The global energy consumption outlook forecast by the U. S. Energy Information Administration (EIA) is shown in Figure 1.1, which shows two sets of data series for the OECD (Organization for Economic Cooperation and Development) and the non-OECD nations [3]. As shown in the chart, much of the increase in energy consumption is predicted for the non-OECD nations due to their strong long-term economic growth and continuous industrialization. Although about 45% of cumulative increase in the annual energy consumption is predicted from 1990 to 2035 for the OECD countries, more than a threefold increase is expected for the same period for the non — OECD countries. For the entire world, annual energy consumption for Year 2035 is predicted to be 770 quadrillion BTU, whereas that for year 1990 was recorded as 354 quadrillion BTU. A quadrillion BTU is 1 x 1015 BTU and is also called a quad. Assuming that the average heating value (HV) of gasoline is 125,000 BTU/gal, a quad of energy is equivalent to an aggregated heating value of approximately 8 billion U. S. gallons of gasoline.

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The marketed energy consumption of modern society is closely tied to its economic strength. It is also affected by the efforts of energy conservation and energy efficiency enhancement by various sectors. Petroleum prices on the global market have been largely dictated by the market’s supply and demand dynamics. Sharply increasing oil prices in recent years have been due to a lack of sufficient supply to meet the growing demand in the mar­ketplace, which was frequently intensified by regional supply disruptions caused by political unrest. High energy costs also add strong causes to infla­tion and adversely affect the global economy. Furthermore, it is difficult to predict or accurately assess technological advances in future energy tech­nologies with respect to the technoeconomic constraints of future societies. Therefore, an energy outlook forecast is by no means an easy task. The U. S. EIA presented five different cases/scenarios: viz. (1) reference case, (2) high oil price case, (3) low oil price case, (4) traditional high oil price, and (5) tra­ditional low oil price [4]. The reference case scenario is based on the baseline world economic growth at 3.5%/year for 2008-2015, 3.3%/year for 2015-2035, and the world light sweet crude oil prices growing to $125 per barrel by 2035 (2009 dollars). On the other hand, the high oil price case, a more pessimistic case scenario, is assuming that the world light sweet crude oil price grows to $200 per barrel by 2035 (2009 dollars) and the low oil price case, a more opti­mistic case scenario, is based on the assumption that the light sweet crude oil prices are going to be $50 per barrel (2009 dollars). The reference case scenario by the U. S. Energy Information Administration (EIA)’s forecast data for world energy consumption by fuel is presented in Table 1.1 [4].

As shown in Table 1.1, the lowest annual growth rate is estimated for liquid fuels or liquids among all fuel types. A very strong demand for transpor­tation vehicles is expected particularly for non-OECD nations, however, a more serious and rigorous global effort in vehicle fuel efficiency enhance­ment is also to be practiced, thus offsetting the effect from the increase in the number of vehicles. Even with the modest 1% increase, a large portion of the increase is expected to come from the increased consumption of biofuels as transportation fuels.

Table 1.2 shows the projections for world consumption of hydroelectricity and other renewable energy for the OECD and the non-OECD countries. As shown in Tables 1.1 and 1.2, the annual growth rate for this category is sub­stantially higher than the conventional fossil energy sources of petroleum, natural gas, and coal. However, it should be noted that common biofuels for transportation such as bioethanol and biodiesel are not included in this cat­egory of "Other," but in the category of "Liquids."

The category of "Liquids" in the EIA’s reporting, as also shown in Table 1.1, includes petroleum and other liquid fuels. Bioethanol and biodiesel, for example, are included in this category as other liquid fuels. Therefore, this category of "Liquids" includes both renewable and nonrenewable liq­uid fuels as well as conventional and unconventional supplies. Table 1.3 shows the world liquid fuel consumption by region for 1990-2035 [5]. The

Source: U. S. Energy Information Administration (EIA). 2011. International energy outlook 2011: World energy consumption by region and fuel. Tech. Rep. DOE/EIA-0484, September 19.

Note: (a) 1 quad = 1 x 1015 BTU. (b) The annual growth rate is taken for the period of 2008-2035. (c) "Other" in the table represents the hydroelectricity and other renewable energy.

worldwide consumption of petroleum and other liquid fuels in 1990 was 67 million barrels a day, 85.7 million in 2008, 83.9 million in 2009, and 86.0 mil­lion in 2010. A decrease in 2009 was due to the global recession. The total liquids consumption for the world is projected to increase to 112.2 mil­lion barrels a day (225 quadrillion BTU for the year) in 2035, which is an increase of 26.5 million barrels a day compared to 2008. Of the total increase from 2008 to 2035, 17.2 million barrels a day, or about 75% of the increase, is expected to come from non-OECD nations. This demand growth of liquids is driven by the projected world GDP growth of 3.6%/year for 2008-2020 and 3.2%/year for 2020-2035. This is also based on the aforementioned reference case scenario, where the world oil price rises to $125 per barrel (2009 dollars) by 2035. This also implies that in the long term, despite the high oil price assumed for the reference case, the liquids consumption will still increase steadily. In order to satisfy this increase in global liquids consumption in the reference case, liquids production has to increase by 26.6 million barrels per day from 2008 to 2035. Even with the expected increase in the world liq­uids consumption, the growth in demand for liquids in the OECD nations is expected to slow due to a number of factors including: (a) governmental policies, (b) efforts of increasing the fuel efficiencies of motor vehicles, and (c) various incentives. In Japan and OECD Europe, the consumption of liquids is predicted to decline by average annual rates of 0.4%/year and 0.2%/year, respectively [5].

