BP recently published its energy outlook for 2035 and did a corporate sigh and effectively said “We can’t go on like this”
Their report suggests that emissions will grow by a further 25% over the next 20 years and in the process atmospheric CO2 concentration will exceed the 450 ppm mark, which is expected to result in a 2oC rise in global temperatures.
This increase is driven by the continued growth in energy demand forecast to increase from 148,049,900 GWh annually to 203,001,650 GWh by 2035. This rate of increase is not matched by the growth in low/zero carbon generation, despite the forecast that renewables will remain the fastest growing class of energy production, increasing as a proportion from the current 14% to near 20% by 2035. The report highlights the huge energy efficiency improvement that new technology has delivered, driven by environmental legislation in the EU and USA and that this has had a positive impact across the globe. It also points out that energy will increasingly be flowing east rather than west.
Two things seem obvious from these forecasts. Firstly that we need to continue to improve energy efficiency through investment in new technology in order to control the demand side, and secondly that we need to get global agreement on emissions control.
Of course forecasting invariably produces the wrong answer - other than that Tottenham aren’t going to finish above Arsenal – and this is particularly true with energy. Who would have assumed that oil, which for so long seemed to be a one way upward bet, would more than halve in price within the space of a few months? Importantly, the report does highlight that change can happen but that there is not one policy or technology that will provide the answer. They argue that to underpin long-term change we need a global price for carbon.
So, does the fact that BP acknowledges that the rate of carbon emissions remains unsustainable mean an end to BP’s love affair with oil and gas? Somehow I doubt it, at least not yet.
For the record: The author holds a number of BP shares and is an Arsenal fan.
Nick Cullen is a partner at Hoare Lea