BP’s 2020 Energy Outlook predicts that demand for oil might never recover from the fall caused by Covid-19.
BP’s 2020 Energy Outlook predicts that demand for oil might never recover from the fall caused by Covid-19. BP’s ‘Net Zero’ scenario predicts that demand for oil could be 80% lower by 2050, and 55% lower in its ‘Rapid’ scenario and 10% lower in its ‘Business-as-Usual’ (BAU) scenario.
‘In BAU demand plateaus in the early 2020s and in both Rapid and Net Zero oil demand never fully recovers from the fall caused by Covid-19,’ says the report.
BP’s prediction differs from Total’s Energy Outlook, published in October, which predicts peak demand for oil around 2030. Meanwhile, OPEC’s latest World Oil Outlook report, estimates that global oil demand will rise from nearly 100 million barrels a day in 2019 to 109 million in 2045.
BP goes on to say that its prediction is predicated on ‘significant increases’ in carbon prices to deliver a lasting reduction in emissions and big changes in consumer behaviour. ‘Delaying these policy measures and societal shifts may significantly increase the scale of the challenge and lead to significant additional economic costs and disruption,’ says the report.
BP’s Net Zero scenario is based on carbon prices increasing to $250/tonne of CO2 in the developed world by 2050 and $175/tonne in emerging economies. It also assumes significant shifts in societal and consumer behaviour and preferences towards low carbon energy sources. This increases the reduction in carbon emissions by 2050 to more than 95%.
Its ‘Rapid’ scenario is based on carbon prices increasing to $250/tonne of CO2 in the developed world by 2050 and $175/tonne in emerging economies, but less progress in societal and consumer behaviour. Carbon emissions from energy use would fall by around 70% by 2050 from 2018 levels.
Its Business-as-Usual (BAU) scenario assumes less progress in government policies, technologies and societal preferences. Carbon emissions from energy use peak in the mid-2020s but do not decline significantly, with emissions in 2050 less than 10% below 2018 levels. Carbon prices reach only $65 in developed economies and $35/tonne CO2 in emerging economies by 2050.
BP chief executive officer Bernard Looney said: ‘Even as the pandemic has dramatically reduced global carbon emissions, the world remains on an unsustainable path. However, 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.’
In each scenario, global energy demand grows, driven by increasing living standards in the emerging world. 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, reaching around 25% higher by 2050.
The decline in oil demand is driven by the increasing efficiency and electrification of road transportation. In all three scenarios the use of oil in transport peaks in the mid to late-2020s. The share of oil in meeting transport demand falls from more than 90% in 2018 to around 80% by 2050 in BAU, but to 40% in Rapid and to just 20% in Net Zero.
Global demand for gas peaks in the mid-2030s in the Rapid scenario and in the mid-2020s in Net Zero, and by 2050 demand will be around a third lower. In BAU, gas demand increases throughout the next 30 years to be around a third higher by 2050. Gas combined with CCUS accounts for between 8-10% of primary energy by 2050 in Rapid and Net Zero.
Renewables are the fast-growing source of energy over the next 30 years in all the scenarios. The share of primary energy from renewables grows from around 5% in 2018 to 60% by 2050 in 2 4
Net Zero, 45% in Rapid and 20% in BAU. Wind and solar power dominate this growth, underpinned by continuing falls in development costs, lower in 2050 by around 30% and 65% for wind and solar respectively in Rapid and by 35% and 70% in Net Zero. 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.
Decarbonization of the energy system leads to increasing amounts of final energy use being electrified. By 2050 the share of electricity in total final consumption increases from a little over 20% in 2018 to 34% in BAU, 45% in Rapid and more than 50% in Net Zero.
Use of hydrogen increases in the second half of the Outlook in Rapid and Net Zero, particularly in activities which are harder or more costly to electrify. By 2050, hydrogen accounts for around 7% of final energy consumption (excluding non-combusted) in Rapid and 16% in Net Zero. By 2050, bioenergy accounts for around 7% of primary energy in Rapid and almost 10% in Net Zero.
