One of the world’s seven “supermajor” oil and gas companies, BP, has released its annual Energy Outlook, claiming fossil fuels will remain a dominant source of energy throughout the next two decades.
Fossil Fuel Optimism
The BP Energy Outlook is the company’s annual analysis of the “most likely” path for the global energy landscape over the following 20 years. The statistics at the heart of the report are not inherently wrong or misleading, but British Petroleum’s (BP) interpretation of those stats is often the cause for much concern and public ridicule.
According to the Outlook, global energy demand is going to increase by 34% between 2014 and 2035, by an average of approximately 1.4% per year. Accurately, BP notes that, “This growth in overall demand includes significant changes in the energy mix, with lower-carbon fuels growing faster than carbon-intense fuels as the world begins to transition to a lower-carbon future.” However, rather optimistically, BP further concluded that, “Despite the rapid growth of other sources, the Outlook projects that fossil fuels will remain the dominant form of energy over the period to 2035, meeting 60% of the projected increase in demand and accounting for almost 80% of the world’s total energy supplies in 2035.”
“In the middle of a downturn in oil and gas prices, it is important not only to adapt to the current tough conditions, but also to prepare for the next set of challenges,” said Bob Dudley, BP’s group chief executive. “Energy is a long-wavelength industry and we need a long term perspective of how the energy landscape we operate in is likely to evolve.
“As this year’s Outlook demonstrates, the world is going to continue to demand growing supplies of energy but the mix of those supplies is changing and becoming less carbon-intense. However, further policy action may be necessary to meet international targets to limit carbon emissions.”
Renewables vs. Fossil Fuels
The Outlook does concede that, “Non-fossil fuels are projected to grow even faster than anticipated in last year’s Outlook.” Specifically, the Outlook predicts renewables (including biofuels), to grow at around 6.6% per year, and increase their share in the energy mix from 3% (today) to 9% by 2035.
Unsurprisingly, BP has faced a lot of criticism in response to its underperforming renewable energy scenario. Over the past several years there have been legitimately dozens of reports and predictions from firms and organizations such as Bloomberg New Energy Finance, the International Renewable Energy Agency, and more, predicting renewable energy could make up as much as 30% of demand by 2030 given the right investment framework — a framework we are seeing take shape, as countries like the US, China, and India all firm up their renewable energy policies.
BP isn’t dismissing the role renewable energy will play in the coming two decades, but it is thoroughly weighing the stats against it so as to firm up their own industries’ role in the coming years.
Simply “Not Credible”
Unsurprisingly, these seemingly biased predictions have yielded much ridicule from renewable energy proponents.
“This is a story of how an oil and gas company predicts the rosy prospects of oil and gas companies,” explained Greg Muttitt of Oil Change International. “BP would like us to believe that government action on climate will fail, that clean technologies will fizzle, and that the future of energy will still be based on the carbon fuels of the past.
“Every year, BP has predicted that the growth in renewable energy will slow down, and each time it has been wrong. This year, again it massively downplays renewables, estimating they will provide a mere 15% of world electricity in 2030 – in spite of wind and solar achieving grid parity in most of the world, and in spite of government action arising from the Paris Agreement.”
“Dressed in a veneer of concern about climate change, in fact BP’s outlook is a public relations exercise, designed to boost fossil fuels and undermine public faith in clean alternatives. Meanwhile it deflects responsibility to government or to coal companies, to distract from its own extraction of oil and gas.
“This is not a credible view of the future of energy.”
BP makes a clear effort each year to present all the facts, but then often relegates those facts which conflict with their own interests.
“BP’s energy outlook to 2035 has changed little over the last year,” said Luke Sussams, senior analyst at the Carbon Tracker Initiative. “It appears to state the COP21 international climate change agreement will make little impact in suppressing future fossil fuel demand, which continues to meet more than 80% of global energy needs.”
“As in previous years, BP’s outlook highlights key uncertainties such as lower economic growth or a faster shift to a low-carbon economy. But these considerations do not make it into its base case.
“For example, BP foresees global energy demand increasing rapidly off the back of emerging economies of Asia. But, China’s economy is slowing faster than anyone thought, lowering energy demand growth. Further, the overall growth narrative in the entire region is changing as concerns grow over the huge debts China amassed to fuel its post-2008 manufacturing boom.
“We believe the base case does not adequately reflect the possible downside scenarios in the nine key demand assumptions highlighted in Carbon Tracker’s Lost in Transition report published late last year.”
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