BP’s Energy Outlook 2023 report explores the trends and uncertainties in the energy transition and provides three main scenarios – Net Zero, Accelerated, and New Momentum – to forecast the future of the global energy system through 2050. The scenarios take into account the recent events of the Russia-Ukraine war and the passing of the Inflation Reduction Act in the US.
According to BP’s Chief Economist, Spencer Dale, the energy transition must address three key elements – security, affordability, and lower carbon – to be successful. The report highlights that despite increased government support for the energy transition, CO2 emissions have continued to rise since the Paris COP in 2015. The Russia-Ukraine war has emphasized the need for energy security and led to an increase in demand for domestically produced non-fossil fuels, which could accelerate the energy transition.
The report shows that the carbon budget is running out and the delay in reducing GHG emissions will result in higher economic and social costs. Fossil fuels will decline in importance, with renewable energy and electrification becoming more prominent. The demand for oil will decline, but it will still play a major role in the energy system for the next 15-20 years. The prospects for natural gas will depend on the speed of the energy transition. The power system will decarbonize, with wind and solar leading the way, and modern biofuels will also play a significant role in decarbonizing hard-to-abate sectors. Low-carbon hydrogen will also be a critical component of the energy transition.
Despite BP’s role in exploring and forecasting the energy transition, the company has a conflicting role in the transition to renewables. On one hand, BP has made significant investments in renewable energy, such as wind and solar, and aims to become a leading provider of low-carbon energy. On the other hand, the company is still heavily reliant on oil and gas and has faced criticism for its continued exploration and production of fossil fuels. BP’s Energy Outlook 2023 report provides valuable insights into the trends and uncertainties in the energy transition, but it also continues to raise questions about its commitment to the transition.