BP Group Chief Economist Spencer Dale said during an online webcast Jan. 25 that the main story in the companys outlook report this year is about the energy transition that is taking place and is likely to continue to take place over the next 20 years. On the demand side, there’s a shift in the pattern of demand, away from the U.S. and Europe to fast-growing Asian markets, Dale said. On the supply side, the story is one of a continuing shift in the fuel mix towards lower carbon fuels.

Oil is expected to remain the top energy source to 2035, with a 29 percent share, down from 32 percent in 2015. Its annual growth is projected to slow slightly to 0.7 percent per year during the 2015 to 2035 period, compared to 1.4 percent per year from 1995 to 2015.

Gas is expected to grow faster than coal and oil in terms of energy consumption, overtaking coal as the second-largest global fuel source by 2035, with a 25 percent share.

Global coal consumption is expected to peak at nearly 4.1 billion tons of oil equivalent in 2025 and 2030 before declining slight to 4 billion tons of oil equivalent in 2035. The big driver of coals declining fortune is China, Dale said, noting the changing pace and pattern of economic growth, combined with the countrys commitment to reduce its dependency on coal.

The global energy consumption share for renewables, including biofuels, is projected to grow from 3 percent in 2015 to 10 percent by 2035, a 291 percent increase. This strong growth in renewable energy is underpinned by improving competitiveness of both solar and wind power, Dale said. He noted that while the European Union continues to lead way in penetration of renewables, China is far and away the largest source of growth in renewables, adding more renewable power than the European Union and United States combined.

By 2035, nuclear, hydroelectric and other non-fossil fuel sources are expected to account for 23 percent of global primary energy, up from 15 percent in 2015.

Global nuclear power share is projected to reach approximately 5 percent in 2035, up from 4 percent in 2015. Chinas rapid nuclear expansion program is expected to account for nearly three-quarters of the global increase in nuclear generation. Meanwhile, nuclear capacity in Europe is expected to decline, as aging plants are gradually decommissioned, with little new investment planned. EU nuclear power generation by 2035 will be 30 percent lower than in 2015, BP estimated.

BP estimates the global car fleet will double to 1.8 billion by 2035, with almost all the growth in emerging markets, as rising incomes and improving road infrastructure boost car ownership. The number of electric cars is projected to swell from 1.2 million in 2015 to around 100 million by 2035, making up six percent of the global fleet. About a quarter of these are plug-in hybrids, which run on a mix of electric power and fossil fuel, while the rest are expected to be pure battery electric vehicles.

In 2015, cars accounted for 19 million barrels per day of liquid fuel demand, a fifth of total global demand. The outlook notes that if all else was equal, a doubling in demand for car travel to 2035 would lead to a doubling in the liquid fuel demand from cars. However, improvements in fuel efficiency as manufacturers respond to stricter vehicle emission standards is expected to reduce such growth by as much as 17 million barrels per day. An average passenger car is expected to achieve almost 50 miles per U.S. gallon in 2035, according to the outlook, compared to 30 miles per gallon in 2015.

Dale noted that an increase to 100 million electric cars in 2035, up from 1.2 million in 2015, is expected to reduce oil demand growth by about 1.2 million barrels per day, about a tenth of the impact expected from gains in vehicle efficiency.

The extent to which fuel economy standards are tightened is a key driver for the rate at which electric vehicles penetrate the global car fleet. But electric vehicle penetration will also depend on a number of other factors, BP said, including the pace at which battery costs continue to fall, the size and durability of subsidies and other government policies supporting electric vehicle ownership, the speed at which the efficiency of conventional vehicles improves and consumer preferences toward such vehicles.

The 2017 BP Energy Outlook documents may be downloaded from BP’sweb site.