Energy Outlook 2020 – bp

Energy Outlook
2020 edition

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The Energy Outlook
explores the forces
shaping the global
energy transition
out to 2050 and the
key uncertainties
surrounding that
transition

The Energy Outlook considers a number of different scenarios. These
scenarios are not predictions of what is likely to happen or what bp
would like to happen. Rather they explore the possible implications of
different judgements and assumptions concerning the nature of the
energy transition. The scenarios are based on existing and developing
technologies which are known about today and do not consider the
possibility of entirely new or unknown technologies emerging.

Much of the analysis in the Outlook is focussed around three
scenarios: Rapid, Net Zero and Business-as-usual. The multitude of
uncertainties means that the probability of any one of these scenarios
materializing exactly as described is negligible. Moreover, the three
scenarios do not provide a comprehensive description of all possible
outcomes. However, the scenarios do span a wide range of possible
outcomes and so might help to inform a judgement about the
uncertainty surrounding energy markets out to 2050.

The Energy Outlook is produced to inform bp’s analysis and strategy
and is published as a contribution to the wider debate. But the Outlook
is only one source among many when considering the future of global
energy markets and bp considers a wide range of other analysis and
information when forming its long-term strategy.

3 | bp Energy Outlook: 2020 edition

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Welcome to the
2020 edition of
bp’s Energy Outlook

In February of this year, bp
announced a new purpose – to
reimagine energy for people and our
planet. This purpose was supported
by a new ambition, to be a net-zero
company by 2050 or sooner and to
help get the world to net zero.

Our new purpose and ambition are
underpinned by four fundamental
judgements about the future. That
the world is on an unsustainable path
and its carbon budget is running out.
That energy markets will undergo
lasting change, shifting towards
renewable and other forms of zero-
or low-carbon energy. That demand
for oil and gas will be increasingly
challenged. And that, alongside many
others, bp can contribute to the
energy transition that the world wants
and needs, and create value doing so.

In August, we set out a new strategy
in support of this purpose and
ambition. It will see bp transform
from an International Oil Company
focused on producing resources to an
Integrated Energy Company focused
on delivering solutions for customers.
From IOC to IEC. And while the
Covid-19 pandemic has had a huge
impact on the global economy and
energy markets, it has not affected
our belief in and commitment to our
purpose, ambition and strategy.

That belief and commitment is in
no small part down to the objective
analysis that goes into every edition
of the Energy Outlook. It does not to
try to predict precise future outcomes
– any attempt to do that is doomed to
fail. Instead, it helps us to understand
the many uncertainties ahead – in the

near and longer term – by considering
a range of possible pathways the
energy transition may take over the
next 30 years. This year’s Outlook
explores three main scenarios –
Rapid, Net Zero and Business-as-
usual – which span a wide range
of possible outcomes. Those three
scenarios have helped us to develop
a strategy that we think is robust to
the uncertainty around the pace and
nature of the energy transition.

Three features are common across
those scenarios and they form a set
of core beliefs as to how energy
demand is likely to change over the
next three decades:

Renewable energy will play an
increasingly important role in meeting
the world’s growing energy needs.

5 | bp Energy Outlook: 2020 edition

Customers will continue to
redefine mobility and convenience,
underpinned by the mobility
revolution that is already underway
combining electric vehicles, shared
mobility and autonomy.

Oil and gas – while remaining
needed for decades – will be
increasingly challenged as society
shifts away from its reliance on fossil
fuels

And those core beliefs lead us to
three more about how the energy
system will change out to 2050:

The energy mix will become
more diverse, driven increasingly
by customer choice rather than
resource availability.

Markets will need more integration
to accommodate this more diverse
supply and will become more
localized as the world electrifies
and the role of hydrogen expands.

Countries, cities and industries will
increasing want their decarbonized
energy and mobility needs met
with bespoke solutions, shifting the
centre of gravity of energy markets
towards consumers and away from
traditional upstream producers.

