BP: Renewables will be the world’s main source of power by 2040
Oil and gas giant BP has forecast that renewables are likely to account for around one-third of the world's energy production by 2040, with uptake growing faster than that of any other fuel to date.
Published on Thursday afternoon (14 February), the company’s Energy Outlook report forecasts that renewables will account for 30% of global electricity supply by 2040 – up from just 10% in 2018. The figure is an increase on BP’s 2018 predictions, which set the 2040 proportion for renewables at 25%.
While oil took almost 45 years to go from 1% of global energy to 10% and gas took more than 50, renewables are expected to undergrow this level of growth within 25 years – a transition “faster than that for any fuel in history”, according to BP.
The Energy Outlook’s predictions are based on a trajectory in which GDP doubles globally over the next 20 years, causing energy demands to increase by one-third from current levels.
Under the report’s ‘Evolving Transition’ (ET) scenario, which is based on policies and technologies progressing in line with recent trends, renewables will fill half of this ‘gap’, with the remainder predominantly accounted for by liquefied natural gas (LNG).
In this scenario, BP claims, the renewables revolution is likely to be driven by Europe, where clean energy will make up half of the continent’s total energy mix by 2040.
As this shift continues, BP is predicting that coal demand will remain flat for around a decade, after which government policies will require more coal-fired facilities worldwide to come offline.
It additionally forecasts that global oil demands will continue to grow for another decade, before plateauing in the 2030s, when the growth of clean technologies should accelerate.
These factors, the Energy Outlook states, will result in a 10% increase in global carbon emissions from 2018 levels.
However, the document also lays out an alternative ‘Lower-carbon Power’ (LCP) scenario, in which a worldwide ban on coal generation is implemented in 2030. Under this trajectory, renewables will overtake fossil fuels as the world’s main power source within 15 years, which which BP said would be “literally off the charts” relative to historical shifts.
BP Group’s chief executive Bob Dudley said that meeting the challenge of providing more energy while cutting emissions would “undoubtedly require many forms of energy to play a role” – including, initially, hydrocarbons.
“The emissions-reduction side of this dual challenge will mean shifting to a lower-carbon energy system, as the world seeks to move to a pathway consistent with meeting the climate goals outlined in the Paris Agreement,” Dudley wrote in his foreword to the report.
“Meeting the other side of the challenge will require many forms of energy to play a role. There’s a strong correlation between human development and energy consumption – and our analysis of this relationship in this year’s Outlook highlights the need for much more energy to meet demand as prosperity rises.”
Oil and gas sector scepticism
The publication of the forecast comes at a time when BP is planning to grow its oil and gas production 16% by 2025, according to consultancy Rystad Energy.
At the same time, the firm is striving to generate reductions of 3.5m tonnes of CO2 equivalent annually throughout the business by 2025 as part of its Advancing the Energy Transition (AET) strategy.
Launched last April, BP claimed the strategy would help it to keep net greenhouse gas emissions at 2015 levels as the business expands.
However, the company has faced much criticism regarding the specifics of its AET strategy – or lack thereof. CDP recently criticised the fact that BP has only made short-term decarbonisation targets which do not cover the firm’s Scope 3 (indirect) emissions, for example, while former BP adviser and current E3G chair Tom Burke dubbed the strategy a “twentieth-century solution to a twenty-first-century problem”.
Critics were also quick to point out that while BP had pledged to invest $500m into low-carbon solutions after posting a strong financial performance in 2017, higher oil prices and growing crude production had pushed up its full-year underlying profits to $6.2bn that year.
In the wake of this debate, the company recently pledged to align its business with the aims of the Paris Agreement and has begun linking staff bonuses to its low-carbon progress. The move came after investor group Climate Action 100+ began lobbying for BP to publish details of how its strategy aligns with the 2C trajectory outlined in the Paris goals last year.
But, on a sector-wide level, experts are continuing to argue that oil and gas majors are failing to shift their investment portfolios to clean energy fast enough for legally binding climate targets to be met. A recent CDP paper, for example, concluded that the world’s largest 24 oil and gas firms had collectively invested just 1.3% of their combined capital expenditure (CAPEX) into low-carbon technologies and projects since the start of 2018.
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