World Energy Review

In 2023, the global population witnessed a 0.9% increase (+70 million), reaching 8 billion people. Notably, this growth was concentrated in Africa (+2.3%) and the Middle East (+1.7%), with Europe being the only region to experience a decline (-0.4%). This marks the second consecutive contraction for Europe, following the one recorded in 2022 (-0.5% compared to 2021). 

At a country level, India, with more than 1.4 billion people, surpassed China for the first time and became the most populous country in the world. Among the top ten by population, the most significant increases came from African countries (Ethiopia +2.6% and Nigeria +2.4%), followed by Pakistan, Bangladesh, and the United States. Population declined in Russia , with a downward trend since 2019. 

In 2023, despite concerns about a global recession, the global economy demonstrated remarkable resilience. Global GDP grew by 2.7%, in line with 2022, thanks to favourable demand developments, including higher-than-expected government spending and household consumption, and a supply-side expansion that helped alleviate inflationary pressures. This resilience was particularly noteworthy in a weak growth environment due to significant interest rate hikes by major central banks aimed at curbing inflation.  

Global economic growth in 2023 revealed distinct trends. European countries experienced a slowdown due to the lingering effects of the 2022 energy crisis, which have continued in 2023. Asian economies, on the other hand, fell short of expectations. China, grappling with weak domestic consumption and deteriorating housing market conditions, saw a slower post-Covid recovery than anticipated (+5.2% in 2023 vs. CAGR 2010-2023 +6.5%). However, there were bright spots. The U.S. (+2.5%) defied expectations, posting higher-than-expected growth. This surprising growth was largely due to an exceptionally expansionary fiscal policy that bolstered consumption, despite high interest rates.

2023 was characterized by uncertainty and volatility. The ongoing Russia-Ukraine war was accompanied, at the end of the year, by the conflict between Israel and Hamas.

In this context, the Brent price averaged 82.6 $/b, about 18% lower than in 2022. In the first half of the year, despite concerns about the global economy and uncertainties related to the Chinese economy, rising demand and OPEC+ policies kept Brent prices around 80 $/b. In the third quarter, demand reached new highs. This trend, coupled with Saudi Arabia’s unilateral production cut of 1 Mb/d, led to a marked increase in Brent, which exceeded 90 $/b in September. The fourth quarter began with prices supported by conflicts in the Middle East, keeping the market in a state of uncertainty; however, by the end of the year, doubts about OPEC+ policy compliance and concerns about oil demand sustainability caused a drop in prices.

In 2023, the global oil demand increased by 2.3 Mb/d, reaching 102 Mb/d, surpassing 2019 (100.6 Mb/d). This growth was mainly driven by the increase in jet-kerosene consumption due to the post-COVID aviation sector recovery and the rising demand for feedstock in the petrochemical industry (naphtha, LPG, and ethane), fueled by the sector’s continuous expansion in China. Global growth is driven by non-OECD economies, with China alone accounting for almost 80% of the increase in 2023.

Production grew by 1.8 Mb/d compared to 2022, reaching 96.6 Mb/d (excluding biofuels and processing gains), with growth concentrated in non-OPEC, particularly the United States, where production grew by 1.5 Mb/d YoY. OPEC production fell by 0.4 Mb/d, reflecting the cuts introduced during the year. Saudi Arabia reached around 9 Mb/d in the second half of the year, the lowest production level since 2011 (excluding the pandemic period). The production decline was partly offset by strong growth in Iran, which does not adhere to the OPEC+ agreement, with oil production at its highest since 2018, reaching 4.2 Mb/d. Despite Western sanctions, Russia kept production levels almost unchanged from the previous year, at about 11 Mb/d. In terms of crude quality, the production mix (light, medium, and heavy) remained largely stable. 

Lastly, primary refining capacity increased in 2023, reaching 104 Mb/d, with a net increase of 1.8 Mb/d compared to 2022, the most significant in the last 20 years. The Middle East contributed more than 40% of the total increase. Specifically, among the most important projects were the startup of Al Zour in Kuwait (615 kb/d), Duqm in Oman (230 kb/d), and Karbala in Iraq (140 kb/d).

