BP’s New Predictions for Share of Energy Sources in 2050 and Their Pivot to Renewables

 

     It was reported in November 2022 that BP was considering stopping publication of their statistical review of world energy, a key source of global energy data, that many who study energy consult regularly. BP has been shifting from being exclusively an oil and gas company to being a leading renewable energy producer. The Review has been published annually for 71 years and the 72^nd edition is expected to be published in June. One company spokesperson said it was simply bad PR. I and many others certainly hope they will continue to publish it.

     BP recently predicted that the share of fossil fuels in primary energy will shrink from 80% in 2019 to between 20 and 55% in 2050. They also predict that the share of renewables will grow from 10% in 2019 to between 35% and 65% in 2050. I would bet more on the lower end of that. Electricity demand is also expected to climb by 75% by 2050, a little less than 3% per year. This is due to expected better electricity access for poor nations as well as increases in electrification of transport and heating. Population growth will be a factor as well, with global population not expected to plateau until around 2064. Robert Bryce seemed to think this new electricity demand was an extraordinary amount, but it is really about the same rate of increase as in the past 27 years. The numbers below are from Statista. Those numbers show an increase in electricity demand in 2050 of about 70% with a very small increase in natural gas share and a very small decrease in coal share. Thus, they predict that overall the amount of electricity provided by coal, natural gas, and nuclear will stay more or less the same to 2050 but the amount of electricity provided by renewables including hydro will more than triple, increasing by 3.36 times or 336%.

 

Data Source: Statista

     Thus, we see that a lesser share of fossil fuels for electricity does not really equate to less fossil fuel production and consumption as now. In terms of primary energy, with a presumed transition from diesel and gasoline vehicles to EVs, there may be some lowering of oil production and consumption to 2050 but that still remains to be seen. If fossil fuel share of primary energy is at the high part of BP’s predicted range of 55%, then that could actually mean the same or a bit more production and consumption of fossil fuels as today. Wildcards include technological and reliability improvements with renewables and energy storage, a rise in nuclear deployments, more successes in carbon capture and storage, blue and green hydrogen/ammonia, and other technological and efficiency improvements in all energy sources.

     Pro fossil energy pundits have pointed out that the profit margins in the highly profitable year of 2022 for the European Big Oil Majors like BP, Shell, and Total have lagged behind those of others like Chevron and Exxon and that this has much to do with their pivots toward clean energy. That is not an unreasonable assumption but long-term these companies are still quite profitable. However, just today Wall Street Journal and OilPrice.com report that BP's CEO Bernard Looney was playing down the company's renewables push. Oilprice.com reported that Looney "has recently discussed plans with people close to the supermajor to potentially scale back the company’s push into greener operations with less emphasis on ESG targets."

     BP began their ‘strategic shift to renewables’ in 2020. It announced in February 2022 that it “intends to halve its operational emissions by 2030, compared with a previous target of 30-35%.”

 

“BP is also aiming for net-zero lifecycle emissions from the energy products it sells by 2050 or sooner, against a previous forecast of a 50% cut in their emissions intensity.”

 

CEO Bernard Looney said then that they plan to transition to becoming an integrated energy company (IEC). Renewables and hydrogen are expected to be major focuses. They still expect their core profit engine to be oil and gas up to 2030 or thereabouts. The company noted it was on target to “develop 20 gigawatts (GW) renewable power capacity by 2025 and 50 GW by 2030, and was confident of achieving 8-10% levered returns on the investments.”

 

References:

 

Will BP Stop Publishing World Energy Review? Andreas Exarheas, Rigzone. November 30, 2022. Will BP Stop Publishing World Energy Review? | Rigzone

 

BP says demand for oil and gas will drop dramatically by 2050 in ‘decisive shift’. Catherine Clifford. CNBD. January 30, 2023. BP: World demand for oil, gas to to tumble by 2050 (cnbc.com)

 

Energy giant BP speeds up green makeover plan. Juliette Portala. Reuters. February 8, 2022. Energy giant BP speeds up green makeover plan | Reuters

 

Net electricity consumption worldwide in select years from 1980 to 2021. Statista. 2022. World electricity consumption 2021 | Statista

 

Projected electricity generation worldwide in 2020 with a forecast to 2050, by energy source. Statista. January 24, 2023. World electricity generation by energy source 2050 | Statista

 

Disappointing Returns May Force BP To Rein In Its Renewable Energy Push. Michael Kern. Oilprice.com. February 3, 2023. Disappointing Returns May Force BP To Rein In Its Renewable Energy Push | OilPrice.com