BP Energy Outlook 2023: Russia-Ukraine war accelerates gas and oil decline
BP’s annual energy outlook has predicted that the instability of oil and gas markets will accelerate the transition towards more sustainable energy sources. With the road transport shifting towards electricity.
The report explores the key trends and uncertainties surrounding the energy transition out to 2050. The three main scenarios considered in the Outlook – Net Zero, Accelerated, and New Momentum – have been updated to take account of two major developments over the past year: the Russia-Ukraine war and the passing of the Inflation Reduction Act in the US.
The Outlook’s three main scenarios are designed to explore the range of possible outcomes for the global energy system over the next 30 years. Understanding this range of uncertainty helps bp to shape a strategy which is resilient to the different speeds and ways in which the energy system may transition.
bp’s chief economist, Spencer Dale, said: “Global energy polices and discussions in recent years have been focused on the importance of decarbonizing the energy system and the transition to net zero. The events of the past year have served as a reminder to us all that the transition also needs to take account of the security and affordability of energy. Any successful and enduring energy transition needs to address all three elements of the so-called energy trilemma: secure, affordable and lower carbon.”
Three scenarios
Accelerated and Net Zero explore how different elements of the energy system might change in pathways that achieve substantial reductions in carbon emissions by 2050 by around 75% in Accelerated and over 95% in Net Zero. Both scenarios assume a significant tightening in climate policies globally. Net Zero also includes a shift in societal behaviour and preferences to further support gains in energy efficiency and the adoption of low-carbon energy.
New Momentum is designed to reflect the current broad trajectory of the world’s energy system. In doing so, it places weight on the marked increase in government ambitions and pledges for decarbonization that have been seen in recent years. In this scenario, global carbon emissions peak in the 2020s and by around 2050 are around 30% below 2019 levels.
The structure of energy demand changes in all three scenarios, with the importance of fossil fuels declining, replaced by a growing share for renewable energy and by increasing electrification. The transition to a low-carbon world requires a range of other energy sources and technologies, including low-carbon hydrogen, modern bioenergy, and carbon capture use and storage.
On the roads
Oil demand declines over the outlook, driven by falling use in road transport as the efficiency of the vehicle fleet improves and the electrification of road vehicles accelerates. Even so, oil continues to play a major role in the global energy system for the next 15-20 years across all three scenarios.
The role of oil falls across all modes of transport, reflecting a shift to alternative, low-carbon energy sources. That shift is dominated by electrification in road transport.
The number of electric (including plug-in hybrid) cars and light-duty trucks increases from around 20 million in 2021 to between 550-700 million by 2035 in Accelerated and Net Zero, and to around 2 billion such vehicles by 2050.
Electric passenger cars account for the majority of new car sales by the mid-2030s in Accelerated and Net Zero, supported by a combination of tighter regulation of vehicle emissions, improving cost and choice competitiveness of electric cars, and growing preference and acceptability among consumers.
Although the electrification of cars and light duty trucks is less rapid in New Momentum, there are still around 500 million such vehicles by 2035 and 1.4 billion by 2050, with electric passenger cars accounting for around 40% of new car sales in 2035 and 70% in 2050.
Electrification of road vehicles is initially dominated by China, Europe and North America, which together account for around 60-75% of the growth of electric road vehicles to 2035 in the three scenarios and 50-60% of the growth to 2050.
There is also a switch away from the reliance on diesel in medium- and heavy duty trucks and buses, with the share of diesel-based trucks in the global parc declining from around 90% in 2021 to between 70-75% in 2035 in Net Zero and Accelerated and 5-20% in 2050.
The main switch is to electrification, but hydrogen-fuelled trucks also play a growing role, especially for heavy-duty, long-distance use cases. The choice between electrification and hydrogen varies across different countries and regions depending on policies affecting the relative price of electricity and low carbon hydrogen, as well as on regulatory policies and the development of charging and refuelling infrastructures.
Read the full bp Energy Outlook 2023 at: https://www.bp.com/en/global/corporate/news-and-insights/press-releases/bp-energy-outlook-2023-explores-key-trends-and-uncertainties-surrounding-the-energy-transition.html
