Inside Out
•
•
•
2040 – energy demand
to rise by a third
According to BP’s latest Outlook for Energy which was published in
February, the biggest challenge facing the global energy sector over the
next 20 years is – MORE ENERGY, LESS CARBON.
In the accompanying podcast, the report’s principal author,
Spencer Dale, BP’s chief economist, reminds us that the report does not
primarily seek to predict the future but to better understand it, along
with the attendant uncertainties and challenges. Many of the latter
inevitably relate to the policy measures and initiatives that need to be
adopted in order to achieve the key COP21 goals around maximum
targeted temperature change and the emissions reductions needed to
achieve this.
Four principal scenarios
•
•
•
•
EVOLVING TRANSITION which assumes that government
policies, technologies and societal preferences evolve in a manner
and speed similar to the recent past
MORE ENERGY which recognises that more energy will be needed
to support growth and enable billions of people to move from low
to middle incomes
LESS GLOBALISATION which explores the possible impact that
escalating trade disputes could have on the global energy system
RAPID TRANSITION which is the combination of analyses that
brings together in a single scenario the policy measures in separate
lower carbon scenarios for industry & buildings, transport & power.
By 2040, this results in around a 45% decline in carbon emissions
relative to current levels. This is broadly in the middle of a sample
of external projections assessed to be consistent with meeting the
Paris climate goals (COP21).
Highlights and conclusions
Although the Outlook considers several future scenarios, this feature
focuses on EVOLVING TRANSITION which can be viewed as a kind of
‘P50’ probability case.
• By 2040 global energy demand will increase by around a third,
driven by improvements in living standards, particularly in India,
China and across Asia. India will replace China as the main source
of energy growth.
•
•
•
Energy consumed by industry & buildings will account for around
75% of this increase in overall energy demand, while growth in
energy demand from transport slows sharply, relative to the past, as
gains in vehicle effi ciency accelerate.
The power sector will use around 75% of the increase in primary
energy.
85% of the growth in energy supply will be 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 will be faster than any fuel in history.
Demand for oil will continue to grow in the fi rst half of the Outlook
period before gradually plateauing sometime in the mid 2030s.
Whilst oil will have a major role to play in the energy system out
to 2040, global coal consumption will remain broadly fl at. Across
all the scenarios considered in the Outlook, signifi cant levels of
continued investment in fi nding and developing new oil reserves will
be required to meet oil demand in 2040.
As global carbon emissions continue to rise, there will be a need for
a comprehensive set of policy measures to achieve a substantial
reduction in carbon emissions. Developments in the power sector
will be critical to being able to achieve the level of emissions
reductions compatible with COP21 goals.
The strongest oil demand
The strongest sources of oil demand in the EVOLVING TRANSITION
scenario are expected to be non-road transport (aircraft and shipping)
and non-combusted (non-energy) uses such as petrochemical feedstock.
This is neatly illustrated in the following chart.
Even under the RAPID TRANSITION scenario, putting the world
on course to meet the COP21 goals, oil demand is only expected to fall
by around 20% by 2040, from the current 100 million barrels per day to
about 80 million bpd – although it would continue to decline after that.
This latest Outlook has some important messages, not the least
of which is that on the current trajectory of EVOLVING TRANSITION
we are not on target to limit global warming to the 2 Degr C target set
under COP21 – let alone the aspirational maximum of 1.5 Degr C.
Whilst the RAPID TRANSITION scenario maps out a pathway that
will enable the maximum 2 Degr C increase to be met, more need s to be
done and there isn’t a lot of time!
Fuel Oil News | April 2019 19