BP Energy Outlook Ignores Renewable EnergyOutpacing Fossil Fuels



British multinational oil and gas companyBP has published its highly-anticipated Energy Outlook for 2018 and, eventhough it has branded its standard model the ‘Evolving Transition’ scenario,this year’s report is the very picture of business as usual for the fossil fuel giant.



BP began publishing its Energy Outlook tothe public back in 2011, and since then the document has actually become somethingof an important marker for those monitoring the global energy space. To becertain, BP stands for British Petroleum, so on the surface, one might considerit biased — sort of like trusting the wolf’s status updates on the contents ofthe sheep pen. I’m not one to dismiss out of hand anything and everything BPsays or does, because we’re not going to make progress unless we incentivize the involvement of fossil fuel supermajors like BP and bring them into theparty. And this year’s BP Energy Outlook 2018 edition does make some allowancesfor the difficulty in predicting the future of the global energy sector.



In its introduction, the authors of theOutlook explain that much of the report is based on their business as usualpredictions — the ‘Evolving Transition’ scenario. “But,” as the authorsimmediately explain, “that does not imply that the probability of this scenariois higher than the others. Indeed, the multitude of uncertainties means theprobability of any one of these scenarios materializing exactly as described isnegligible.”



In other words, let’s give credit where itsdue. Though we might disagree with some of BP’s main takeaways — and trust me,we do — let’s not pretend that any of us are really overly confident in howthings will turn out.



All of that being said, it is dismaying tohave all my attempts to give BP the benefit of the doubt undone when youconsider their predictions through to 2040 — the extent of this year’s Outlook.The report is an ‘energy’ outlook, so it covers all aspects of energy aroundthe world. You can get a sense of the report’s scope here.




Spencer Dale


My main point of contention with the Outlook is itsfuel analysis through to 2040. “By 2040, oil, gas, coal and non-fossil fuelseach account for around a quarter of the world’s energy,” explained SpencerDale, group chief economist. “More than 40% of the overall increase in energydemand is met by renewable energy.” In other words, BP is more than willing toacknowledge the impressive growth of renewable energy and its importance as theenergy generation technology of the future.

在这份报告中我的主要的观点是到2040年间的化石燃料的分析。“到2040年,石油,天然气,和非矿物燃料,它们各占世界能源的比例都在1/4左右。”BP集团的首席经济学家Spencer Dale解释说。“超过40%的能源需求增长是通过可再生能源来实现的”。那也就是说,BP公司更愿意承认,可再生能源的惊人的增长速度,以及未来可再生能源发电技术的重要性。


I just think they are missing just howquickly renewable energies are transforming the power sector specifically.



According to the Outlook out to 2040,“renewable energy grows 400% and accounts for over 50% of the increase inglobal power generation.” The lion’s share of the growth is thanks to the“increasing competitiveness of wind and solar” despite the fact that “Subsidiesare gradually phased out by the mid-2020s, with renewable energy increasinglyable to compete against other fuels.” Unsurprisingly, BP acknowledges that“China is the largest source of growth, adding more renewable energy than theentire OECD combined, with India becoming the second largest source of growthby 2030.”



Sounds good, right?



The issue is less about the companyacknowledging the growth of renewables and more about its consistent beliefthat fossil fuels, especially coal, will maintain their stranglehold on theworld energy mix.



When you dig into the numbers beyond justthe initial front page and press release you find that, even though BPacknowledges that “the world continues to electrify,” it still believes thatcoal will remain the largest source of energy for power in 2040, predicting a30% share. Yes, coal decreases over that time and renewables expanddramatically, but it still misses current realities.

当你深入到报告首页和新闻发布会之外的数字时,你会发现,尽管BP公司承认“世界在继续电气化”,但他们仍然坚信到2040年,煤炭仍然是最主要的能源来源,并预测到占到30%的比例。是的 ,那个时候,煤炭是在不断的减少,可再生能源在逐渐的增加,但他们仍然忽略的当下的现实。



The mix of fuels used in power generationis set to shift materially, with renewable energy continuing to gain inimportance




I’m not simply poking holes in BP’spredictions — as already mentioned, good luck getting that right at this point— but rather at their seeming ignorance of the trends already evident. Coalisn’t just going to disappear one day, it is disappearing right now withmassive closures across Europe and project cancellations in China.



“We agree with BP that electrification is amega-trend that will change the energy sector in ways previously unimaginable,”said Laurence Watson, a data scientist with London-based not-for-profit thinktank the Carbon Tracker Initiative. “However, we see the future energy systempredominantly supplied by cheap wind and solar backed up by a combination ofstorage, demand response and gas. For coal, national phase-outs in Europe,large-scale cancellation of projects in China, and global progress on carbonpricing should give BP pause.”

“我们同意BP公司所说的,电气化是一股巨大的潮流,并以之前不可想象的姿势改变世界能源结构”,位于伦敦的一个非盈利智库,Carbon Tracker Initiative(碳追踪计划)的一个大数据科学家,LaurenceWatson说。“然而,我们能看到的是,在未来,能源系统将会被廉价的风能和太阳能所主导,由存储,需求响应和天然气的组合所支撑。对于煤炭来说,欧洲国家正在逐渐的淘汰,中国进行了大规模的项目取消,还有全球碳定价方面的一些进展,BP公司应当要三思而后行。”


“BP’s costs for renewables are already outof date. Remarkably, solar PV tariff prices in India have declined nearly 80%since 2011. This price decline means solar PV is no longer just a threat to newcoal investments.”



I will give BP credit. Its renewablespresentation highlights an alternative scenario for the growth of renewables —its ‘renewables push’ scenario which sees renewables account for more than 90%of growth in power demand by 2040 (compared to over 50%). However, as BP notes,accurately, “The pace at which renewable energy penetrates the global powersystem depends partly on the size and persistence of government support.” InBP’s Evolving Transition scenario support for renewables is largely phased outby the mid-2020s — a not-unlikely event, given the current malaise ofgovernment support for renewable energy technologies. In its ‘renewables push’scenario, however, government support persists until 2040 and, unsurprisingly,punches renewables through the roof, squeezing out room for coal and gas.



But, and on this score I’m with BP, thecurrent situation does not necessarily back the idea that governments will pickup the mantle of support for renewable energy beyond 2020, unless somethingdrastic happens, which I simply don’t see happening at this point. Governmentsupport in major markets like the United States, the UK, Australia, and partsof Europe are sliding, and though renewables are gaining traction in emergingmarkets such as Latin America and Asia, it is not guaranteed that they willbreak with the pattern and continue to support renewables past their massadoption.



BP’s Energy Outlook for 2018 digs into manymore aspects of the world’s energy sector, and it’s all worth a look if you’reinterested. But in the end, while BP may have given short shrift to the renewable energy industry, I think it has accurately predicted the currentstate of support for the sector — and there’s only so much the renewable energysector can do on its own.