Energy Outlook 2020 edition 2 | The Energy Outlook The Energy Outlook considers a number of different scenarios. These scenarios are not predictions of what is likely to happen or what bp explores the forces would like to happen. Rather they explore the possible implications of different judgements and assumptions concerning the nature of the shaping the global energy transition. The scenarios are based on existing and developing energy transition technologies which are known about today and do not consider the out to 2050 and the possibility of entirely new or unknown technologies emerging. Much of the analysis in the Outlook is focussed around three key uncertainties scenarios: Rapid, Net Zero and Business-as-usual. The multitude of surrounding that uncertainties means that the probability of any one of these scenarios materializing exactly as described is negligible. Moreover, the three transition scenarios do not provide a comprehensive description of all possible outcomes. However, the scenarios do span a wide range of possible outcomes and so might help to inform a judgement about the uncertainty surrounding energy markets out to 2050. The Energy Outlook is produced to inform bp’s analysis and strategy and is published as a contribution to the wider debate. But the Outlook is only one source among many when considering the future of global energy markets and bp considers a wide range of other analysis and information when forming its long-term strategy. 3 | bp Energy Outlook: 2020 edition 4 | In February of this year, bp In August, we set out a new strategy announced a new purpose – to in support of this purpose and reimagine energy for people and our ambition. It will see bp transform planet. This purpose was supported from an International Oil Company by a new ambition, to be a net-zero focused on producing resources to an company by 2050 or sooner and to Integrated Energy Company focused help get the world to net zero. on delivering solutions for customers. From IOC to IEC. And while the Our new purpose and ambition are Covid-19 pandemic has had a huge underpinned by four fundamental impact on the global economy and judgements about the future. That energy markets, it has not affected the world is on an unsustainable path our belief in and commitment to our Welcome to the and its carbon budget is running out. purpose, ambition and strategy. 2020 edition of That energy markets will undergo lasting change, shifting towards That belief and commitment is in bp’s Energy Outlook renewable and other forms of zero- no small part down to the objective or low-carbon energy. That demand analysis that goes into every edition for oil and gas will be increasingly of the Energy Outlook. It does not to challenged. And that, alongside many try to predict precise future outcomes others, bp can contribute to the – any attempt to do that is doomed to energy transition that the world wants fail. Instead, it helps us to understand and needs, and create value doing so. the many uncertainties ahead – in the near and longer term – by considering Customers will continue to Countries, cities and industries will a range of possible pathways the redefine mobility and convenience, increasing want their decarbonized energy transition may take over the underpinned by the mobility energy and mobility needs met next 30 years. This year’s Outlook revolution that is already underway with bespoke solutions, shifting the explores three main scenarios – combining electric vehicles, shared centre of gravity of energy markets Rapid, Net Zero and Business-as- mobility and autonomy. towards consumers and away from traditional upstream producers. usual – which span a wide range Oil and gas – while remaining of possible outcomes. Those three needed for decades – will be The Energy Outlook has been tracking scenarios have helped us to develop increasingly challenged as society and analysing the trajectory of the a strategy that we think is robust to shifts away from its reliance on fossil world’s energy system for the past the uncertainty around the pace and fuels 10 years. This year’s Outlook has nature of the energy transition. been instrumental in the development And those core beliefs lead us to of the new strategy we announced in three more about how the energy Three features are common across August. I hope it is useful to everyone system will change out to 2050: those scenarios and they form a set else seeking ways to accelerate the of core beliefs as to how energy energy transition and get to net zero. The energy mix will become demand is likely to change over the We welcome any feedback on the next three decades: more diverse, driven increasingly by customer choice rather than content and how we can improve. resource availability. Renewable energy will play an increasingly important role in meeting Markets will need more integration the world’s growing energy needs. to accommodate this more diverse supply