Renewables to drive energy demand by 2040

Renewables is slated to become the largest source of global power generation by 2040 and natural gas is set to replace coal as the second largest source of energy, says Spencer Dale, Chief Economist at BP at a presentation on BP Energy Outlook – BP’s views on global energy markets out to 2040

Renewables and natural gas together will account for more than 80 per cent of the growth in primary energy demand by 2040.

The world of energy is changing. “Renewables and natural gas together account for the great majority of the growth in primary energy. 85 per cent of the growth in energy supply is generated through renewable energy and natural gas, with renewables becoming the largest source of global power generation by 2040. In our evolving transition scenario, 85% of new energy is lower carbon,” said Spencer Dale, Chief Economist-BP, who was in Muscat recently at a talk on BP’s newly published Energy Outlook 2019. Dr Hatem al Shanfari, Vice President of the Oman Economic Association moderated the session.

Renewables account for around two-thirds of the increase in power generation, with their share in the global power sector increasing to around 30%. In contrast, the share of coal declines significantly, such that by 2040 it is surpassed by renewables as the primary source of energy in the global power sector. Renewable energy is the fastest growing source of energy, accounting for around half of the increase in energy. Natural gas grows much faster than either oil or coal. The growing abundance of energy supplies plays an increasing role in shaping global energy markets, he said citing the findings of BP’s Energy Outlook.

Growth in Energy

By region, all of the growth in energy demand comes from fast-growing developing economies, led by India and China. Natural gas is set to replace coal as the second largest source of energy, supported by increasing levels of industrialisation and power demand in those fast-growing emerging economies, as well as increasing availability of low-cost supplies in North America and the Middle East.

The Energy Outlook considers a range of scenarios to explore different aspects of the energy transition. The scenarios have some common features, such as ongoing economic growth and a shift towards a lower carbon fuel mix, but differ in terms of policy, technology or behavioural assumptions. Beyond the evolving transition scenario, the Energy Outlook considers a number of additional scenarios. Some of the key ones are- More energy will be needed to support growth and enable billions of people to move from low to middle incomes. There is a strong link between human progress and energy consumption; the UN Human Development Index suggests that increases in energy consumption of up to around 100 gigajoules (GJ) per head are associated with substantial increases in human development and well-being. Today, around 80% of the world’s population live in countries where average energy consumption is less than 100 GJ per head. In order to reduce that number to one-third of the population by 2040, the world would require around 65% more energy than today, or 25% more energy than needed in the evolving transition scenario. The increase in energy required over and above the evolving transition scenario is roughly the equivalent of China’s entire energy consumption in 2017. The Outlook also highlights the need for further action to reduce carbon emissions. This is the dual challenge for the world – to provide more energy with fewer emissions.

Meanwhile, Yousuf al Ojaili, president of BP Oman, speaking to media on the sidelines of the event, said that BP Oman is working on a plan to add value to gas produced through its concession areas in the Sultanate. “We will submit the plan to the government for the approval soon.” On BP’s Ghazeer gas field project, Ojaili informed that the Ghazeer gas field project will enter the production phase in the first quarter of 2021.

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