BP Releases 2024 Energy Outlook Report
BP, one of the world’s leading energy companies, has published its 2024 energy outlook today. The report highlights two key points – global demand for oil is expected to peak next year, while low-carbon energy sources are not growing quickly enough to keep up with energy demand.
Spencer Dale, BP’s chief economist, stated that the world is currently in an ‘energy addition’ phase, where countries are increasing their use of renewable energy while still consuming high amounts of both low-carbon energy and fossil fuels. However, he emphasized the need to transition to an ‘energy substitution’ phase, where low-carbon energy grows at a faster pace, resulting in lower consumption of fossil fuels and reduced carbon emissions.
Mr. Dale, a former chief economist at the Bank of England, pointed out that the world has seen two ‘energy addition’ phases in the past – during the mid-19th century when coal replaced wood and biomass, and a century later when oil replaced coal. He also mentioned that despite significant investments in low-carbon energy and efforts to address climate change, carbon emissions have continued to rise since the Paris climate goals were agreed upon in 2015, with the exception of a decline in 2020 due to the COVID-19 pandemic.
According to Mr. Dale, two main themes – sustainability and security – continue to shape the global energy landscape. He noted that the defining moment for the energy industry was not the pandemic, as he initially thought, but rather the 2022 invasion of Ukraine by Russia, which highlighted the importance of energy security and affordability.
BP’s outlook includes two scenarios – the ‘current trajectory’ and a ‘net zero’ scenario that assumes the world has tightened its climate policies in line with the Paris Agreement. Under the current trajectory, carbon emissions are predicted to be only 20% below their current level by the middle of the century. However, in both scenarios, global demand for oil is expected to peak in 2025, and natural gas demand is expected to continue to rise in the current trajectory but decrease significantly in the ‘net zero’ scenario.
Mr. Dale stated that emerging economies are increasingly using natural gas, but under the ‘net zero’ scenario, its demand will be overshadowed by the growth of renewable energy sources and electrification. Overall, the world’s dependence on fossil fuels is expected to decline in both scenarios, with the net zero scenario predicting a significant decrease in their use.
However, Mr. Dale acknowledged the uncertainty in predicting the future of the energy system, and BP invited a global audience of more than 20,000 people to participate in online polls during the report’s launch. The majority of the audience predicted that the world will transition from an ‘energy addition’ to an ‘energy substitution’ phase in the second half of the 2030s, and that the most effective way to achieve this is for the whole world to decarbonize, with developed countries supporting emerging economies.
Finally, Mr. Dale invited the audience to predict the technology that will have the most significant impact on accelerating decarbonization in the next 13 years. The most popular option was nuclear fusion, followed by AI-enabled improvements in energy efficiency. Mr. Dale concluded by stating that the first energy outlook published by BP in 2011 was similar to the latest one, highlighting the inertia of the global energy industry and the predictability of forecasting in the sector due to long lead times and long-lived assets.
