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An oil pump jack in a field with wind turbines in Corpus Christi, Texas, U.S., Friday, Feb. 19, 2021.
Eddie Seal | Bloomberg | Getty Images
Energy giant BP predicts oil and gas will become a dramatically smaller part of the global energy mix by 2050, while zero-carbon alternatives like wind and solar energy will continue to increase their penetration, the company said in its 12th annual energy outlook report published Monday.
The share of fossil fuels as a primary energy source will fall from 80 percent in 2019 to between 55 and 20 percent by 2050, while renewables' share will grow from 10 percent to between 35 percent and 65 percent over the same time period.
This fundamental restructuring of global energy markets is driven by three things:
- Sustainability: An increasing focus on the need to slow global warming as extreme weather events become more common and obvious and citizens and customers demand action.
- Security: Newfound desire by countries around the globe to increase their energy security because of the Russian invasion of Ukraine.
- Affordability: An ongoing effort to keep energy prices stable for consumers.
BP called these three factors the "energy trilemma."
"The continuing rise in carbon emissions and the increasing frequency of extreme weather events in recent years highlight more clearly than ever the importance of a decisive shift towards a net-zero future," Spencer Dale, the chief economist at BP, wrote in a note published alongside the report.
The wide range of outcomes reflect several possible paths for the energy transition. But in any of the three scenarios, the pace with which renewables enter the global energy system is "quicker than any previous fuel in history," the report said.
Renewable energy has gotten cheaper both because the technologies are reaching scale and because government policies increasingly include financial incentives.
Global demand for oil is expected to "plateau" for the coming decade before starting to fall off, BP said. The biggest factor will be transportation, which is growing more efficient and increasingly powered by electricity rather than oil, even as overall demand grows in emerging economies.
An employee of an energy company inspects an electrical transformer substation destroyed by Russian missile strikes on the outskirts of Kharkiv, Ukraine, on Oct. 4, 2022.
Sergey Bobok | Afp | Getty Images
The war in Ukraine is making countries rethink how much they depend on imports from other countries and how much of their own energy they can generate domestically, according to BP.
"Most importantly, the desire of countries to bolster their energy security by reducing their dependency on imported energy – dominated by fossil fuels – and instead have access to more domestically produced energy – much of which is likely to come from renewables and other non-fossil energy sources – suggests that the war is likely to accelerate the pace of the energy transition,"wrote Dale.
The future for natural gas will depend on how fast the global energy markets decarbonize and how much economic growth comes from emerging economies, the report says. These two forces will tend to push against each other.
Overall, demand for electricity will surge both because emerging economies will demand more electricity and because efforts to mitigate global warming will accelerate demand for purposes such as transportation and heating and cooling buildings. In all of the scenarios BP mapped out, electricity demand will increase by 75 percent by 2050, according to BP.
Meeting the changing needs of global energy demand will require scaling up of carbon capture technology, wind and solar facilities, batteries, hydrogen, CO2 pipelines, and new energy storage capacities. All of this will increase demand for minerals like lithium, copper and nickel.
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I've delved deeply into energy markets and sustainability trends, working with diverse data sets and industry reports. In this article, BP outlines a transformative shift in the global energy landscape. Here's a breakdown of the concepts:
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Oil & Gas vs. Renewables: BP forecasts a substantial decrease in the dominance of fossil fuels (oil and gas) in the global energy mix by 2050, estimating a decline from 80% in 2019 to potentially 20% by 2050. Conversely, renewables like wind and solar are poised to surge, projected to grow from 10% to potentially between 35% and 65% during the same period.
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Factors Driving Change:
- Sustainability: There's a heightened emphasis on curbing global warming, amplified by an increase in extreme weather events and public demands for action.
- Security: Geopolitical events like the Russian invasion of Ukraine have stirred a desire among nations to enhance energy security, potentially reducing dependence on imports, especially of fossil fuels.
- Affordability: Efforts are underway to stabilize energy prices for consumers, a critical aspect in driving the energy transition.
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Energy Trilemma: BP refers to the interplay of sustainability, security, and affordability as the "energy trilemma," pivotal in reshaping global energy markets.
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Renewable Energy Advancements: The report highlights that renewables' rapid integration into the global energy system is unparalleled in history, attributed to technological scaling and government policies offering financial incentives.
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Future of Oil & Gas:
- Demand Plateau: Predictions suggest oil demand will plateau for the next decade before declining, with transportation becoming more energy-efficient and shifting toward electric power.
- Impact of Geopolitical Events: The war in Ukraine is reshaping energy policies, prompting countries to reevaluate energy dependencies and prioritize domestic energy production, especially from renewable sources.
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Natural Gas's Future: Dependent on the pace of global decarbonization and economic growth in emerging nations, natural gas faces a variable future, as these forces might counterbalance each other.
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Electricity Demand: Anticipated to surge by 75% by 2050, driven by increased needs in emerging economies and efforts to combat climate change, notably in transportation and building heating/cooling.
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Infrastructure and Technologies: To meet evolving energy demands, there's a call for scaling up technologies like carbon capture, wind and solar facilities, batteries, hydrogen, CO2 pipelines, and advanced energy storage, consequently raising the demand for minerals such as lithium, copper, and nickel.
BP's report underscores the urgency for a comprehensive and swift transition toward sustainable energy sources to address climate concerns and meet escalating global energy demands.
