The headline is that oil giant BP sees global demand for coal continuing for decades in the face of dynamic growth of renewable energy.
That is what BP thinks will happen on the basis of projecting forward what we are doing to date. However, in what they see as a Rapid Transition Scenario, BP still sees around half of our energy needs in 2040 coming from fossil fuels in the form of gas and oil. Here from the BP Energy Outlook, 2019 in a nutshell is the story:
Evolving transition (ET) scenario, assumes that government policies, technology and social preferences continue to evolve in a manner and speed seen over the recent past.
The More Energy scenario recognises that a special effort may be made to meet the needs of around two-thirds of the world’s population who in 2040 would still live in countries where average energy consumption per head is relatively low, that is, the energy deprived. Some 80% of the world’s population live in countries where average energy consumption is less than 100 GJ per head. For reference, the EU average is 120 GJ per head.
Key to solving this problem, says BP, is improving energy efficiency in countries that use a disproportionate amount.
The problem with ET is that it would see CO2 emissions rise by 7 per cent, so a Rapid transition (RT) scenario has been formulated which see carbon emissions fall by 45 per cent by 2040:
RT, BP says, would meet the goals of the Paris Agreement. I think they have simply ignored the 1.5°C target examined by the IPCC late last year. In truth that report probably came too late for them to consider.
So the options are stark:
1. We carry on as we are, and we cook the planet.
2. We make a special effort to meet the energy needs of the poor, and we cook the planet even more rapidly.
3. We transition more rapidly to achieve the 2°C target adopted in Paris, which scientists now appear to be telling us is dangerous.
Rapid transition (RT) is achieved by gains in energy efficiency, a switch to lower-carbon fuels, and greater use of CCUS. (I think that means ‘carbon capture utilisation and storage’.) They say:
- The gains in energy efficiency means energy demand increases by around 20% in the RT scenario by 2040, compared with a third in the ET scenario.
- The shift to lower-carbon fuels reflects a combination of rapid growth in renewable energy – which more than accounts for the entire increase in primary energy – and a sharp contraction in the use of coal. By 2040, renewables account for around 30% of primary energy.
- Despite the strong growth in renewables, oil and gas account for close to 50% of primary energy in 2040 in the RT scenario. The level of oil consumption falls to around 80 Mb/d in 2040, with roughly 60% of this remaining use in transport and much of the rest in the non-combusted sector. In contrast, gas continues to grow aided by growing use of CCUS – with close to a third of natural gas in the RT scenario in 2040 being used in conjunction with CCUS.
- CCUS is used in both power and industry and captures almost 4.5 Gt of CO2 emissions by 2040 in the RT scenario.
This graph gives the broad idea:
Their scenarios are built on the assumption that population will increase by 1.7 billion to reach almost 9.2 billion, GDP per capita will increase by 3.25% pa so that total GDP will double, however energy consumption will only increase by about a third. Some 80% of growth will come from developing countries, and half of that from India and China.
Here’s energy consumption by fuel type, with RT compared to ET:
I think “oil” should read “liquid fuel” (see below).
Energy efficiency is increased under the RT scenario, reducing energy consumption overall. Renewable energy (mainly solar and wind) are ramped up more rapidly, and coal is diminished by about 70 per cent. However, oil and gas remain in substantial amounts to comprise about half the energy needed in 2040.
Emissions beyond that are captured in this diagram (p61 of the report):
They regard this as difficult but achievable. It involves the complete decarbonisation of the electricity grid, more CCUS in conjunction with gas and coal, alternative fuels including bioenergy and hydrogen, further resource and energy efficiency including both increased use of circular economy techniques, and more use carbon removal techniques including direct air capture.
There is no elaboration, but clearly they consider the above possible – albeit post 2040. Next year they may contemplate whether these outcomes can be achieved sooner than 2040.
There is much in the report, so I’ve selected a few aspects for consideration.
Primary energy consumption by region and fuel
Below I’ve shown the primary energy consumption by region and fuel. I’ve split and stacked the image for legibility. You have to pick up the fuel type from the second:
The above shows where the momentum is and where things need to change.
The future of coal
This graph shows coal consumption under ET:
In this graph the US, Canada, Japan, South Korea, Mexico, Europe and Australia would be included in the countries belonging to the OECD.
On another thread, Geoff Meill has cited information from CoalSwarm’s Global Coal Plant Tracker showing trends for countries cancelling plans to build new coal. The summary is, where GU equals ‘generator units:
- GLOBAL TOTAL: 6,732 GUs operating, 491 GUs under construction, and 729 GUs planned.
If a coal plant lasts 40 years one would expect 168 units to be built each year for replacement purposes. Peak coal may be in sight, but BP sees it as enduring unless we make a plausible attempt to implement the Paris Agreement at the 2°C target level.
The extraordinary growth of renewables
The report points out that the growth of renewables and speed of market penetration has been extraordinary. Here’s the speed of penetration in years after reaching the 1% foothold:
As to the future, here’s how they see the increase in renewables share of generation by source:
The future sees an explosion in the use of solar. On the face of it there seems no good reason why the adoption of solar cannot be even more rapid.
This graph of renewables penetration by region is instructive:
China’s rapid move into renewables in recent times is impressive, but merely mirrors what happened in Europe a decade earlier. Europe will maintain its leadership.
The strange story of oil
BP, of course, is not a disinterested observer, but their big message is that they believe there will be strong need for the continued use of oil. Again, for legibility I’ve split and stacked the graphs:
Peak ‘liquid fuel’ they see arriving in 2035. They see strong demand in motorised transport, electric cars notwithstanding until about 2035.
In terms of supply, they see American tight oil as the main factor until the latter part of the period, when they see leadership in supply returning to the Middle East and Russia.
Their big message, however, is that this will require investment, indeed trillions of dollars of investment. The question arises whether those trillions should be spent elsewhere to provide alternatives to oil. This particular report does not help use to know whether that is feasible within the time frame.
However, they see oil demand as essentially flat from 2020, but not declining thereafter, with the growth then coming from NGLs (natural gas liquids) and ‘other’ including biofuels.
The extraordinary story of China
The report finishes with a reflection on what has changed in this year’s report. The standout in the last five years has been China:
- The most important factor driving revisions over the past 5 years has been the faster-than-anticipated pace of economic adjustment in China: rebalancing its economy away from energy-intensive industrial sectors and shifting to a cleaner, lower-carbon energy mix. These changes are most marked in the revisions to Chinese industrial and coal demand (-22% and -37% respectively in 2035).
- The softer prospects for Chinese energy demand has led to a downgrading in overall energy demand (-4%), partially offset by upward revisions to other parts of developing Asia and Africa as some Chinese industrial production is relocated to lower-income countries.
- The shift in China’s fuel mix directly accounts for roughly 80% of the downward revision to global coal consumption, and around a third of the upward revision to the outlook for renewables over the past 5 years. The overall impact on renewables is even greater since the quicker adoption of renewable energy in China helps to drive down the costs of wind and solar energy as they move down their learning curves more quickly, increasing the penetration of renewables in other parts of the world.