Media coverage since the publication of yesterday’s report has focused on BP’s prediction that renewables will “become the single largest source of global power generation by 2040”. Wind power’s anticipated fivefold expansion will be eclipsed by an adoption rate of twice that figure which is expected of solar. China will continue to lead the charge to a brave new world, along with India, ‘other Asia’ and an EU which will get half of its power from clean energy sources by 2040. Oh happy day!
It is almost as if the journalists who rushed to convey the good news had ignored the press release issued by BP to publicize the report and actually read the 143-page study – bits of it at least. And they say journalism is dead.
Never mind what chief executive Bob Dudley said in his introductory remarks about how “across all the scenarios considered in the Outlook, significant levels of continued investment in oil will be required to meet oil demand in 2040”.
What a gas
But that is basically what the latest BP missive boils down to. Behind predictions of a renewables age and a China transitioning rapidly to a less polluting economy, the central message from the fossil fuel giant is that gas and oil will remain vital to the global economy 20 years from now, even if that means – as the Outlook’s business-as-usual ‘evolving transition’ (ET) scenario admits on page 113 – the Paris climate agreement will be lost.
The acceptance of the idea gas is a necessary part of the energy future – presumably based on the fact it emits less carbon than coal as there is ne’er even a passing reference to power-to-gas technology – means BP can be upfront about that half of its huge fossil fuel business, and it is an opportunity the oil and gas major certainly does not miss.
Some 85% of the rising demand for power in 2040 will be met by renewables and natural gas, says BP in its executive summary. “Meeting this challenge will undoubtedly require many forms of energy to play a role,” says Dudley. The ‘rapid transition’ alternative scenario which would be needed for faster decarbonization of energy would depend on renewables, carbon capture, utilization and storage (CCUS) and natural gas. BP even helpfully notes, CCUS is much more efficient for natural gas rather than coal-fired generation.
And it goes on, Dudley lauding in his opening statement the “shale revolution” for enabling the “rapid growth of liquefied natural gas”. Page 7: “natural gas grows robustly”, page 15: “natural gas grows much faster than either coal or oil”. The rapid transition will only be possible with the support of policies such as incentives for CCUS in gas-powered generation, readers are told. China’s clean transition will come on the back of renewables and gas, gas production will expand in the Middle East in Iran and Qatar – quite what President Trump would make of that particular prediction is easy to guess.
Are you getting the message yet? The title of page 95 begins: “Natural gas grows strongly… ” and in case you are still in any doubt, there’s a handy highlighted quote on that page which states: “Gas demand grows in almost every region and country considered.” Why? Because of broad-based demand across the power, industrial and transport sectors; plentiful, low-cost supplies; and the increasing availability of gas globally. Even the caveat provided smacks of lobbying, BP stating the pivotal role gas can play in the future energy world will be “dependent on the pace at which the required supporting infrastructure is built.”
So much for gas. Oil is a much tougher sell, so the Outlook tends to tiptoe around the subject until the oil section, presumably in the hope environmental correspondents will skip over that part and head to the ‘renewables will rule’ bit.
Is the black stuff set to decline along with coal? Apparently not, as the title of page 84 indicates: “The outlook for oil demand is uncertain but looks set to play a major role in global energy out to 2040.” So much so that huge amounts of cash need to be invested into the oil industry to exploit new fields. For those BP shareholders with only enough time to skim the report there is another handy highlighted quote: “In all scenarios, trillions of dollars of investment in oil is needed.”
Plastics are good. No really!
There is even an unintentional dig at solar, which OPEC nations are increasingly using to drive down the costs of getting oil out of the ground. The report notes, with no trace of irony, OPEC countries will continue to play a major role in world oil production by “reducing their dependency on oil”.
Perhaps the most laughable part of the report is the warning against seeing a ban on single-use plastics as good for the environment. Having acknowledged the use of “non-combusted” oil in plastics will play an increasingly important role in global oil demand as its use in transport declines, BP makes vague warnings about how alternatives to plastic could have higher carbon footprints and lead to food waste. It is little more than a side note from whichever analyst worked on that aspect of the report, but the point has been magnified at corporate level to feature in the press release publicizing the Outlook.
Perhaps the most amusing section of the publication is devoted to BP’s ‘less globalization’ alternative scenario. Intended, no doubt, as a warning against a world afflicted by trade wars and geopolitical hurdles to international energy trading, it actually serves to paint an encouraging picture for renewables. Trade wars would see the volume of oil and gas exported by the U.S. and Russia reduced, particularly to India and China, as those nations would be forced to rely on internal power generation, inevitably boosting renewables – maybe Trump has an eco plan after all.
Reasons to be cheerful
If the report is chiefly an exercise in reassuring shareholders their investment in oil and gas is a safe one – and an attempt to toss a bone to the renewables lobby – what can we take from it?
There are two reasons for optimism. Firstly, even the world’s fossil fuel majors are starting to admit the unstoppable rise of clean energy in their business-as-usual scenarios. And secondly, the latest findings at least indicate that the realization has dawned in the corporate world that coal is well and truly a relic, even if BP insists India will continue to supply a big market for the carbon-intensive power source.
And the Outlook is not entirely without honesty. As Dudley says in his opening remarks: “The decisions all of us make today can shape the future for many years to come.”
The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.
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