After the supply shock due to Russia’s invasion of Ukraine in February 2022 –with record prices, strong volatility, and radical reshaping of global LNG flows and countries’ roles – global gas markets moved towards a gradual rebalancing over the 2022/23 heating season and for 2023 summer months. 

In 2023, prices have declined with an average drop of approx. 60% from 2022 levels, in particular:

• In Europe, the Title Transfer Facility (TTF) averaged 12.8 $/Mbtu (vs. 37.1 $/Mbtu in 2022), ranging from 7.3-23.4 $/Mbtu.

• In Asia, the LNG spot price (avg. 15.3 $/Mbtu in 2023 vs. 34.0 $/Mbtu in 2022) coming back to a premium vs. the European market since June, except for a few days right after the start of the Israel-Hamas war.

• In the United States, the 2023 gas market softened, with Henry Hub prices returning to values more aligned with the historical average (avg. 2.5 $/Mbtu in 2023 vs. 6.4 $/Mbtu in 2022).

Global gas demand remained stable in 2023 (+0.1% vs. 2022), reaching about 4,000 Bcm with divergent dynamics worldwide: favourable weather conditions and economic environment, in particular, mitigated demand both in Europe and Asia, making supply able to meet demand and storage. The significant increase in China (+7%) was partly offset by the slowdown recorded in the EU (-7%), which weighed the reduction in the civil and power sector.

World gas production increased slightly in 2023 (+0.3% vs. 2022) to about 4,000 Bcm. This increase was primarily driven by the United States, which recorded +3% growth (+34 Bcm), and China, which saw a +6% increase (+12 Bcm). Russia, on the other hand, bucked the trend with a drop in production of about -5% (-34 Bcm), influenced by lower exports to Europe.

Regarding LNG, global liquefaction and regasification capacities increased in 2023 compared to 2022, reaching 645 Bcm (+2%) and 1,465 Bcm (+6%), respectively. In particular, the United States led the growth in liquefaction (+5.7 Bcm), followed by Mozambique (+3.8 Bcm). In comparison, the increase in regasification capacity occurred in Europe (+36 Bcm, especially Germany and the Netherlands) and Asia (+35 Bcm, especially China, India, and the new import market, the Philippines).

Gas imports decreased by approx. 4% compared to 2022, particularly in the European market (approx. -11%), influenced by the drop in demand; this reduction in Europe was only partially offset by the increase in imports to China of +10% (flows via pipe approx. +20%, via LNG +5%).  In terms of gas exports, while outflows from Russia fell sharply (-18%), among the world's major exporters, the United States recorded the most significant increase (+14%) thanks to LNG exports, which have become the largest producer globally.

In 2023, the world’s coal demand reached a total of about 8,350 Mton, marking a 2.2% increase from 2022.

This growth was driven by higher consumption in Asia (particularly in China and India, which saw a +6% and +10%, respectively). These gains were partially offset by reductions in Europe (-17%) and North America (-10%). Coal production also saw a 2.6% increase compared to 2022, reaching about 8,700 Mton. China, a dominant force in the global coal market, confirmed its position as the world's leading country in terms of coal consumption and production. In 2023, China accounted for 56% of the global demand and 51% of the worldwide output. The country’s CAGR 2010-23 shows a steady growth trend of 2.5% for coal consumption and 2.4% for coal production.

In 2023, the global energy-related CO₂ emissions increased by 1.1%, reaching a new record of 37.2 Gton. The increase was driven by China, which alone accounted for one-third of the global CO₂ emissions, and India, which for the first time surpassed the EU by contributing over 7%. By contrast, emissions from advanced economies dropped to levels last seen 50 years ago, primarily due to the shift from coal to gas and the increased use of clean energy in power generation.

In terms of geographic areas, the distribution of CO₂ emissions remains uneven. Over the 2005-2022 period, OECD countries gradually reduced their emissions by more than 15%, mainly due to increased energy efficiency, coal-to-gas switching, and the growth of renewables. In addition, a weak macroeconomic environment contributed to the decline in industrial production in many countries.

