BP: Renewables to Grow Faster Than Any Fuel in History

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By MarEx 2019-02-16 20:24:45

BP has published the 2019 edition of its Energy Outlook, exploring the need for more energy                      to support continued global economic growth and rising prosperity and the need for a more rapid transition to a lower-carbon future.

The Outlook also considers the possible impact of an escalation in trade disputes and the                    implications of a significant tightening in the regulation of plastics.

Much of the narrative in the Outlook is based on its evolving transition scenario which                      assumes that government policies, technologies and societal preferences evolve in a                            manner and speed similar to the recent past. “The world of energy is changing,” says                          Spencer Dale, group chief economist. “Renewables and natural gas together account for                        the great majority of the growth in primary energy. In our evolving transition scenario,                                  85 percent of new energy is lower carbon.”

The evolving transition scenario predicts:

• Global energy demand increases by around a third by 2040, driven by improvements in                          living standards, particularly in India, China and across Asia.

• Energy consumed by industry and buildings accounts for around 75 percent of this increase                      in overall energy demand, while growth in energy demand from transport slows sharply                            relative to the past as gains in vehicle efficiency accelerate.

• The power sector uses around 75 percent of the increase in primary energy.

• 85 percent of the growth in energy supply is generated through renewable energy and                      natural gas, with renewables becoming the largest source of global power generation by 2040.

• The pace at which renewable energy penetrates the global energy system is faster than for                    any fuel in history.

• Demand for oil grows in the first half of the Outlook period before gradually plateauing, while                    global coal consumption remains broadly flat.

Across all the scenarios considered in the Outlook, significant levels of continued investment in                 new oil will be required to meet oil demand in 2040. Other scenarios include:

More energy scenario

More energy will be needed to support growth and enable billions of people to move from                          low to middle incomes. There is a strong link between human progress and energy consumption              the UN Human Development Index suggests that increases in energy consumption of up to around           100 gigajoules (GJ) per head are associated with substantial increases in human development                  and well-being.

Today, around 80 percent of the world’s population live in countries where average energy                  consumption is less than 100 GJ per head. In order to reduce that number to one-third of                            the population by 2040, the world would require around 65 percent more energy than today,                      or 25 percent more energy than needed in the evolving transition scenario. The increase                            in energy required over and above the evolving transition scenario is roughly the equivalent                      of China’s entire energy consumption in 2017.

Rapid transition scenario

The rapid transition scenario is the combination of analyses throughout the Outlook which                       brings together in a single scenario the policy measures in separate lower carbon scenarios                       for industry and buildings, transport and power. Doing so results in around a 45 percent                        decline in carbon emissions by 2040 relative to current levels – which is broadly in the                               middle of a sample of external projections with claim to be consistent with meeting the                          Paris climate goals.

The fall reflects a combination of: gains in energy efficiency; a switch to lower-carbon fuels;                       material use of Carbon Capture Utilization and Storage; and, of particular importance in the                      power sector, a significant rise in the carbon price.

The power sector is currently the single largest source of carbon emissions from energy use.               Reductions in carbon emissions from the transport industry in all scenarios to 2040 is relatively                  small in comparison.

Less globalization scenario

International trade underpins economic growth and allows countries to diversify their source                       of energy. In the less globalization scenario the Outlook explores the possible impact that                     escalating trade disputes could have on the global energy system. 

“The message from history is that concerns about energy security can have persistent,                              scarring effects,” said Dale.

The scenario highlights how a reduction in openness and trade associated with an escalation                    in trade disputes could reduce worldwide GDP and therefore energy demand. Moreover,                 increasing concerns about energy security may cause countries to favor domestically-                             produced energy, leading to a sharp reduction in energy trade. The greatest impact is                                 on net energy exporters who suffer a material slowdown in the growth of oil and gas exports.

Single-use plastics ban scenario

The single-largest projected source of oil demand growth over the next 20 years is from the non-combusted use of liquid fuels in industry, particularly as a feedstock for petrochemicals, driven by              the increasing production of plastics. Growth of non-combusted demand in the evolving transition scenario is, however, slower than in the past, reflecting the assumption that regulations governing           the use and recycling of plastics tighten materially over the next 20 years.

Given the heightening environmental concerns regarding single-use plastics, the Outlook                     considers a single-use plastics ban scenario, in which the regulation of plastics is tightened                     even more quickly, culminating in a worldwide ban on the use of all single-use plastics from 2040 onwards.

In this scenario, oil demand rises more slowly than in the evolving transition scenario.                        However, the Outlook cautions that the full impact on energy growth and the environment                          will depend on the alternative materials that may be used in place of single-use plastics. A                         ban on single-use plastics could result in an increase in energy demand and carbon emissions                  without further advances in alternative materials and the widespread use of collection and                          reuse systems.                                                                                                                                         source:




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