BP PLC (LON:BP) is expecting a fundamental restructuring of the global energy system as the industry steer a ‘global energy transition’ in the coming decades, up until 2050.
This transition will create both challenges and opportunities for companies, BP added.
“The global energy system is likely to undergo a fundamental restructuring in order to decarbonize, which will create challenges and opportunities for the industry,” BP said in its ‘Energy Outlook 2020’ report.
It comes after BP’s quarterly results, in August, laid out promises to reimagine its business to become an integrated energy company with hydrocarbons business anticipated to reduce by around 40% over the next ten years. The company plans to reduce its emissions by 30 to 35%.
And, along with a new US$5bn per year investment strategy, it aims to increase its capacity some 20-fold from its current level of around 2.5 gigawatts to 50GW.
BP wants aims to take a 10% share of the hydrogen market and wants to increase bioenergy output to 100,000 barrels a day from 22,000. It intends to build ‘energy partnerships’ with between ten to fifteen cities where it targets the installation of 70,000 electric vehicle charging points, from around 7,500 presently.
Earlier this month, BP took a first step down its new greener path with a US$1.1bn investment in two wind farms off the US east coast.
Today, BP’s report lays out three potential scenarios for the industry - rapid, net zero, and business-as-usual.
BP’s ‘rapid’ scenario anticipates a series of policy measures that significantly increase carbon prices, leading to a 70% drop in carbon emissions from energy by 2050. The company said that this scenario is consistent with limiting the rise in global temperatures by 2100 to well below 2-degrees Celsius above pre-industrial levels.
The ‘net zero’ scenario, meanwhile, takes into account the ‘rapid’ approach plus significant shifts in societal behaviour and preferences which further accelerate the reduction in carbon emissions.
In this scenario, BP sees carbon emissions from energy use fall by over 95% by 2050. It said that this would be in line with scenarios that are consistent with limiting temperature rises to 1.5-degrees celsius.
Business-as-usual anticipates a continuation behaviours and speed of transition seen in the recent past, with slow progress, that will see carbon emissions peak by the mid-2020s.
Under this mode, BP anticipates little headway being made in reducing carbon emissions from energy use. This would see emissions in 2050 less than 10% below 2018 levels., BP added.