Page 4 - AfrElec Week 10 2023

AfrElec COMMENTARY AfrElec

BP predicts faster decline in oil

and gas demand

BP is forecasting an accelerated decline in oil and gas demand over the next decade as a
result of fallout from the Russia-Ukraine war and the impact of the broader energy crisis.

GLOBAL BP released its flagship annual report, Energy carbon budget is running out, and that despite
Outlook, at the end of January, forecasting an all efforts made by governments and compa-
accelerated decline in oil and gas consumption nies so far, CO2 has continued to rise every year
WHAT: as a result of fallout from the Russia-Ukraine war since the Paris Agreement was reached in 2015,
BP has released its and the impact of the broader energy crisis. with the exception of 2020, when coronavirus
flagship Energy Outlook In light of soaring global oil and gas prices, (COVID-19) restrictions caused energy demand
report. caused in part by Moscow’s invasion of Ukraine to tank.
and the subsequent severing of energy ties Second, BP notes that the Russia-Ukraine
WHY: between Russia and the EU, countries will pur- war is having long-lasting implications for the
The UK major sets out sue greater energy security over the next decade, global energy system, and is causing the pace
one scenario based and this will result in a faster decline in global oil of the energy transition to accelerate. Third, the
on current trends and and gas demand, BP said. At the same time, the importance of fossil fuels is declining as renew-
existing policies, and UK major predicts an accelerated shift towards ables expand their share and electrification is
two more based on renewable energy – in part because of high oil increased.
predetermined climate and gas prices, and in part because of hydro- Oil demand will decline over the period of
goals. carbon importers developing more domestic the outlook, BP notes, as its use in road trans-
energy supply. And this will mean that global port declines in favour of electrification, and
WHAT NEXT: emissions reduce more quickly, BP said. vehicles become more efficient. The outlook for
The company has BP outlines three scenarios in its outlook. natural gas will depend on the pace of the energy
stressed the need for an The first two – Accelerated and Net Zero – are transition and how demand grows in emerging
orderly transition from oil broadly in line with IPCCs scenarios that are economies.
and gas to avoid future consistent with Paris Agreement goals. These BP warns that the current energy crisis
crises. scenarios envisage the substantial cut in car- demonstrates that the transition away from The
bon emissions – 75% in Accelerated and more oil and gas should be orderly, so that supply
than 95% in Net Zero. Net Zero will also involve declines in line with demand and not at a faster decarbonisation
a shift in societal behaviour and preferences rate. Upstream investment must continue over of the global
to support increased energy efficiency and the the next three decades to offset natural decline at
greater adoption of low-carbon technologies. already-developed fields, the company stresses. power system
This is to say that they are scenarios based on The decarbonisation of the global power sys-
predetermined outcomes. tem will be driven by the greater deployment will be driven
BP’s third scenario, New Momentum, fore- of wind and solar power, BP notes, and both by the greater
casts the current trajectory of the global energy low-carbon hydrogen and carbon capture uti-
system, based on current trends and known pol- lisation and storage (CCUS) will play critical deployment of
icy directions. It stresses “the marked increase in roles in decarbonising hard-to-abate industries,
global ambition for decarbonisation in recent according to the company. wind and solar
years, as well as on the manner and speed of
decarbonisation seen over the recent past.” A break from the past power.
The UK cautions that “the scenarios are not In contrast with its previous outlooks, all three of
predictions of what is likely to happen or what BP’s scenarios now envisage final energy peaking
BP would like to happen.” Furthermore, it states within the next three decades, owing to energy
that “the many uncertainties surrounding the efficiency gains. But as was the case in previous
transition of the global energy system mean reports, BP warns that in the New Momentum
that the probability of any one of these scenarios scenario, the world is lagging far behind the nec-
materialising exactly as described is negligible.” essary course to reach net zero by 2050. In New
Nevertheless, the outlook provides useful insight Momentum, global carbon emissions will only
on how global energy trends may play out over be around 30% lower than the level they were
the next three decades. at in 2019. Electrification will drive emissions
BP bases all three scenarios on a number reductions in all three scenarios, with electricity
of present trends. First, it notes that the global demand climbing 75% by 2050.

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