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BP’s chief economist Spencer Dale has urged an orderly transition away from hydrocarbons (Photo: USDA)
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 to the sustainability of existing and new mining
2050, on the other hand, potentially climbing to activity.
20% above the 2019 level by that year. LNG trade
will increase in the near term, but the outlook is An orderly transition
more uncertain after 2030. Despite its projections, BP’s chief economist
But in New Momentum, the LNG market is Spencer Dale stresses that the transition from
set to double in size by 2040 versus 2019, with hydrocarbons must be orderly to avoid future
extra supply predominantly coming from the energy price spikes and shortages.
US and the Middle East. Growth will be driven “The scale of the economic and social disrup-
by demand in emerging Asian markets, as these tions over the past year associated with the loss
countries shift away from coal while continuing of just a fraction of the world’s fossil fuels has
to industrialise. also highlighted the need for the transition away
The pace of wind and solar development from hydrocarbons to be orderly, such that the
will be rapid in all three scenarios. Even in New demand for hydrocarbons falls in line with avail-
Momentum, installed wind and solar capacity able supplies, avoiding future periods of energy
will increase ninefold by 2050, primarily on the shortages and higher prices,” Dale notes.
back of declining costs. In Accelerated and Net This is a warning that should be heeded by
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.
China and the developed world will domi- “The events of the past year have served as a
nate new wind and solar capacity, accounting reminder to us all that this transition also needs
for 30-40% of the overall increase between now to take account of the security and affordability
and 2035. of energy,” Dale says.
Electrification will expand in all end-user BP also highlights the drawback of renewa-
sectors over the period of the outlook, but the bles: their intermittent supply. As such, they will
greatest scope for growth is in buildings, where need to be combined with baseload power sup-
BP envisages that at least half of final energy ply – ideally, natural gas-fired plants equipped
demand will be electrified by 2050 in all three with carbon-capture technology.
scenarios. Interestingly, while BP is predicting a faster
While demand for oil and gas falls in all decline in oil and gas consumption, the com-
three scenarios, continued investment will still pany’s CEO Bernard Looney recently said he
be 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.” ™

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