BP released the 2018 edition of its annual Energy Outlook yesterday, prompting all the usual gags from the renewables lobby.
The oil and gas major’s annual crystal ball moment – which it is at great pains to stress does not constitute a forecast, but rather a series of “what if experiments” – is the source of much contention within the clean energy space given how it has repeatedly downplayed the rapid growth of renewables.
For readers not familiar with the Energy Outlook until now, think Mystic Meg but with none of the subject matter and all of the success rate.
Between BP’s Outlook in 2015 and the one published yesterday, the expectation for renewable generation has increased by some 3,000TWh. This, BP says, is largely attributable to surging wind and solar.
BP’s expectations of solar have increased in particular, up some 150% reflecting cost reductions continuing to beat forecasts. Indeed, BP now thinks solar will hit grid parity by the mid-2020s, some ten years earlier than previously expected.
There is, however, one glaringly pessimistic view within BP’s renewables outlook. It’s cost curve for solar in North America, displayed below, shows a wide flattening of the continued fall in levelised costs of deploying the technology between 2025 and 2040, pretty much as soon as the technology hits US$0.05/W.
BP does qualify this by arguing that some projects enjoying better than average generating conditions and continued policy support will deploy at prices lower than those implied by the curve. But speak to any dedicated solar developer active in the US today and they’ll tell you that solar is already beating BP’s cost curve, and not just in its southern states.
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It’s not just in renewables either. BP has quite drastically updated its electric vehicles forecasts, effectively doubling the number of EVs it says could be on the roads by 2035 to nearly 190 million. A further 130 million EVs could be on the roads by 2040.
BP said that the changes to its Outlook this year reflect that while energy demand is broadly similar, there are now “significant differences” in the fuel mix. Renewable energy sources will contribute 15% more than was expected last year with BP arguing this to be the latest in a line of “material increases” in renewables each year.
Clean power, it would seem, just keeps beating BP’s models, which could go some way to explain the company’s decision to spend more than £150 million on a 43% stake in European solar heavyweight Lightsource.
While this year’s Energy Outlook may portray an upbeat tone – indeed, participants in yesterday’s presentation were a bit jovial at times – there’s a far darker message. BP’s ‘Evolving Transition’ model, the one which most closely reflects recent trends in policy, technological advances and social preferences, shows how emissions will actually increase in the coming years.
That’s a far cry from the kind of sharp decline in emissions needed to meet the climate targets agreed upon in Paris in late 2015. Only BP’s ‘Even Faster Transition’ model heralds the kind of change necessary to limit global carbon emissions to COP21 targets.
That kind of scenario would require far more progress across different sectors than is currently being achieved. Around 11 billion tonnes more CO2 would have to be removed from the power sector’s annual emissions, on top of worldwide deployment of carbon capture use and storage equivalent to removing a further 3 billion tonnes of CO2.
As much as BP might claim that such an energy transition would have “significant implications” on the global energy system, it is now inescapable that this kind of drastic action is absolutely necessary.
And it’s for this reason that the world had better hope that this year’s Energy Outlook is as wide of the mark as previous editions have evidently been. If it isn’t, then it won’t be a simple 125-page set of experiments that require a hasty rewrite, but global energy policy.