the climate change policy must take into account the problems with energy efficiency faced not only by producers but also by consumers of not just energy but of energy intensive goods," the expert concluded.

It should be noted that the Forecast for the Development of the Energy Sector in Russia and the World until 2040, which was publicly presented last November at the Analytical Center for the Government of the Russian Federation, predicts revolutionary changes in the global energy sector that will be happening in the next few years as a result of new technologies. This means changes resulting not from the introduction of completely new energy sources but rather new methods of utilizing existing sources and deep structural shifts in the energy markets.

Photo from the website of the event