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BP Energy Outlook 2016

February 12, 2016
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By Paul Homewood  

 

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http://www.bp.com/en/global/corporate/energy-economics/energy-outlook-2035/energy-outlook-to-2035.html

 

BP have published their latest annual energy outlook, looking ahead to 2035.

 

The key points to note are :

 

  • Global energy consumption to rise by 34%
  • GDP to double, around 20% of the rise due to population increase and the rest improvements in productivity.
  • China and India together account for almost half of the projected increase in global GDP, with OECD (Organisation for Economic Co-operation and Development) economies accounting for around a quarter.  
  • Virtually all of the additional energy is consumed in fast-growing emerging economies. Energy demand within the OECD barely grows.
  • Fossil fuels remain the dominant source of energy powering the global economy, providing around 60% of the increase in energy and accounting for almost 80% of total energy supplies in 2035.
  • Gas is the fastest growing fossil fuel at 1.8% per annum, with its share in primary energy gradually increasing. Oil grows steadily at 0.9% p.a., although the trend decline in its share continues. The combined increase of oil and gas over the Outlook is similar to the past 20 years.
  • In contrast, coal suffers a sharp reversal in its fortunes. After gaining share since 2000, the growth of coal is projected to slow sharply at (0.5% p.a.), compared with almost 3% p.a. over the past 20 years, such that by 2035 the share of coal in primary energy is at an all-time low, with gas replacing it as the second-largest fuel source.
  • Among non-fossil fuels, renewables (including biofuels) grow rapidly at 6.6% p.a., causing their share in primary energy to rise from around 3% today to 9% by 2035. 
  • More than half of the increase in global energy is used for power generation as the long-run trend towards global electrification continues, particularly benefiting those who currently lack adequate access to electricity in regions such as Asia and Africa.
  • Both hydro and nuclear energy are projected to increase steadily, growing at 1.8% p.a. and 1.9% p.a. respectively. 
  • The rate of growth of carbon emissions more than halves relative to the past 20 years, reflecting gains in energy efficiency and the changing fuel mix. But emissions continue to rise, suggesting the need for further action.
  • The growth rate of carbon emissions over the Outlook is expected to more than halve relative to the past 20 years: 0.9% p.a. versus 2.1% p.a.. (This would be about 20% total increase, compounded).

 

 

A few key charts:

 

 

 

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Energy Consumption by Region

 

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(IEA 450 is the IEA’s “Challenge Scenario”, not to be confused with real life!)

 

ScreenHunter_3623 Feb. 12 18.05

 

 

My key thoughts:

 

  • As I have predicted previously, the Paris Treaty will see a continued rise in CO2 emissions. BP’s estimate of 20% does not look unrealistic.
  • Despite sharply rising growth in renewables, these will still only account for a very small share of total energy, 9%, by 2035, as total energy demand continues to rise rapidly.
  • Fossil fuels will still account for 80% of energy by 2035
  • Given current economic conditions, my guess is that GDP growth may be overstated, which in turn will make it harder for China and co to cut energy intensity, but will also slow CO2 emissions.
  • The forecast decline of coal has, in my view, been overdone. The likes of China and India will continue to get energy where it is readily available and cheap. Current market conditions favour oil and gas, but this may not be the case in ten years time.
15 Comments leave one →
  1. Adamsson permalink
    February 12, 2016 7:00 pm

    Remember BP have been wrong about everything all the time for years, if you don’t believe me look at the share price

  2. February 12, 2016 8:12 pm

    Good post.
    Thanks Paul

    My note to your note. China is in trouble. One of the most common flaws of big corporate reports is an expectation that ensuing years will be the same economic growth cycle of preceding years. I track RYDEX cash flow. I’ve had 2 previous sell signals in the past 30 years that were macrocorrect. I received the latest sell signal early last year concerning equities. If we are headed for a correction that dwarfs 2008, money for pet projects such as renewables will be sparse.

    Additionally, coal has taken such a drubbing that it’s drubbing even exceeds that of oil. During hard times, undervalued real assets such as coal will make a comeback because essential choices become self evident.

    Grist for the mill.
    Thanks for your posts btw. I read them all but don’t often comment.

  3. February 13, 2016 7:30 am

    Excellent post, indeed! Thanks for all your good work Paul!

    However, making ANY forecasts much beyond 5 years is a pretty fatuous business! Back in the “good old days”, before “powerful” computer models such as those used with massive confidence by (for example) Lehmann Brothers right up to the point of its complete demise, we charted the future with more humility.

    I honestly wonder what would have been the 20 – 30 year scenarios of models developed in (say) 1912, 1917 or 1937 had such forecasting tools been available at the time.

    History is a better guide. Prepare for the worst but hope for the best and whatever you do, treat computer generated forecasts with the deep scepticism they deserve!

    • February 13, 2016 2:28 pm

      +1
      Investment ideas can show a fine ROR for a long time when alot of money is behind them. Problems arise when fatal flaws are ignored from the getgo. The housing debacle was an excellent example of that as was the explosion of non profitable Internet companies of the late 90s. CAGW driven energy gyrations are of the same ilk. It’s just a matter of time till the money sunk into the ruse starts to run away.

      The timing feels right as does the exodus of equity investment cash that started last year. Smart money left last year. The unwinding continues. You’ll hear a giant sucking sound if the US votes in a Republican for president.

  4. February 13, 2016 10:03 am

    “But emissions continue to rise, suggesting the need for further action.

    The BP report would have even more credibility if they refrained from trying to do down their competition (coal), and from green virtue seeking.

    Expect more anti-coal hysteria following the recent report on air pollution, the BBC are already playing the dirty trick of pointing the finger at coal-fired power stations, whereas the real problem is exactly the opposite, i.e. the lack of low cost electricity (and natural gas):

    http://www.bbc.co.uk/news/science-environment-35568249

  5. Peter Howard permalink
    February 13, 2016 10:11 am

    No meeting for SW? The heartland of England out of EU!! UKIP was started in Torquay, don’t forget.

    Our super MP Sarah Wollaston (Totnes) has bravely come out for leaving and if you come to my local, you will have a job to find one inner!! Best, Peter Howard Kingsbridge Devon

    Sent from my iPad

    >

  6. Corruption de Lion permalink
    February 13, 2016 10:17 am

    I notice that between 0730 and 0830 this morning the BBC dropped the’home fires cooking ‘ contribution to lung deaths – it was all industrial pollution.

  7. Kelvin Vaughan permalink
    February 13, 2016 5:29 pm

    I predict the future will be Nuclear Fusion and Hydrogen.

    • February 13, 2016 5:49 pm

      Yes

      And all the men will be buff. The women lusty and teleporation will be free for all.
      In between now and then we have to use what works.

  8. manicbeancounter permalink
    February 14, 2016 3:03 pm

    With reference to the CO emissions, BPs historical estimates are about two-thirds of the CO2 equivalent greenhouse gas emissions from the IPCC. About half the difference is due to methane emissions and much of the rest is CO2 emissions land use.
    When comparing with the policy proposals put forward for COP21 Paris, the rising emission levels through to 2035 are in broad agreement to the UNFCCCs estimates of emissions with policies through to 2030. But as UNFCCCs’ graphic shows below, the UNFCCC assumes new policies will be enacted post-2030 that will bring global emissions down rapidly.

    I explain the graph in a post from last November.

    • February 14, 2016 4:22 pm

      That’s right.

      Other GHG such as Nitrous Oxide, Ozone and CFC’s also count in the UNFCCC targets

Trackbacks

  1. BP Energy Outlook 2016 – A Summary | The Global Warming Policy Forum (GWPF)

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