Globally fossil fuel consumption is set to fall for the first time ever as renewables continue to surge over the next thirty years, according to oil and gas giant BP’s 2020 Energy Outlook Report.
The outlook focused on three different potential scenarios; rapid, net zero and business as usual (BAU). The Rapid Transition Scenario looked at the impact of significantly higher carbon prices, along with specific, targeted measures that would help carbon emissions from energy use to fall by around 70% by 2050.
The Net Zero Scenario assumes the same high prices and policy measures, but reinforced by significant shifts in societal behaviour and preferences, which would allow carbon emissions from energy to fall by 95% globally in 2050.
The BAU Scenario government policies, technologies and social preference follow the same trajectory that they are on currently. While this would mean carbon emissions fall – peaking in the mid-2020s – progress would be slow, with emissions less than 10% below 2018 levels by 2050.
All three scenarios have a number of common elements, including the rise of energy demand in the short term. The consumption of fossil fuels will fall and be replaced by renewables, led by solar and wind, and there is likely to be a fundamental restructuring of the global energy system.
Oil is set to fall in use dramatically, especially in the rapid and net zero scenarios, which could mean that peak consumption was in 2019. Last year, it reached 100 million barrels a day, but since has failed to reach such height due to a number of reasons, but particularly because of a drop in demand cased by international lockdowns as the COVID-19 pandemic continues.
The fall in the consumption of oil and other fossil fuels will depend on policy choices made globally. The pace of the electrification of transport will have a direct correlation to when oil demand peaks, while natural gas proves more resilient due to its role in supporting fast growing economies.
To reach the levels of decarbonisation seen in both the rapid and net zero scenarios carbon prices will need to reach $250/tonne of CO2 (2018 prices) in the developed world by 2050 and $175 in emerging economies.
As renewables begin to take over from fossil fuels across all three scenarios, the energy markets will change, leading to a more diverse energy mix, greater consumer choice, more localized energy markets and increasing levels of integration and competition according to the Outlook.
Along with this, the use of hydrogen is likely to increase to support the decarbonised energy system, carrying energy to activities that are difficult or costly to electrify.
BP’s CEO Bernard Looney said the Energy Outlook had been tracking the trajectory of the global energy system for a decade now.
“This year’s Outlook has been instrumental in the development of the new strategy we announced in August. I hope it is useful to everyone else seeking ways to accelerate the energy transition and get to net zero. We welcome any feedback on the content and how we can improve.”
The Outlook comes after BP announced its intention to reinvent itself to become a net zero company, increasing its renewables capacity to 50GW by increasing investment tenfold. Last Thursday, it announced that it had made a US$1.1 billion (£844 million) investment into four projects within two of Equinor’s existing leases, transferring 50% of non-operated interests in the sites from Equinor to BP.
“Our new purpose and ambition are underpinned by four fundamental judgements about the future”, added Looney. “That the world is on an unsustainable path and its carbon budget is running out. That energy markets will undergo lasting change, shifting towards renewable and other forms of zero- or low-carbon energy. That demand for oil and gas will be increasingly challenged. And that, alongside many others, BP can contribute to the energy transition that the world wants and needs, and create value doing so.”