Page 5 - AfrElec Week 10 2023

AfrElec COMMENTARY AfrElec

BP garage near Cape
Town, South Africa

In New Momentum, global oil demand pla- critical minerals, and this will mean a signifi-
teaus at around 100mn barrels per day of the cant increase in investment in the mining sector.
next decade, and then shrinks to 75mn bpd by But there should also be greater scrutiny about
2050. Natural gas demand will keep rising out the sustainability of existing and new mining
to 2050, on the other hand, potentially climb- activity.
ing to 20% above the 2019 level by that year.
LNG trade will increase in the near term, but An orderly transition
the outlook is more uncertain after 2030. But Despite its projections, BP’s chief economist
in New Momentum, the LNG market is set to Spencer Dale stresses that the transition from
double in size by 2040 versus 2019, with extra hydrocarbons must be orderly to avoid future
supply predominantly coming from the US energy price spikes and shortages.
and the Middle East. Growth will be driven by “The scale of the economic and social dis-
demand in emerging Asian markets, as these ruptions over the past year associated with the
countries shift away from coal while continuing loss of just a fraction of the world’s fossil fuels
to industrialise. has also highlighted the need for the transition The transition
The pace of wind and solar development away from hydrocarbons to be orderly, such that
will be rapid in all three scenarios. Even in New the demand for hydrocarbons falls in line with from
Momentum, installed wind and solar capacity available supplies, avoiding future periods of hydrocarbons
will increase ninefold by 2050, primarily on the energy shortages and higher prices,” Dale notes.
back of declining costs. In Accelerated and Net This is a warning that should be heeded by must be orderly
Zero, about a quarter to a third of the capacity those advocating for an immediate end to new
in 2050 will be used to produce green hydrogen. upstream investment. to avoid future
China and the developed world will dom- “The events of the past year have served as a
inate new wind and solar capacity, accounting reminder to us all that this transition also needs energy price
for 30-40% of the overall increase between now to take account of the security and affordability spikes and
and 2035. of energy,” Dale says.
Electrification will expand in all end-user BP also highlights the drawback of renew- shortages.
sectors over the period of the outlook, but the ables: their intermittent supply. As such, they
greatest scope for growth is in buildings, where will need to be combined with baseload power Spencer Dale
BP envisages that at least half of final energy supply – ideally natural gas plants equipped with Chief economist, BP
demand will be electrified by 2050 in all three carbon-capture technology.
scenarios. Interestingly, while BP is predicting a faster
While demand for oil and gas falls in all three decline in oil and gas consumption, the com-
scenarios, continued investment will still be pany’s CEO Bernard Looney recently said he
needed to meet future demand, representing wanted to “dial back” its own green energy push,
a break from the position of the International in response to lower returns from investments
Energy Agency (IEA), which stated in 2021 that in renewables. BP said in 2020 it wanted to curb
no new oil and gas projects would be needed on its oil and gas production by 40%, but it has now
the path to net zero. scaled back that target to 25%. It is also ramping
BP notes that an accelerated energy tran- up oil and gas investments to $8bn annually by
sition will result in a spike in demand for 2030 to “meet near-term demand.”™

Week 10 08•March•2023 www. NEWSBASE .com P5