BP Energy Outlook: Renewables will grow five-fold by 2040

Renewable energy sources and electric vehicles are expected to be some of the biggest forces shaping the global energy transition up to 2040, according to an annual report from BP.

The 2018 Energy Outlook report claims that by 2040, renewables will be the fast-growing fuel source, increasing five-fold and providing around 14% of primary energy. This strong growth is enabled by the increasing competitiveness of solar and wind, with subsidies gradually phased out by the mid-2020s.

Electric cars will assume 15% of the total market share, but because of the much higher intensity with which they are used, will account for 30% of passenger vehicle kilometres.

However, the report paints a mixed picture for the global low-carbon transition. Carbon emissions are expected to rise by 10% by 2040, which remains higher than the sharp decline thought to be necessary to achieve the Paris Agreement goals.

Demand for oil increases over much of the period before plateauing in later years, while natural gas demand grows strongly and overtakes coal as the second largest source of energy.

BP's group chief economist Spencer Dale said: “We are seeing growing competition between different energy sources, driven by abundant energy supplies, and continued improvements in energy efficiency.

“As the world learns to do more with less, demand for energy will be met by the most diverse fuels mix we have ever seen.”

‘Decisive break from the past’

Much of the report is based on an ‘Evolving Transition’ scenario, which BP stresses is not a prediction of what is likely to happen. Rather, it assumes that government policies, technologies and societal preferences will evolve in a manner similar to the recent past.

Up to 2040, fast growth in countries such as China and India drives up global energy demand by one-third, with oil and gas together accounting for more than half of the world’s energy.

Non-combusted use of fuels, particularly as feedstocks for petrochemicals, are the fastest growing source of overall demand for oil and gas, although increasing environmental pressures on products such as single-use plastics and packaging dampens this growth.

Global coal consumption flatlines, with falls in China and the OECD offset by increasing demand in India and other emerging Asian economies.

In response to the report’s findings, Bob Dudley, group chief executive of BP, said his company and the wider world must deliver a “far more decisive break from the past”.

“BP’s strategy has to be resilient and adaptable to significant changes in the energy industry,” he said.

Earlier this month, BP pledged to invest $500m into low-carbon solutions after posting a strong financial performance in 2017.

The UK-based firm recently returned to solar power with the $200m investment in solar developer Lightsource, and has announced it will add rapid charging points for electric cars at its UK petrol stations within the next two months.

George Ogleby