Over the next 25 years world energy use will increase by 53%, with China and India alone accounting for half of the total growth, according to the International Energy Outlook 2011 (IEO2011) issued by the Energy Information Administration (EIA) on Monday.

EIA Acting Administrator Howard Gruenspecht presented the agency’s annual long-term assessment of world energy markets, the latest covering a reference case from 2008 to 2035, at a press conference hosted by the Center for Strategic and International Studies Energy and National Security Program.

Fossil fuels, he noted, would continue to dominate world energy markets, accounting for around 80% of energy use in 2035. Most of the energy gains in the next two decades-plus will be driven by strong economic growth in developing nations, especially China and India.

“China alone, which only recently became the world’s top energy consumer, is projected to use 68% more energy than the United States by 2035,” he said.

The report covers EIA’s view on long-term global natural gas markets, petroleum and other liquids fuel supplies, energy demand growth among developing nations, and recent events that have compounded the uncertainty associated with this year’s long-term outlook. The latest case projection does not incorporate prospective legislation or policies that might affect energy markets.

“We do see oil prices in real terms continuing to rise as the world’s economies recover, demand grows and supply growth faces real above-ground and below-ground challenges,” said Gruenspecht. Oil prices are forecast to reach $125/bbl under the new IEO reference case as the Organization of Petroleum Exporting Countries (OPEC) attempts to regain its market share, he said.

High prices and more market volatility are more likely now than they were in the 1986-2000 period because spare production capacity is lower and producing nations have seen no incentive to increase it immediately, said the EIA chief. However, high oil prices also will probably increase conventional production outside OPEC, with the United States, Russia, Brazil and Kazakhstan offsetting declines in Europe and Mexico.

Total world petroleum and other liquids fuel use is seen increasing by 26.9 million b/d between 2008 and 2035 but the growth in conventional crude oil production is less than half this amount at 11.5 million b/d. While petroleum and other liquid fuels remain the largest energy source worldwide through 2035, projected higher oil prices erode their share of total energy use to 29% in 2035 from 34% in 2008.

Production gains are expected from the use of enhanced oil recovery and more recovery from shale formations worldwide, said Gruenspecht.

“There’s not a lot of shale oil outside of North America, but the question is whether it will follow the trend of shale natural gas and begin to grow elsewhere,” he said. “Reference case oil prices are at high levels, reflecting more unconventional sources from both OPEC and non-OPEC suppliers…They become competitive particularly when political factors restrict access to more conventional supplies.”

Because the forecast doesn’t consider possible political change, a particular region’s share of total world oil and gas production could be altered over the time period reviewed, Gruenspecht noted.

“Clearly, sanctions and other financial and institutional constraints that are restricting development of abundant resources in other countries could be alleviated,” he said. “Recent political unrest in North Africa and elsewhere also remind us that there’s growing price and production uncertainty.”

The key reference case assumptions from 2008 through 2035 include the following:

Natural gas liquids output is forecast to jump by 5.1 million b/d in 2035. And global production of unconventional resources (including biofuels, oilsands, extra-heavy oil, coal-to-liquids and gas-to-liquids), which totaled 3.9 million b/d in 2008, increases to 13.1 million b/d in 2035.

Meanwhile, coal consumption is forecast to grow from 139 quadrillion Btu in 2008 to 209 quadrillion Btu in 2035, at an average annual rate of 1.5%. “In the absence of policies or legislation that would limit the growth of coal use, China and, to a lesser extent, India and the other [emerging Asian] nations…consume coal in place of more expensive fuels,” the report noted. “China alone accounts for 76% of the projected net increase in world coal use,” with India and other emerging Asian nations accounting for 19% of the growth.

Electricity remains the world’s fastest-growing form of end-use energy consumption in the reference case, as it has been for the past several decades, with renewables the fastest growing source of new generation. Net electricity generation worldwide is projected to increase by 2.3% a year on average from 2008 to 2035. Renewables increase by 3% and outpace the average annual increases for natural gas (2.6%), nuclear power (2.4%) and coal (1.9%).

The IEO2011 reference case also found that energy-related carbon dioxide emissions are forecast to increase $43% over the next 25 years to 43.2 billion metric tons in 2035 from 30.2 billion metric tons in 2008. Most of the increase in emissions is projected to occur among the developing nations of the world, especially in Asia.

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