bp Energy Outlook Explores Possible Paths for Global Energy Transition

The 2020 edition of the bp Energy Outlook explores possible paths for the global energy transition, how global energy markets may evolve over the next thirty years and the key uncertainties that may shape them. Looking out to 2050, the Outlook is focused around three main scenarios.

In the main scenarios, it considers, global energy demand continues to grow for at least part of the period to 2050. However, over this time, the structure of energy demand fundamentally shifts, with a declining role for fossil fuels offset by an increasing share for renewable energy and a growing role for electricity.

“Even as the pandemic has dramatically reduced global carbon emissions, the world remains on an unsustainable path. However, the analysis in the Outlook shows that, with decisive policy measures and more low carbon choices from both companies and consumers, the energy transition still can be delivered,” said Bernard Looney, CEO of bp.

“It is one of the reasons I remain optimistic about the future and I hope readers will find the report helpful as we all try to make a difference.”

The Outlook explores the energy transition to 2050 using three main scenarios. These are not predictions but, based on alternative assumptions about policies and societal preferences, are designed to help explore the range of outcomes possible over the next thirty years.

Rapid assumes the introduction of policy measures, led by a significant increase in carbon prices, that result in carbon emissions from energy use falling by around 70% by 2050 from 2018 levels. Rapid is broadly in line with scenarios that are consistent with limiting the rise in global temperatures by 2100 to well below 2°C above pre-industrial levels.

Net Zero assumes the policy measures of Rapid are reinforced by significant shifts in societal and consumer behaviour and preferences – such as greater adoption of circular and sharing economies and switching to low carbon energy sources. This increases the reduction in carbon emissions by 2050 to over 95 percent. Net Zero is broadly in line with a range of scenarios consistent with limiting temperature rises to 1.5°C.

Business-as-usual (BAU) assumes that government policies, technologies and societal preferences continue to evolve in a manner and speed seen in the recent past. In BAU, carbon emissions from energy use peak in the mid-2020s but do not decline significantly, with emissions in 2050 less than 10 percent below 2018 levels.

Both the Rapid and Net Zero scenarios assume a significant increase in carbon prices, reaching USD 250/tonne of CO2 in the developed world by 2050 and USD 175/tonne in emerging economies. This is much lower in the BAU scenario, with carbon prices reaching only USD 65 and USD 35/tonne CO2 by 2050 on average in developed and emerging economies respectively.

bp’s chief economist, Spencer Dale said “the role of the Energy Outlook is not to predict or forecast how the energy system is likely to change over time. We can’t predict the future; all the scenarios discussed in this year’s Outlook will be wrong. Rather, the Outlook uses these different scenarios to help better understand the range of uncertainty we face as the energy system transitions to a lower-carbon world. Improving our understanding of this uncertainty is an important input into designing a strategy that is robust and resilient to the range of outcomes we may face.”

A few key themes from the bp Energy Outlook:

Growing energy demand: in all three scenarios, global energy demand grows, driven by increasing prosperity and living standards in the emerging world. Primary energy demand plateaus in the second half of the Outlook in Rapid and Net Zero as improvements in energy efficiency accelerate. In BAU, demand continues to grow throughout the Outlook, reaching around 25 percent higher by 2050.

Fundamentally restructured global energy systems: the transition to a lower carbon energy system results in a more diverse energy mix, as all three scenarios see a decline in the share of the global energy system for hydrocarbons and a corresponding increase in renewable energy as the world increasingly electrifies. The scale of the shift varies significantly across the scenarios, with the share of hydrocarbons in primary energy declining from around 85 percent in 2018 to between 65-20 percent by 2050 and renewable energy rising to 20-60 percent.

Wind and solar lead fast growth in renewable energy: renewables are the fastest growing source of energy over the next 30 years in all the scenarios. The share of primary energy from renewables grows from around 5 percent in 2018 to 60 percent by 2050 in Net Zero, 45 percent in Rapid and 20 percent in BAU. Wind and solar power dominate this growth, underpinned by continuing falls in development costs, lower in 2050 by around 30 percent and 65 percent for wind and solar respectively in Rapid and by 35 percent and 70 percent in Net Zero. The growth requires a significant acceleration in the build out of renewable capacity. In Rapid and Net Zero the average annual increase in wind and solar capacity over the first half of the Outlook is around 350 GW and 550 GW respectively, compared to the annual average of around 60 GW since 2000.

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Ayush Verma

Ayush Verma

Ayush is a staff writer at saurenergy.com and writes on renewable energy with a special focus on solar and wind. Prior to this, as an engineering graduate trying to find his niche in the energy journalism segment, he worked as a correspondent for iamrenew.com.

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