UK-based oil giant BP has predicted renewables to be the fastest-growing fuel source, increasing five-fold and providing around 14% of primary energy through to 2040.
The 2018 edition of BP’s Energy Outlook, published on February 20, 2018, considers the forces shaping the global energy transition out to 2040 and the key uncertainties surrounding that transition.
Under the ‘Evolving Transition’ (ET) scenario, one of the scenarios for energy transition considered in the outlook, BP states that renewables in power sector will be the fastest growing energy source, increasing 7.5% annually to account for over 50% of the increase in power generation.
In the ET scenario, subsidies are gradually phased out by the mid-2020s, with renewable energy increasingly able to compete against other sources of energy, aided by a gradual rise in carbon prices and continued regulation supporting a shift to lower carbon energy, the report states.
BP has also considered an alternative scenario in which levels of government support per unit of capacity installed persists around current levels until 2040.
In this alternative ‘renewables push’ scenario, renewables account for more than 90% of the growth in power demand over the outlook, with the share of renewables within power reaching over 40% by 2040, compared with 25% in the ET scenario.
The expansion in renewable energy is broad-based, with China and increasingly other parts of the developing world taking over from the EU as the main engine of growth, while India becomes the second largest source of growth by 2030, according to BP.
“The global energy mix is the most diverse the world has ever seen by 2040, with oil, gas, coal and non-fossil fuels each contributing around a quarter,” it is stated in the report.
Comparing the ET scenario with the base case in last year’s Energy Outlook, overall energy demand in 2035 is broadly similar, but there are some significant differences in the projected fuel mix.
The largest difference is in the level of renewable energy, which is over 15% higher in 2035, BP informed.
Spencer Dale, group chief economist, said: “We are seeing growing competition between different energy sources, driven by abundant energy supplies, and continued improvements in energy efficiency. As the world learns to do more with less, demand for energy will be met by the most diverse fuels mix we have ever seen.”
The higher level of renewables is partially offset by a lower outlook for both nuclear and hydro energy, it is stated in this year’s energy outlook.