The increased portion of the global liquids demand of 26.6 million barrels per day from 2008 to 2035 will have to come from both conventional supplies (such as crude oil and lease condensate, natural gas plant liquids, and refinery gain) and unconventional supplies (such as biofuels, oil sands, extra-heavy oil, coal-to-liquids (CtL), gas-to-liquids (GtL), and shale oil) [6]. Sustained high oil prices will provide incentives for the unconventional supplies by making them more competitive. Unconventional liquids production is predicted to be increasing at a rate of about 5%/year for 2008-2035, according to the refer­ence case. In all five oil price cases of projection models by the EIA, Canadian bitumen (oil sands) production is an important factor, making up more than 40% of the total non-OPEC unconventional liquids production, ranging from

Projected World Liquids Consumptions by Region: Reference Case

Source: Energy Information Administration (EIA). 2011. International Energy Outlook 2011: Liquid Fuels. Tech. Rep. DOE/EIA-0484, September 19.

Note: AGR = Annual growth rate in %/year.

3.1 million barrels/day (low oil and traditional low oil case scenarios) to 6.5 million barrels/day (high and traditional high oil price case scenarios).

Biofuels, which are the main topical area of this book, come under this unconventional liquids category in the EIA projections. The world biofuel production in 2010 exceeded 105 billion liters (28 billion U. S. gallons or 667 million barrels), which was a remarkable 17% increase from the 2009 pro­duction. The liquid biofuels, mostly made up of bioethanol and biodiesel, accounted for about 2.7% of the world’s transportation fuel in 2010 [7].

As a long-term projection, the global biofuels production in the reference case scenario of IEO2011 is projected to increase from 1.5 million barrels/day in 2008 to 4.7 million barrels/day in 2035, at an average annual growth rate of 4.3% per year. The largest increase in biofuels production and consump­tion is expected to be in the United States, whose annual biofuels production grows from 0.7 million barrels/day in 2008 to 2.2 million barrels/day in 2035 in the reference case scenario. Another very strong growth in biofuels pro­duction is expected to take place in Brazil, a traditionally strong biofuels nation, whose annual production will increase from 0.5 million in 2008 to 1.7 million barrels/day in 2035, based on the reference case scenario. To achieve these goals, many biofuel-using nations set mandates for the amount of bio­fuels used and provide tax credits or incentives for biofuel producers. For example, the United States mandates 36 billion gallons of biofuels by 2022 under the Energy Independence and Security Act of 2007 (EISA of 2007), which is explained in more detail in Chapters 3 through 5.

The combined total of the two nations accounts for about 84% of the world increase in biofuels production. It has to be noted here that the biofuel pro­jections by the EIA have received significant changes and adjustments in their predictions from the IEO2009 reference case to the IEO 2010 and 2011 reference cases. The revised projection of 2010 and 2011 shows a 40% lower projected biofuels production in 2030, compared to the IEO2009 reference case. This rather significant adjustment was made based on several com­pounded factors including:

• Some recent studies suggest that biofuels may not be as effective in reducing greenhouse gas (GHG) emissions as previously thought.

As a result, many countries such as Germany [8] have relaxed or postponed renewal of their mandates.

• The global economic recession of 2009 has dampened investment in biofuels development.

• Some of the timetables originally set for technological exploitation of new and enhanced biofuels technologies on commercial scales have been pushed back.

Biofuels will become more competitive with conventional petroleum prod­ucts over time, as the oil price remains high or continues to rise and new technologies are continuously introduced and enhanced. A strong relation­ship between future biofuels production and the future petroleum price trend is explicitly reflected in the IEO’s projections. The IEO2011’s low oil price case scenario predicts the total global biofuels production of 3.5 mil­lion barrels/day in 2035, whereas the IEO2011’s traditional high oil price case scenario predicts it at 6.2 million barrels/day in 2035[6].

It should also be noted that the future years’ projections of biofuels production will have to be continuously adjusted and modified based on evolving market conditions and changing technoeconomic constraints, which include: (a) oil price trend, (b) economic strengths of major markets, (c) global politics, (d) R&D progress of new technologies and commercializa­tion efforts, (e) changing views and concerns of environmental and sustain­ability issues with regard to biofuels utilization, (f) governmental mandates and incentives, and so on.