BP says The future is
electric...but not yet!
The future is electric for BP, though it’s
not giving up on oil just yet. The UK MOC
bumped up its forecast for EVs by 80 percent
to 180 million by 2035, according to
an energy outlook released this month. It
expects a third of the miles driven in 2040
will be powered by electricity.
The company forecasts the abundance of
gasoline and diesel cars will ensure overall
oil demand will continue to grow at about 0.5
per cent per year. But that’s slower than the
0.7 per cent annual increase it forecast last
year. Consumption is expected to peak at
110 million barrels per day in the mid-2030s,
BP’s Chief Economist Spencer Dale said.
That’s earlier than the mid-2040s he predicted
“The suggestion that rapid growth in electric
cars will cause oil demand to collapse
just isn’t supported by the basic numbers
- even with really rapid growth,” Dale said.
“It’s almost nothing. Oil used in the car market
is essentially flat for the next 20 years.”
BP said this year’s outlook doesn’t have a
base case scenario, like in previous editions.
It instead has a “evolving transitions scenario,”
which has a stable pace of change
Demand from cars, the backbone of oil
consumption growth in the past century,
may drop after 2030 and be at about today’s
level by 2040, BP said.
The surge of electric cars means manufacturers
may not need to put as much effort
and investment into increasing the efficiency
of gasoline and diesel vehicles, Dale
said. “Selling more EVs will tend to have almost
no effect on oil demand because now
I can sell a greater number of large cars or
I can do less investment in light weighting,”
The change to cleaner energy is going to
be slow and BP won’t be left holding any oil
assets it can’t produce from economically,
Chief Executive Officer Bob Dudley said in
an interview this month. Cleaner burning
natural gas will be an important fuel in that
transition, he said.
Gas is expected to grow faster than oil,
adding about 1.6 percent per year as it increasingly
becomes the fuel of choice for
power producers, according to the outlook
report. Coal consumption is projected to
“It’s significant that BP has kicked the notion
of an energy transition to the forefront of
its latest outlook,” said Luke Sussams, senior
researcher at Carbon Tracker Initiative,
a London-based think tank. Still, its business
as-usual projection “shows the yawning
gap between company expectations
and the 2˚C climate target set by the world’s
leaders in Paris in 2015.”
BP has also raised its forecasts for renewables.
It expects clean-energy technologies
will make up 40 percent of the growth in energy
supplies in the years ahead. The London
based company increased solar power
projections by 150 percent compared with
2015 as panel costs fell faster than anticipated
amid strong policy support globally.
“We cannot predict where these changes
will take us, but we can use this knowledge
to get fit and ready to play our role in meeting
the energy needs of tomorrow,” Dudley
said in a statement.
The oil company recently bought a stake
in British solar developer Lightsource Renewable
Energy Ltd. for $200 million. It’s
also said to be weighing a bid for Terra Firma’s
Rete Rinnovabile Srl, a solar company
based in Italy.
The biggest driver of oil consumption is
likely to be petrochemicals. However, BP
has reduced its forecast for demand from
that sector by 2 million barrels a day as governments
around the world are beginning to
regulate the use of products such as plastic
bags. Packaging makes up about 3 percent
of global oil use.
“We think we’re going to see increasing
regulation against some types of petrochemical
products, particularly single-use
plastics,” Dale said. “As a result of that, we
have less growth in non-combusted oils
than we otherwise would have done.”
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