BP Goes Public

Report predicts oil growth in transportation to slow dramatically due to biofuels.
By Holly Jessen | February 15, 2011

BP released its 80-page Energy Outlook 2030 in January, containing its projections of long-term energy trends, including biofuels’ increasing share in the energy mix. By 2030, the company’s base case shows biofuels, mostly ethanol, will exceed 6.5 million barrels a day (Mb/d), an increase from 1.8 Mb/d produced in 2010. The company calculates that biofuels will contribute 30 percent of global supply within the next two decades.

Specifically, the company projects that growth of oil use in transportation will slow dramatically and will probably plateau in the mid 2020s, largely due to increased biofuels use. “In transport, we are starting to see diversification, driven by policy and enabled by technology, with biofuels accounting for nearly a third of energy demand growth,” the report says. Other factors include higher oil prices, improving fuel economy, vehicle saturation in mature economies and expected increases in taxation and subsidy reduction in developing countries.

All this comes from an annual report that until this year was only used internally, according to Bob Dudley, group chief executive. “However, we feel it is part of our responsibility as a company to make important information and analysis available for public debate—all the more so if the issue at hand is as vital to all of us as is energy, its relation to economic development on one side, and to climate change on the other.”

The company expects the U.S. and Brazil to continue to lead in biofuels production, accounting for 68 percent of total production in 2030, a decrease from the combined 76 percent share in 2010. First-generation biofuels will likely make up most of the increase, the report says. About 40 percent of global liquid fuel demand growth will be met by biofuels after 2020 and 60 percent by 2030, compared to 13 percent in 2010.

In contrast, the company projects that oil will be the slowest-growing fuel in the next 20 years. Still, global liquid fuel demand will rise by 16.5 Mb/d and exceed 102 Mb/d by 2030. Most of the growth will come from countries with emerging economies such as China, Russia and Brazil. OPEC’s share of oil production is projected to increase to 46 percent, levels that haven’t been seen since 1977. However, the U.S. dependence on imports of oil and gas is likely to fall to levels seen in the 1990s, thanks to improved fuel efficiency and increased biofuels use.

Overall, biofuels, wind, solar and other renewables will continue strong growth, increasing their share in primary energy to more than 6 percent by 2030, up from 2 percent in 2010. Biofuels alone will take up 9 percent of transport fuels. Fossil fuels contributed more than 80 percent of growth in energy from 1990 to 2010, however, they are expected to contribute only 64 percent of growth in the next 20 years. Renewables, excluding hydro power but including biofuels, will account for 18 percent of growth in energy to 2030. “The global fuel mix continues to diversify, but for the first time, nonfossil fuels will be major sources of supply growth,” says Christof Rühl, BP's chief economist.

The world’s population has more than quadrupled since 1900. In that same period, real income as measured by gross domestic product (GDP) has increased by a factor of 25 and primary energy consumption by a factor of 23. “The modern energy economy has been shaped by the trends of industrialization, urbanization, motorization and rising income levels,” Rühl says. In addition, energy per unit of income, also measured by GDP, continues to fall faster and faster. “This is true in our outlook to 2030, not only for the global average but for almost all of the key countries and regions,” he says. “The combination of energy efficiency gains and a long-term structural shift towards less energy-intensive activities as economies develop underpins this trend.” 

—Holly Jessen