Exploring the Energy Trilemma: BP’s Energy Outlook 2023 Predictions
By The BP Energy Outlook 2023 has released its predictions for the global energy system over the next 30 years, taking into account the Russia-Ukraine war and the passing of the Inflation Reduction Act in the US.[0] The Outlook's three main scenarios are designed to explore the range of possible outcomes for the energy system and help to shape a resilient strategy.[1]
BP Chief Economist Spencer Dale commented that the desire of countries to bolster their energy security by reducing their dependency on imported energy, much of which is likely to come from renewables and other non-fossil energy sources, suggests that the war is likely to accelerate the pace of the energy transition.[2]
Oil demand is expected to decrease or plateau in the years ahead, driven by falling use in road transport due to the efficiency and electrification of the vehicle fleet.[3] Meanwhile, natural gas demand will depend on how fast the global energy markets decarbonize and how much economic growth comes from emerging economies.[4] Renewables are set to increase substantially, driven by increasing cost-competitiveness and policies supporting a shift to low carbon electricity and green hydrogen.[3]
Low-carbon hydrogen plays a critical role in helping the energy system to decarbonize, including in shipping, over the outlook period. BP also argues that low-carbon hydrogen (blue and green) will be used in decarbonization plans, including such plans in shipping.
Government support for the energy transition has increased in a number of countries, but the scale of the decarbonization challenge suggests greater support is required globally, including policies to facilitate quicker permitting and approval of low-carbon energy and infrastructure.[5]
Overall, understanding the range of uncertainty helps BP to shape a strategy which is resilient to the different speeds and ways in which the energy system may transition.[1] The events of the past year have served as a reminder to us all that the transition also needs to take account of the security and affordability of energy, as any successful and enduring energy transition needs to address all three elements of the so-called energy trilemma: secure, affordable and lower carbon.[6]
0. “bp: Solar power expansion requires increased building and financing new capacity” PV-Tech, 30 Jan. 2023, https://www.pv-tech.org/significant-acceleration-in-building-and-financing-new-capacity-required-for-solar-power-expansion-bp/
1. “bp Energy Outlook 2023 Explores Key Trends and Uncertainties Surrounding The Energy Transition, Hydrogen Included” Hydrogen Central, 1 Feb. 2023, https://hydrogen-central.com/bp-energy-outlook-2023-explores-key-trends-uncertainties-surrounding-energy-transition-biofuels-included/
2. “Energy Outlook / Nuclear Generation Could Increase By As Much As 80%, Says BP” NucNet, 31 Jan. 2023, https://www.nucnet.org/news/nuclear-generation-could-increase-by-as-much-as-80-says-bp-1-2-2023
3. “Renewables set for rapid long-term growth as role of hydrocarbons declines: BP” S&P Global, 30 Jan. 2023, https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/electric-power/013023-renewables-set-for-rapid-long-term-growth-as-role-of-hydrocarbons-declines-bp
4. “BP says demand for oil and gas will drop dramatically by 2050 in ‘decisive shift'” CNBC, 30 Jan. 2023, https://www.cnbc.com/2023/01/30/bp-demand-for-oil-gas-to-fall-and-for-renewables-electricity-grows.html
5. “Big Oil Relents: Peak Oil is Upon Us” Energy & Capital, 31 Jan. 2023, https://www.energyandcapital.com/articles/big-oil-relents-peak-oil-is-upon-us/111495
6. “Global carbon emissions forecast cut due to Ukraine war and Biden, says BP” The Guardian, 30 Jan. 2023, https://www.theguardian.com/business/2023/jan/30/global-carbon-emissions-ukraine-war-biden-bp
