BP cuts its long-term global activity and energy consumption forecasts

MADRID, 30 (EUROPA PRESS)

British oil company BP has cooled its long-term outlook for global economic activity and energy demand, partly as a result of the impact of the Russia-Ukraine war, which could help accelerate countries' energy transition to renewable and non-fossil fuel energy sources.

"The increased focus on energy security as a result of the Russia-Ukraine war has the potential to accelerate the energy transition," BP chief economist Spencer Dale has warned. In its analysis, BP examines three scenarios - Accelerated and Net Zero and New Momentum.

In the first two, it explores how different elements of the energy system could change on pathways that achieve substantial reductions in carbon emissions by 2050: around 75% in Accelerated and more than 95% in Net Zero.

"Both scenarios involve a significant tightening of climate policies globally," the company has noted, adding that the Net Zero scenario also includes a shift in societal behavior and preferences to further support energy efficiency gains and low-carbon energy adoption.

For its part, the New Momentum scenario is designed to reflect the current trajectory of the global energy system, placing weight on the sharp increase in government ambitions and decarbonization pledges seen in recent years.

In this scenario, global carbon emissions peak in the 2020s and by around 2050 are around 30% below 2019 levels.

WEAKER ECONOMY AND DEMAND

Thus, the level of global GDP underlying the three scenarios contemplated by the oil company in its analysis is about 3% lower in 2025 and 2035 than a year ago and about 6% lower by 2050.

"The weaker profile of near-term economic activity is mainly due to the impact of commodity prices associated with the Russia-Ukraine war," BP has explained, for which the direct impact of the commodity price 'shock' largely fades by 2030.

Beyond 2030, the lower level of expected GDP reflects the increasing impact of slower average economic growth associated with the estimated lower trajectories of international trade, so the impact of this reduction in growth is greatest in those regions that benefit most from international trade and productivity transfers.

Thus, in 2050, GDP in China is 7% lower than in BP's outlook last year and is 12% lower in Africa, but is only 1% lower in the case of the United States.

The oil company has also warned of weaker energy demand developments than it anticipated a year ago, with around 3.5% lower in 2035 in all scenarios and between 5.5% and 6% lower in 2050.

In 2035, just over half of the downward revision in energy consumption reflects the weaker GDP profile, while the remainder is driven by greater energy efficiency gains reflecting both the increased focus on energy security and the impact of higher energy prices. By 2050, however, the lower level of GDP accounts for about three-quarters of the revised energy consumption.

Thus, global oil demand, which in 2019 the oil company estimates at 98 million barrels per day, would be limited in 2050 to 21 mb/d in the Net Zero scenario, while in the Accelerated it estimates demand at 42 mb/d and 73 mb/d in the New Boost scenario.