Renewables will be the world’s principal source of power by 2040 and are penetrating world grids faster than any other energy source in history, O&G major BP has said.
BP today published its outdated Energy Outlook for 2019, revising upwards its forecasts for the penetration of renewables out to 2040.
Its Outlook, which establishes four potential scenarios based on various trends, argues that renewables are penetrating the world’s energy mix quicker than any other fuel source in history and, combined with gas, will account for 85% of growth in energy supply over the next two decades.
Its most central scenario, dubbed ‘Evolving Transition’, is based on assumptions that technology and policy will evolve at a similar pace as it has already.
By 2040, BP expects renewables to account for around 30% of the world’s power supply driven predominantly by significant penetration throughout Europe. European nations will derive more than half – 55% - of their power from renewables by 2040, a factor which in itself is expected to cause intermittency issues towards the end of the Outlook.
And much of that growth is expected to come from solar PV. Globally, BP expects solar generation capacity to grow by a factor of 10 between now and 2040, twice the growth factor of wind, as the technology penetrates even further into markets the world over.
This may go some way to explain the rationale behind BP’s acquisition of a minority stake in British solar developer Lightsource in late 2017. Since then, Lightsource has expanded into a number of key strategic markets and featured prominently in BP’s recent advertising campaign.
However BP points to a growing trade-off between the overall growth of power and the pace of decarbonisation, exacerbated by the exposure to renewables of some countries.
China and Africa, for existence, would be able to grow their non-fossil fuel generation capacity relatively quickly and achieve high levels of decarbonisation as their power demand grows. But this will not be replicable across the world and, as a result, there may be a more significant reliance on coal, decreasing overall decarbonisation.
Bob Dudley, group chief executive at BP, said the Outlook brought “into sharp focus” just how fast the world’s energy systems are changing, with the “dual challenge” now being the requirement for more energy with fewer emissions.
"Meeting this challenge will undoubtedly require many forms of energy to play a role,” Dudley said.
The (necessary) Rapid Transition
The most pertinent scenario within BP’s Outlook is perhaps ‘Rapid Transition’, as this is the only scenario that deliver emissions reductions over the next two decades consistent with the ambition established within the Paris Climate Agreements.
That scenario combines sector policy measures recommended across all sectors including power, the built environment, transport and single-use plastics.
While in the ‘Evolving Transition’ scenario power sector carbon intensity declines by around 30% by 2040, the ‘Rapid Transition’ model sees power sector carbon emissions collapse by 75% by 2040, driven by a more ambitious carbon price, a worldwide ban on non-carbon capture usage and storage coal stations and policy support for nuclear and hydropower developments.
BP has said the required carbon price would be set to around US$200 per tonne of CO2 in Organisation for Economic Co-operation and Development (OECD) countries by 2040 and US$100 in non-OECD countries.
This would be a major contributing factor in shifting the global share of renewables to around 50% of power by 2040, with coal the main loser. Its share of global power would plummet from around 40% in 2017 to less than 5% by 2040, effectively shunting it off grids across the world.
“Polices aimed at the power sector are central to achieving a material reduction in carbon emissions over the next 20 years…most of the low-hanging fruit in terms of reducing carbon emissions is outside of the transport sector,” Dale said.