Energy economist Robert Lyman summarizes the recent BP Global Energy Outlook report. Claims of a ‘low-carbon’ future are not upon us.
Contributed by Robert Lyman @ June 2016
British Petroleum, one of the largest energy companies in the world, recently issued its 2016 updated projections of global energy supply and demand to 2035. BP is a widely respected analyst of energy markets. Based in the United Kingdom, it is very sensitive to the demands of European governments that the alleged threat of human-induced catastrophic global warming be taken seriously, and so it accepts the presumption that the political commitments made by several governments at the COP21 Climate Change Conference in Paris in December 2015 will be honoured in practice. Its projections are therefore based on a combination of market-based analysis and politically influenced assumptions about international actions to reduce greenhouse gas emissions.
Given this, one might expect that BP’s projections about the changes that will occur in the world energy economy to 2035 might be closely in keeping with the political statements coming from European leaders. The European Commission has adopted the goal of decreasing greenhouse gas emissions by 40% from 1990 levels by 2030 and is hoping to attain a reduction of global emissions by 60 to 70% by 2050. BP’s projections don’t entirely fit the script.
BP projects that despite significant economic and population growth over the next 19 years, there will be an unprecedented improvement in energy efficiency, leading to much lower energy and emissions intensity per unit of GDP. It also assumes that governments will continue large subsidies to renewable energy sources and that the costs of these sources will decline sharply. It endorses the need for carbon taxes as a way to accelerate the “progress”.
Now, for the “bad news” – if you are dreaming of a ‘low-carbon economy’…according to BP’s projections:
- Fossil fuels, currently about 89% of global energy supplies, will provide around 60% of the additional energy and still account for 80% of energy supplies in 2035.
- Oil demand will increase by almost 20 million barrels per day over the Outlook.
- The increase in world energy consumption will be driven by the growing economies of Asia. China and India, followed by Southeast Asia and eventually Africa will drive energy and fossil fuel use significant higher. Total energy consumption will increase by 34% between 2014 and 2035.
- Natural gas is the fastest growing fossil fuel; its share in primary energy use will rise gradually over time.
- The growth in coal consumption will slow sharply, as the share of coal used in electricity generation declines from 43% to around 33%. Overall, however, coal consumption continues to rise at the rate of about 0.5% per year throughout the period.
- Oil, now about 97% of transportation energy demand, will constitute 88% by 2035; natural gas will provide 8%.
- Transportation energy demand declines in the OECD because of significant improvements in vehicle fuel efficiency, but the growth in vehicle ownership and use in the non-OECD area more than offsets this.
- The global vehicle fleet (commercial vehicles and passenger cars) more than doubles from 1.2 billion today to over 2.4 billion by 2035.
- While the rate of carbon emissions growth declines, the level of emissions continues to grow, increasing by 20% between 2014 and 2035.
- By 2035, global carbon dioxide emissions are projected to be about 38 billion tonnes, far above the targets set by the European Union and COP21.
What the BP Outlook illustrates but does not state explicitly is that virtually all the growth in greenhouse gas emissions over the period to 2035 will take place in the developing countries, in areas where the growth in energy use is driven by people’s desire for economic development and improvement in their standards of living. This growth is beyond the control of western governments or their environmental lobbies.