Energy Sector Forecast for 2023 Highlights Crucial Developments and Uncertain Factors in Energy Transition, Encompassing Hydrogen
The BP Energy Outlook 2023 provides a comprehensive exploration of key trends and uncertainties surrounding the global energy transition out to 2050. This year's report takes into account the impact of the Russia-Ukraine war and the passing of the Inflation Reduction Act in the US, offering insights into the evolving energy landscape.
Despite the increase in government ambitions, global carbon dioxide emissions have risen in every year since the Paris COP in 2015, with the exception of 2020. This underscores the need for an accelerated energy transition to achieve the goals set out in the Paris Agreement.
The energy transition is not just about reducing carbon dioxide emissions; it's also about ensuring security and affordability. The Russia-Ukraine war has highlighted the importance of addressing all three elements of the energy trilemma: secure, affordable, and lower carbon. As a result, the war has long-lasting effects on the global energy system, increasing demand for domestically produced renewables and other non-fossil fuels.
The global power system is decarbonising, led by the increasing dominance of wind and solar power. Oil demand declines over the outlook, driven by falling use in road transport as the efficiency of the vehicle fleet improves and the electrification of road vehicles accelerates.
The Outlook's three main scenarios are the Net Zero, Accelerated, and New Momentum. The Net Zero scenario aims for over 95% reductions in carbon dioxide emissions by 2050, while the Accelerated scenario explores significant reductions in carbon dioxide emissions by 2050, around 75%. The New Momentum scenario reflects the current broad trajectory of the world's energy system.
Carbon capture, use, and storage plays a central role in enabling rapid decarbonisation trajectories. A range of techniques for carbon dioxide removal are needed for the world to achieve a deep and rapid decarbonisation. The use of modern biofuels grows rapidly, helping to decarbonise hard-to-abate sectors and processes.
Low-carbon hydrogen plays a critical role in decarbonising the energy system, especially in hard-to-abate processes and activities in industry and transport. The structure of energy demand changes in all scenarios, with the importance of fossil fuels declining and the growing share for renewable energy.
The Net Zero scenario assumes a shift in societal behavior and preferences to support energy efficiency and the adoption of low-carbon energy. Government support for the energy transition has increased further, including the passing of the Inflation Reduction Act in the US.
The prospects for natural gas depend on the speed of the energy transition. The events of the past year serve as a reminder that the transition also needs to ensure a demand for hydrocarbons falls in line with available supplies.
In conclusion, the BP Energy Outlook 2023 offers valuable insights into the future of the global energy system. It underscores the need for a comprehensive, balanced approach to the energy transition, one that addresses security, affordability, and lower carbon dioxide emissions. The outlook highlights that while challenges remain, there is a path towards a more sustainable, lower-carbon future.