and will become more localized as the world electrifies Bernard Looney and the role of hydrogen expands. chief executive officer 5 | bp Energy Outlook: 2020 edition Executive summary 6 | Key messages Global energy demand continues levels of integration and competition. to grow, at least for a period, driven These changes underpin core beliefs by increasing prosperity and living about how the global energy system standards in the emerging world. may restructure in a low-carbon Significant inequalities in energy transition. consumption and access to energy persist. Demand for oil falls over the next 30 years. The scale and pace of this The structure of energy demand decline is driven by the increasing is likely to change over time: efficiency and electrification of road declining role of fossil fuels, offset transportation. by an increasing share of renewable energy and a growing role for The outlook for natural gas is more electricity. These changes underpin resilient than for oil, underpinned by core beliefs about how the structure the role of natural gas in supporting of energy demand may change. fast growing developing economies as they decarbonized and reduce A transition to a lower carbon their reliance on coal, and as a energy system is likely to lead source of near-zero carbon energy to fundamental restructuring of when combined with carbon capture the global energy system, with a use and storage (CCUS). more diverse energy mix, greater consumer choice, more localized energy markets, and increasing Renewable energy, led by wind and The use of hydrogen increases as solar power, is the fastest growing the energy system progressively source of energy over the next 30 decarbonizes, carrying energy years, supported by a significant to activities which are difficult or increase in the development of – and costly to electrify. The production of investment in – new wind and solar hydrogen is dominated by a mix of capacity. blue and green hydrogen. The importance of electricity in The importance of bioenergy – final energy consumption increases biofuels, biomethane and biomass materially over the next 30 years. – increases as consumption shifts The carbon intensity of power away from fossil fuels. generation falls markedly, driven by renewables gaining share relative to The world is on an unsustainable coal. path. A rapid and sustained fall in carbon emissions is likely to require The intermittency associated with a series of policy measures, led the growing use of wind and solar by a significant increase in carbon power means a variety of different prices. These policies may need to technologies and solutions are be reinforced by shifts in societal needed to balance the energy behaviours and preferences. system and ensure the availability of Delaying these policies measures firm power. and societal shifts may lead to significant economic costs and disruption. 7 | bp Energy Outlook: 2020 edition Contents 8 | Overview 10 Regions 50 Three scenarios: Rapid, Net Zero and Summary 52 Business-as-usual 12 Regional energy demand and carbon emissions 54 Changing nature of global energy system 16 Fuel mix across key countries and regions 56 Global energy trade and energy imbalances 58 Global backdrop 18 Alternative scenario: Deglobalization 60 Total greenhouse gases 20 Global GDP 22 Demand and supply of energy sources 62 Climate impacts on GDP growth 24 Summary 64 Energy demand 26 Oil and liquid fuels 66 Impact of Covid-19 28 Gas 76 Energy access and economic development 30 Renewable energy in power 84 Coal 88 Energy use by sector 32 Nuclear power 90 Summary 34 Hydroelectricity 92 Industry 36 Non-combusted 38 Buildings 40 Transport 42 Other energy carriers 94 Investment 132 Electricity and power generation 96 Summary 134 Hydrogen 102 Upstream oil and gas investment 136 Carbon emissions from energy use 106 Comparisons 138 Summary 108 Revisions to Rapid 140 Carbon pathways 110 Comparing Rapid with external Outlooks 142 Alternative scenario: Delayed and Disorderly 112 Annex 144 Global energy system at net zero 118 Key figures, definitions, Summary 120 methodology and data sources 146 Energy demand 122 Electrification and the power sector 124 Oil and natural gas 126 Bioenergy and hydrogen 128 CCUS and negative emission technologies 130 9 | bp Energy Outlook: 2020 edition 10 | Overview Three scenarios: Rapid, Net Zero and Business-as-usual Changing nature of global energy system 11 | bp Energy Outlook: 2020 edition Overview 12 | Three scenarios to explore the energy transition to 2050 CO2 emissions from energy use Gt of CO2 40 Rapid Net Zero 35 Business-as-usual 30 25 20 5 0 5 0 2000 200 2020 2030 2040 2050 Key points This year’s Energy Outlook considers with limiting the rise in global that progress, albeit relatively slow, three main scenarios which explore temperatures by 2100 to well below means carbon emissions peak in the different pathways for the global 2-degrees Celsius above pre- mid-2020s.