BP has released the latest edition of the Energy Outlook, exploring the key forces which could shape the global energy market to 2040.
In the ninth edition of the Outlook, BP states that the greatest uncertainties which will likely face the energy market over the period involve the need for more energy to support continued global economic growth and the need for a more rapid transition to a lower-carbon future.
Most of the Outlook is viewed from the evolving transition (ET) scenario, which assumes that government policies, technology and social preferences continue to evolve in a manner and speed seen over the recent past.
In the ET scenario, global energy demand is expected to increase by around one third by 2040 and will be driven by improvements in living standards – particularly in India, China and across Asia.
Energy consumed by industry and buildings accounted for roughly 75 per cent of this increase in overall energy demand, while growth in energy demand from transport slows in comparison to the past as gains in vehicle efficiency are expected to accelerate.
The share of passenger vehicle kilometres powered by electricity is forecast to increase to approximately 25 per cent by 2040, supported by the growing importance of fully-autonomous cars and shared-mobility services.
In this scenario, BP expects 85 per cent of the growth in energy supply will be generated through renewable energy and natural gas, with renewables becoming the largest source of global power generation by 2040.
The pace at which renewable energy penetrates the global energy system is also expected to be faster than for any fuel in history.
In the ET scenario, the demand for oil grows in the first half of the Outlook period before gradually plateauing, while global coal consumption remains broadly flat.
Across all the scenarios considered in the Outlook, significant levels of continued investment in new oil will be required to meet oil demand in 2040.
Lastly, it is expected that global carbon emissions will continue to rise. BP believes that this signals the need for a comprehensive set of policy measures to achieve a substantial reduction in carbon emissions.
BP Group Chief Executive Bob Dudley said that predicting how this energy transition will evolve is a vast, complex challenge.
“In BP, we know the outcome that’s needed, but we don’t know the exact path the transition will take. Our strategy offers us the flexibility and agility we need to meet this uncertainty head on,” he said.
“The world of energy is changing,” agrees BP Group Chief Economist, Spencer Dale.
“Renewables and natural gas together account for the great majority of the growth in primary energy. In our evolving transition scenario, 85 per cent of new energy is lower carbon.”
The Outlook also considers several other issues and scenarios which could impact the market from now to 2040, including what could happen in a world with more barriers to trade and the possible impact of increasing controls on the use of plastics.
BP’s 2019 Energy Outlook can be found here.