Considering the importance and relevance of the BP Energy Outlook and the pristine position it holds as a beacon of guidance for the energy sector, both the events saw attendance of top executives from the oil and gas companies in India.

Mr. Spencer Dale, Group Chief Economist BP in his presentation of BP Energy Outlook – 2019 spoke on the energy transition under different scenarios. He explained as to how the outlook presents and analyses future energy trends and the growing demand will be met over the coming decades through a diverse range of supplies including oil, gas, coal and renewables. The highlights of the presentation are given below.

Key Takeaways from the Presentation: Global energy demand is set to rise by around a third in 2040, driven by increasing population and improving living standards in Asia, particularly in India and China. Renewables will be the largest source of global power generation. Industry and buildings accounts for3/4th of the increase in energy demand. Carbon emissions continue to rise, signalling the need of policy to achieve less carbon. On India’s perspective, India will continue to be one among the large importers of energy. With different alternative scenarios of gas for demand India, it is vivid that Natural gas is set to play a vital role in meeting the rising energy demand. Though the gas consumption will increase, it will be still short of 15% in the energy basket.

Scenario of transition of energy:

It is based on three perspectives namely,

1. Sectors in which energy is used

Industrial sector including the non-combustible use of fuels will consume around 50% of the global energy. Residential and commercial buildings will account for 29% of the energy demand while transport sector will account for the remaining 21 %.

2. The regions in which energy is consumed and produced

India and China will account for the major growth in energy demand by 2040. The demand growth from these two countries will account for more than a quarter of the global demand. OECD countries will see a flat growth over the time period.

3. Type of fuel used to meet the demand

Gas will overtake coal to be the second in the energy basket. Renewables will contribute to 18% of the energy basket. Contribution of oil and coal will fall significantly. Renewables and gas will contribute to 85% of the growth in energy demand.

Energy Demand Driver:

Energy demand grows by a third in 2040 due to increasing population and increasing prosperity. The demand is driven by fast growing economies led by India and China. This is primarily due to the reason that, billions of people move from low to middle income allowing them to increase their energy consumption per head substantially. Overall energy demand growth is offset by energy efficiency improvement.

There is a strong linkage between the human progress and energy consumption. 80 % of the World’s population live in countries with average energy consumption less than 100 GJ per head. By 2040, the proportion will still be 2/3rd. Global energy system faces a dual challenge wherein, they need more energy and less carbon.

Transition to a lower-carbon fuel:

Renewable energy is the fastest growing source of energy with its share increasing from today’s 4% to 15% by 2040. Gas is set to overtake coal to be the second largest source of energy. Renewables and gas collectively will form about 85 % of the energy growth up to 2040. Demand for oil rises in the first half and decreases later. Coal consumption changes dramatically and will broadly stay flat over 2040.

Five questions on global energy demand:

1. How much energy does the world needs?

Human development and energy consumption shows the increasing trend. Increase in energy consumption is correlated to the change in life style and trend. In US, average energy consumption is 250 Gigajoules per head. In Europe it reduces to 125 Gigajoules and in India it is 25 Gigajoules per head. Energy demand will double in 2040 for India, but still the average energy per head will be far behind many countries.

2. What might happen if trade dispute grows?

Trade dispute – It will lead to two consequences. i) Reduced openness and leads to slight reduction in trend global GDP growth ii) concerns about energy security adds a small risk premium (10%) to imported energy.

3. How fast can renewables grow?

Renewables will contribute to 2/3rd of the energy growth. Renewable energy will overtake coal. Speed of energy transition takes decades to change. In 2006, renewables were pretty much in the starting line and by 2040; share of renewables will hit 30%. To meet the Paris Climate change goal, technology is required for these penetrations.

4. A low carbon energy system, what needs to be done?

Carbon emission will grow by 7%, but the growth rate will be lower than before. Rate of growth in carbon emissions is much lower than in the past 20 years. Policy changes are required to achieve the Paris climate goal. Replacement of coal in power sector with gas and replacement of fuel cars with electric cars can address the issue.

5. Key issues for India’s energy Outlook

India’s energy demand will grow by 4% y-o-y. Demand for coal is going down and renewable will grow fast. In terms of fuel, there will be significant slowing down of coal and oil. Demand for gas will rise up. When it comes to demand and supply, demand of natural gas outplays supply. Supply of natural gas will grow by 2.5 times while, the demand will grow by 3.5 times. Import of oil and gas will increase despite the increase in domestic production. Outcome of liberal oil and gas policy of government will increase the domestic production. There is a significant role for renewables.

Alternative scenarios for gas demand in India:

The presentation by Mr. Dale was followed by an engaging question and answer round, post which Mr. Sashi Mukundan Regional President and Head of Country, India, BP Group presented the vote of thanks and expressed his gratitude to Mr. Dale for the invigorating session as well as FIPI for having contributed towards making this event a success.

Click here to view the presentation