bp Energy Outlook 2023 explores key trends and uncertainties surrounding the energy transition
This year’s bp Energy Outlook explores the key trends and uncertainties surrounding the energy transition out to 2050, with scenarios considered covering three main areas: Net Zero, Accelerated, and New Momentum.
The Outlook’s three main scenarios are designed to explore the range of possible outcomes for the global energy system over the next 30 years. Understanding this range of uncertainty helps bp to shape a strategy which is resilient to the different speeds and ways in which the energy system may transition.
bp’s chief economist, Spencer Dale, said: “Global energy polices and discussions in recent years have been focused on the importance of decarbonising the energy system and the transition to net zero. The events of the past year have served as a reminder to us all that the transition also needs to take account of the security and affordability of energy. Any successful and enduring energy transition needs to address all three elements of the so-called energy trilemma: secure, affordable and lower carbon.”
The scenarios Accelerated and Net Zero explore how different elements of the energy system might change in pathways that achieve substantial reductions in carbon emissions by 2050 by around 75% in Accelerated and over 95% in Net Zero. Both scenarios assume a significant tightening in climate policies globally. Net Zero also includes a shift in societal behaviour and preferences to further support gains in energy efficiency and the adoption of low-carbon energy.
New Momentum is designed to reflect the current broad trajectory of the world’s energy system. In doing so, it places weight on the marked increase in government ambitions and pledges for decarbonisation that have been seen in recent years. In this scenario, global carbon emissions peak in the 2020s and by around 2050 are around 30% below 2019 levels.
The carbon budget is running out
Despite the marked increase in government ambitions, CO2 emissions have increased in every year since the Paris COP in 2015 (with the exception of 2020). The longer the delay in taking decisive action to reduce GHG emissions on a sustained basis, the report warns, the greater the likely resulting economic and social costs.
The energy transition has enjoyed increased government support from numerous companies, which includes the passing of the Inflation Reduction Act in the US. However, the scale of the decarbonisation challenge suggests greater support is required, including policies to facilitate quicker permitting and approval of low-carbon energy and infrastructure.
With the importance of fossil fuels declining, replaced by a growing share for renewable energy and by increasing electrification, the transition to a low-carbon world requires a range of other energy sources and technologies, including low-carbon hydrogen, modern bioenergy, and carbon capture use and storage.
Improving prospects for natural gas and other alternate fuels
The prospects for natural gas depend on the speed of the energy transition, with increasing demand in emerging economies as they grow and industrialise offset by the transition to lower-carbon energy sources led by the developed world.
The use of modern biofuels – modern solid biomass, biofuels and biomethane – is also enjoying rapid growth, helping to decarbonise hard-to-abate sectors and processes.
Low-carbon hydrogen plays a critical role in decarbonising the energy system, especially in hard-to-abate processes and activities in industry and transport. Low-carbon hydrogen is dominated by green and blue hydrogen, with green hydrogen growing in importance over time.
Carbon capture use and storage plays a central role in enabling rapid decarbonisation trajectories: capturing industrial process emissions, acting as a source of carbon dioxide removal, and abating emissions from the use of fossil fuels.
A range of techniques for carbon dioxide removal – including bioenergy combined with carbon capture and storage, natural climate solutions, and direct air carbon capture with storage – are needed for the world to achieve a deep and rapid decarbonisation.
The full 2023 Energy Outlook can be seen here.