The Energy Outlook has been tracking
and analysing the trajectory of the
world’s energy system for the past
10 years. This year’s Outlook has
been instrumental in the development
of the new strategy we announced in
August. I hope it is useful to everyone
else seeking ways to accelerate the
energy transition and get to net zero.
We welcome any feedback on the
content and how we can improve.

Bernard Looney
chief executive officer

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Executive summary

Key messages

Global energy demand continues
to grow, at least for a period, driven
by increasing prosperity and living
standards in the emerging world.
Significant inequalities in energy
consumption and access to energy
persist.

The structure of energy demand
is likely to change over time:
declining role of fossil fuels, offset
by an increasing share of renewable
energy and a growing role for
electricity. These changes underpin
core beliefs about how the structure
of energy demand may change.

A transition to a lower carbon
energy system is likely to lead
to fundamental restructuring of
the global energy system, with a
more diverse energy mix, greater
consumer choice, more localized
energy markets, and increasing

levels of integration and competition.
These changes underpin core beliefs
about how the global energy system
may restructure in a low-carbon
transition.

Demand for oil falls over the next
30 years. The scale and pace of this
decline is driven by the increasing
efficiency and electrification of road
transportation.

The outlook for natural gas is more
resilient than for oil, underpinned by
the role of natural gas in supporting
fast growing developing economies
as they decarbonized and reduce
their reliance on coal, and as a
source of near-zero carbon energy
when combined with carbon capture
use and storage (CCUS).

Renewable energy, led by wind and
solar power, is the fastest growing
source of energy over the next 30
years, supported by a significant
increase in the development of – and
investment in – new wind and solar
capacity.

The use of hydrogen increases as
the energy system progressively
decarbonizes, carrying energy
to activities which are difficult or
costly to electrify. The production of
hydrogen is dominated by a mix of
blue and green hydrogen.

The importance of electricity in
final energy consumption increases
materially over the next 30 years.
The carbon intensity of power
generation falls markedly, driven by
renewables gaining share relative to
coal.

The intermittency associated with
the growing use of wind and solar
power means a variety of different
technologies and solutions are
needed to balance the energy
system and ensure the availability of
firm power.

The importance of bioenergy –
biofuels, biomethane and biomass
– increases as consumption shifts
away from fossil fuels.

The world is on an unsustainable
path. A rapid and sustained fall in
carbon emissions is likely to require
a series of policy measures, led
by a significant increase in carbon
prices. These policies may need to
be reinforced by shifts in societal
behaviours and preferences.
Delaying these policies measures
and societal shifts may lead to
significant economic costs and
disruption.

7 | bp Energy Outlook: 2020 edition

Energy access and economic development

Renewable energy in power

Regions

Summary

Regional energy demand and carbon emissions

Fuel mix across key countries and regions

Global energy trade and energy imbalances

Alternative scenario: Deglobalization

Demand and supply of energy sources

Summary

Oil and liquid fuels

Gas

Coal

Nuclear power

Hydroelectricity

Investment

Summary

Upstream oil and gas investment

Comparisons

Revisions to Rapid

Comparing Rapid with external Outlooks

Annex

Key figures, definitions,
methodology and data sources

Contents

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Overview

Three scenarios: Rapid, Net Zero and
Business-as-usual

Changing nature of global energy system

Global backdrop

Total greenhouse gases

Global GDP

Climate impacts on GDP growth

Energy demand

Impact of Covid-19

Energy use by sector

Summary

Industry

Buildings

Transport

Non-combusted

Other energy carriers

Electricity and power generation

Hydrogen

Carbon emissions from energy use

Summary

Carbon pathways

Alternative scenario: Delayed and Disorderly

Global energy system at net zero

Summary

Energy demand

Electrification and the power sector

Oil and natural gas

Bioenergy and hydrogen

CCUS and negative emission technologies

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