Continuous growth in demand for life-critical resources is the result of social and economic development. The United Nations predicts that the world’s growing population will need at least 40% more water and 50% more energy within the next fifteen years.
- population growth
- economic growth
- rising living standards
- dietary and agricultural changes
During the 20th century, water consumption grew twice as fast as the world population. Increasing global demand for fresh water resources is driven by growing populations, urbanisation, migration, food and energy production, and economic factors like trade globalisation and changing patterns of consumption. These same trends have led to the pollution of water resources, further reducing the capacity of the natural water cycle to meet the world’s growing water demand.
Today, about one third of the global population lives in water-stressed countries. By 2025 that could rise to two thirds. By 2050 the United Nations expects that the world will need to produce 60% more food (100% more in developing countries), but the current growth rate of agricultural consumption of freshwater resources is unsustainable. Water demand for manufacturing industry worldwide is predicted to rise by 400% from 2000 to 2050, with the largest increases in emerging economies.
Competition for water resources is forecast to increase between industries and economic sectors, and between countries in both developed and developing regions. The rising value of finite water resources drives demand for our water conservation, treatment and testing products.
As people in developing economies become more affluent, they can switch from starch-based diets to meat and dairy diets, which raises agricultural water demand. Dietary change has had the strongest impact on global water consumption over the past 30 years, and this trend is expected to continue well into the middle of the 21st century.
Rising demand for energy and water is strongly linked. Water is used in power generation, in fuel extraction, transport and processing, and to irrigate biofuel feed stock crops. Water use in energy production can also affect fresh water resources by reducing the downstream volume and quality. Energy is vital to provide fresh water, powering the systems that collect, transport, distribute and treat it. After agriculture, energy production is the second largest water consumer. Energy uses about 15% of the world’s total water withdrawal, but this is expected to rise 20% by 2035.
Global economic growth is forecast to drive up energy demand by 34% between 2014 and 2035. Most of the extra energy will be consumed in the fast-growing emerging economies; energy use within developed OECD countries is expected to remain largely unchanged.
The oil and gas segment of the energy market consists of three sectors: upstream (exploration and production), midstream (storage, processing and distribution), and downstream (oil refining and raw gas processing).
In response to the recent slump in oil prices, the oil majors have postponed many projects and made massive cuts in upstream capital investment. Despite signs in the second quarter of 2016 that the oil price is beginning to rise, energy industry forecasts suggest that upstream sector capital investment is likely to continue to fall in the short- and medium term.
Conversely, the oil price fall has been favourable to midstream and downstream processors who have benefited from lower feed stock prices. As a result, investment continues in midstream and downstream oil and gas storage and refinery projects where our Process Safety products have most exposure.
Several of our businesses may see revenue from upstream oil and gas projects continue to fall. However, a combination of long-term growth in energy demand, rising capital expenditure in refining, petrochemicals and pipelines in the oil and gas midstream/downstream sectors, and in alternative energy markets like wind farm power generation, will offer growth and diversification opportunities for our businesses affected by the short-term oil price fall.
As global demand for water resources becomes unsustainable, the value of conservation, improving efficiency and effective monitoring is growing. Several of our Environmental & Analysis sector businesses operate in markets driven by the global trends of rising demand for life-critical resources such as energy and water. Rising energy demand and continued global investment in the key sectors of traditional and unconventional energy sources also drives demand for our Process Safety products.