Page 5 - AsiaElec Week 09 2023

AsiaElec COMMENTARY AsiaElec

2050. Natural gas demand will keep rising out But there should also be greater scrutiny about
to 2050, on the other hand, potentially climb- the sustainability of existing and new mining
ing to 20% above the 2019 level by that year. activity.
LNG trade will increase in the near term, but
the outlook is more uncertain after 2030. But An orderly transition
in New Momentum, the LNG market is set to Despite its projections, BP’s chief economist
double in size by 2040 versus 2019, with extra Spencer Dale stresses that the transition from
supply predominantly coming from the US hydrocarbons must be orderly to avoid future
and the Middle East. Growth will be driven by energy price spikes and shortages.
demand in emerging Asian markets, as these “The scale of the economic and social dis-
countries shift away from coal while continu- ruptions over the past year associated with the
ing to industrialise. loss of just a fraction of the world’s fossil fuels
The pace of wind and solar development has also highlighted the need for the transi-
will be rapid in all three scenarios. Even in New tion away from hydrocarbons to be orderly,
Momentum, installed wind and solar capacity such that the demand for hydrocarbons falls
will increase ninefold by 2050, primarily on in line with available supplies, avoiding future
the back of declining costs. In Accelerated periods of energy shortages and higher prices,”
and Net Zero, about a quarter to a third of the Dale notes.
capacity in 2050 will be used to produce green This is a warning that should be heeded by
hydrogen. those advocating for an immediate end to new
China and the developed world will domi- upstream investment.
nate new wind and solar capacity, accounting for “The events of the past year have served as a
30-40% of the overall increase between now and reminder to us all that this transition also needs
2035. to take account of the security and affordability
Electrification will expand in all end-user of energy,” Dale says.
sectors over the period of the outlook, but the BP also highlights the drawback of
greatest scope for growth is in buildings, where renewables: their intermittent supply. As
BP envisages that at least half of final energy such, they will need to be combined with
demand will be electrified by 2050 in all three baseload power supply – ideally natural
scenarios. gas plants equipped with carbon-capture
While demand for oil and gas falls in all technology.
three scenarios, continued investment will Interestingly, while BP is predicting a faster
still be needed to meet future demand, rep- decline in oil and gas consumption, the com-
resenting a break from the position of the pany’s CEO Bernard Looney recently said he
International Energy Agency (IEA), which wanted to “dial back” its own green energy
stated in 2021 that no new oil and gas pro- push, in response to lower returns from invest-
jects would be needed on the path to net ments in renewables. BP said in 2020 it wanted
zero. to curb its oil and gas production by 40%, but
BP notes that an accelerated energy transi- it has now scaled back that target to 25%. It
tion will result in a spike in demand for criti- is also ramping up oil and gas investments to
cal minerals, and this will mean a significant $8bn annually by 2030 to “meet near-term
increase in investment in the mining sector. demand.”™

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