Energy in focus | Energy Outlook edition

Welcome to a special edition of the Energy in focus newsletter.

We’re diving into the bp Energy Outlook  – an annual look at where global energy might be headed over the next 25 years.

We say might because the Energy Outlook is not a forecast. Rather, it’s a way of thinking about how energy systems could develop under certain conditions. This allows us to spot broad trends and identify key points of uncertainty.

The Outlook takes around six months to produce – decision-makers around the world look to it as a source of expert and impartial insight.  

This year the team modelled two key scenarios:

1)     Current Trajectory – what might happen if the energy transition continues broadly at its current pace.

2)     Below 2° – what energy systems might look like out to 2050 if the world reduces carbon emissions by around 90% compared to 2023 levels.  

Here’s a rundown of the some of the key findings:

In both scenarios, oil continues to play a central role in the energy system over the next 10 to 15 years.

The rise of electric vehicles means that less oil is likely to be used in road transport, however both scenarios see significant increases in demand for oil as a petrochemicals feedstock. In the ‘Below 2°’ scenario, global oil consumption stands at around 85 million barrels per day in 2035 (compared to around 100 million today).

Natural gas demand, on the other hand, varies widely by scenario. Under ‘Current Trajectory’, gas demand continues to rise into the 2040s. In ‘Below 2°’, natural gas use halves by 2050 due to a shift away from gas and towards lower-carbon energy.

Global electricity demand could roughly double by mid-century, driven by rising living standards in emerging economies. Many processes that rely on burning fuels are expected to become electrified, especially road transport. By how much depends on the pace of the energy transition.

‘Current Trajectory’ sees electricity’s share of final energy consumption going from 20% today to 35% by 2050. ‘Below 2°’ puts the 2050 figure at more than 50%. Under both scenarios, wind and solar account for over 95% of the growth in power generation. 

There are huge uncertainties around AI’s future impact on the global energy system, with the Outlook concluding this is likely to go far beyond the power needs of the world’s data centres.

If AI boosts global productivity by 1.2% a year – the central estimate in a recent OECD survey – energy demand could rise by around 15% by 2035. AI-driven enhancements to energy efficiency could potentially offset this, but by how much is unknown.

Increased geopolitical fragmentation – conflict, rival power blocs, reduced global trade – is one of the key issues affecting the global energy system. The Outlook assesses how further escalation might lead to countries seeking greater self-reliance.

Net energy importers like China, the EU and India could reduce their reliance on imported oil and gas and try to become ‘electro-states’ – investing more in renewables or increasing the use of domestically available resources like coal. On the other hand, net oil and gas exporters could delay their own adoption of higher-cost low carbon tech.

How this divergence plays out could have a big impact on the shape and speed of the global energy transition.

It might not be a front-page news story compared to geopolitics or AI, but energy efficiency really matters.

Global gains in energy efficiency have slowed in recent years – a big part of why fossil fuel consumption continues to rise despite record renewables deployment. The pace of the transition is closely linked to the pace of gains in energy efficiency. It’s a trend to watch.

Those are just a few highlights from this year’s Energy Outlook and we’ve barely scratched the surface. To find out more check out the interactive version on bp.com.

Thank you for reading issue 4 of Energy in focus.

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