BP's energy outlook projects strong renewables growth
Biofuels and other renewables are expected to be the fastest growing sources of energy globally for the next two decades, according to BP’s latest Energy Outlook 2030, an annual energy projections report produced by BP’s economics team in order to guide the company’s decision making and contribute to the public’s longer-term debates on the future of energy. Scaled back expectations for next-generation fuel production resulted in reduced biofuels growth predictions compared to BP’s 2011 Energy Outlook, but the company continues to believe that the growth of renewables use will be robust over the next 20 years, rising by more than 8 percent each year to 2030. By comparison, natural gas use is expected to increase by only about 2 percent annually during the same time frame, according to BP. However, despite the steady growth, renewables will continue to comprise a minimal amount of world’s total energy supplies by 2030. Also, unfortunately, the company expects worldwide CO2 emissions to rise significantly throughout the report’s timeframe,
In remarks delivered shortly after releasing this year’s Energy Outlook 2030 on Jan. 18, Bob Dudley, BP group CEO, outlined some of the report’s findings related to the world’s energy demands over the next 20 years and offered the company’s outlook for opportunities to deliver more sustainable forms of energy. “We want energy that is affordable, secure and sustainable,” he said. “But we need to be clear about what is possible and what is not.” Dudley noted that while BP has conducted these types of world energy outlooks for some time, this is only the second year the company has made the results publicly available. “In previous years, we used the projections internally – but we decided to start publishing them last year because we believe they are a useful contribution to the longer-term debate on the future of energy,” he said.
According to the Energy Outlook, BP expects that demand for energy will remain strong through 2030 and that nearly all of the growth in demand will stem from emerging economies, with China and India being responsible for more than half of the demand. But while the use of renewable sources of energy is expected to grow rapidly, its base is very low. Therefore, BP expects fossil fuels to continue to provide about 80 percent of the world’s energy in 2030. Oil is predicted to be responsible for about 87 percent of the transport fuel used worldwide in 2030, down from 95 percent today. “Even with continued policy support, biofuels, wind, solar and geothermal together are not expected to account for more than around 6 percent of energy by 2030, barring unexpected technology breakthroughs,” Dudley said. “This is because of challenges in areas such as cost, technology, infrastructure and logistics.”
The company has concluded that efficiency improvements and the deployment of hybrid vehicles, in addition to increased biofuels production, will be most effective in reducing demand for transportation fuels. While BP expects oil demand to grow by less than 1 percent annually over the next 20 years, Dudley pointed out that by 2030, that will equal the need for an additional 16 million barrels of oil per day. “While we expect Saudi Arabia and other Middle Eastern countries to increase their exports, another tough reality is that the industry needs to go to new frontiers to find oil – and indeed alternatives,” he said.
Dudley also pointed out that BP’s modeling scenario also shows a significant increase in greenhouse gas emissions over the next two decades—rising by 28 percent by 2030. An alternative model, which took into consideration potential aggressive policy action to curb emissions, showed an increase of about 10 percent, but it was noted that the alternative scenario is less likely to become reality. “This is not an outlook for the world as we wish to see it,” Dudley said. “However, as we said last year, it should be important input for policymakers.”
The report also highlighted several opportunities for sustainable energy development, including efficiency improvements, technology advancements, increased competition, natural gas developments and increased biofuels production, according to Dudley. Specifically, BP expects the efficiency of internal combustion engines to double over the next 20 years with other technological innovations spurring competition in the fuels sector, leading to lower cost fuel solutions, he said. As a result, BP expects North America to convert its current energy deficit into a small surplus by 2030. The company expects this turn-around to be partially due to increased domestic oil and gas production, and partially due to significant growth in biofuels production. However, Dudley warned that more focus needs to be paid to biofuels in order to ramp up its capabilities. “The world needs to focus on biofuels that do not compete with the food chain and are produced in a sustainable way,” he said, adding that the “greatest promise” for next-generation biofuels production is biofuels produced from cellulose.