However, this decline in advanced economies was “offset” by a 65% increase in emissions in non-OECD countries. China was confirmed as the world’s largest emitter, a position it has held since 2006, almost doubling its emissions by 2023. The United States, the second-largest emitter worldwide (first country until 2005), has undertaken a downward trend since 2006, with emissions in 2023 being 20% below 2005 levels. The main driver of this decline was the closure of coal-fired power plants and the switch to gas. Finally, in India, the third largest country after China and the US, emissions grew at an average annual rate of more than 5% from 2005 to 2023.

Renewable capacity (solar and wind) has been growing exponentially in recent years, reaching a global all-time high of about 2,400 GW in 2023; the share of solar and wind in the electricity generation mix has risen over 13%, compared with over 60% generated by fossil fuels.

Only a decade ago this share was close to 3%.

In 2023, the solar photovoltaic sector is confirmed to be the driving force behind the renewable industry, thanks to a capacity growth of +347 GW (+33%) compared to 2022. Strong impetus for this increase comes mainly from China (+217 GW, or +55% vs. the last year) and, to a lesser extent, the United States (+25 GW, +22% vs the previous year). Cumulative capacity at the end of 2023 amounted to about 1,411 GW, with China and the United States accounting for 43% and 10% of the world's capacity, respectively.

Less significant than photovoltaics, albeit important within renewables, is the growth of the wind power sector whose capacity increased in 2023 by 115 GW compared to 2022 (+13%) to a level of 1,017 GW at the end of the year. China and the U.S. are also confirmed as the world's major players in this sector with a global share of 43% and 15%, respectively; in addition, China contributed primarily to the growth with an increase of 76 GW y-on-y.

As for biofuels, global production increased by 8% vs. 2022 with the sharpest increase in biodiesel production. Specifically, among advanced economies, there is strong growth in renewable diesel (HVO Hydrotreated Vegetable Oil) in the US, supported by legislation to reduce transportation emissions, while in emerging economies such as Indonesia and Brazil, the increase in biodiesel is incentivized by energy security objectives and ample feedstock availability.

Hydroelectric and nuclear are two mature power generation technologies, that saw their greatest development a few decades ago. As these technologies have been widely established, they have not experienced a sharp increase in capacity as happened for wind and solar, maintaining an almost constant level of generation. In 2022, hydroelectricity represented around 15% of global electricity production, while nuclear accounted for around 10%.

In 2022, hydropower generation worldwide reached about 4,350 TWh, up 1.2% compared to 2021, mainly due to higher production recorded in Asia (+3%) and the Americas (+6.5%), which more than offset the significant reduction in European production (-14%) due to the severe drought. Nuclear generation decreased by -4.5% compared to the previous year, at 2,685 TWh globally. The decline was mainly caused by lower production in Europe (-16%) and the Americas (-2%), only partially offset by the increase in the Middle East. 

In 2023 China was the world’s first country for hydroelectric generation with a production of about 1,250 TWh, down by -5% compared to 2022, followed by Brazil (425 TWh) and Canada (360 TWh); the United States was the world's leading country for nuclear generation with a production of around 810 TWh, followed by China (435 TWh) and France (340 TWh).

Critical minerals play a vital role in some key transition-related technologies: batteries (cobalt, lithium, nickel, manganese, and graphite), wind (rare earth), and solar (silicon).

The extraction of these raw materials is concentrated in a few countries, which, together with high prices and expected growth in demand, could jeopardize the security of supply.

In recent years, many critical raw materials have experienced significant price spikes. Most of them show significant growth rates in terms of production (e.g., lithium CAGR 2010-2023 of +15%), also reflecting the estimated growth in demand, linked to the energy transition. Cobalt and lithium are, among all critical minerals, the most concentrated in terms of reserves and production.

In terms of reserves, cobalt saw a growth of 2,700 kton in 2023 (+33%), the most significant increase recorded in the Democratic Republic of Congo (+2,000 kton), where 57% of the world reserves are concentrated; for lithium, there was an increase of 2,000 kton compared to 2022, owing to a large number of reserves in China and Argentina; on the other hand, Chile is the country with the highest geographical concentration of reserves (34%).

Regarding production, 74% of cobalt is produced in the Democratic Republic of Congo, 68% of rare earths in China, over 50% of nickel in Indonesia, and almost 50% of lithium in Australia.