Energy Outlook 2022 is focussed on three main scenarios: Accelerated, Net Zero and New Momentum. 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 and do not consider the possibility of entirely new or unknown technologies emerging.
The many uncertainties mean 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, they 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 Outlook was largely prepared before the military action by Russia in Ukraine and does not include any analysis of the possible implications of those developments on economic growth or global energy markets.
The Energy Outlook is produced to inform bp’s strategy and is published as a contribution to the wider debate about the factors shaping the energy transition. 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 external scenarios, analysis and information when forming its long-term strategy.
The content published in this initial version of the Outlook summarizes some of the key highlights and findings from the updated scenarios. More detailed material is planned to be released in the future.
The world’s scientific community has developed a number of “integrated assessment models” (IAMs) that attempt to represent interactions between human systems (the economy, energy, agriculture) and climate. They are “simplified, stylized, numerical approaches to represent enormously complex physical and social systems” (Clarke 2014). These models have been used to generate many scenarios, exploring possible long-run trajectories for greenhouse gas emissions and climate change under a wide range of assumptions.
The Intergovernmental Panel on Climate Change (IPCC) carries out regular surveys of this scenario modelling as part of its assessment work. The most recent survey was carried out in support of the IPCC Special Report on Global Warming of 1.5°C (SR15). A total of 414 scenarios from 13 different modelling frameworks were compiled and made available via an online portal hosted at the International Institute for Applied Systems Analysis (IIASA).
Some of the scenarios are now quite dated and, in some cases, scenario results are already significantly out of line with recent historical data and so were excluded from our analysis. From the remaining model runs, 112 scenarios were judged to be consistent with the Paris climate change agreement of holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels. These scenarios were further divided into two subsets: “well below 2°C” (69 scenarios); and “1.5°C with no or low overshoot” (43 scenarios).
These two subsets were further refined by excluding, first, scenarios in which historical year 2010 emissions from energy and industrial sources deviate more than 5% from the mean of the scenario sample and, second, scenarios with implied (shadow) pre-2020 average global carbon prices higher than $30 per ton CO2 ($2010) which were viewed as being overly optimistic about the state of climate policy by 2020. For the remaining scenarios in each of these two subsets, the ranges of outcomes for key variables are described in terms of medians and percentile distributions (see scenario selection methodology for a more detailed explanation). To allow for direct comparisons with the Energy Outlook scenarios, methane emissions from energy supply are added to emissions from energy and industrial processes. For those scenarios that do not report methane emissions we used the corresponding subset average.
It is important to note that the scenario dataset represents a collection of scenarios that were available at the time of the IPCC survey, and which were produced for a variety of purposes. “It is not a random sampling of future possibilities of how the world economy should decarbonize” (Gambhir et al, 2019). That means that the distributions of IPCC scenarios cannot be interpreted as reliable indicators of likelihood of what might actually happen. Rather, the distributions simply describe the characteristics of the scenarios contained in the IPCC report.
In addition to this selection of scenarios, the Comparison with IPPC Pathways chart shows the emissions path for a representative scenario based on the information available in Table 2.4 in the IPCC report ‘Mitigation Pathways Compatible with 1.5°C in the Context of Sustainable Development.’ This path is constructed using the median level of CO₂ from fossil fuels and industry (net) in 2030 and the average decline of emissions in 2010-2030 and 2020-2030 for 42 scenarios consistent with 1.5°C with no or limited overshooting.
The GDP profiles used in the Energy Outlook come from Oxford Economics (OE). These long-term forecasts incorporate estimates of the economic impact of climate change. These estimates draw on the latest research in the scientific literature and follow a similar methodology to that used in Energy Outlook 2020.
OE updated and extended the models developed by Burke, Hsiang and Miguel (2015), which use the IPCC Representative Concentration Pathways (RCP) scenarios to assess the impact of temperature changes on GDP. Like Burke et al., OE’s updated results find evidence of a non-linear relationship between productivity and temperature, in which per capita income growth rises to an average (population weighted) temperature of just under 15°C (Burke et al’s initial assessment was 13°C). This temperature curve suggests that ‘cold country’ income growth increases with annual temperatures. However, at annual temperatures above 15°C, per capita income growth is increasingly adversely affected by higher temperatures.
The OE forecasts are broadly in line with the RCP 6.0 scenario and assume average global temperatures will reach 2°C above pre-industrial levels by 2050. The results suggest that in 2050 global GDP is around 3% lower than in a counterfactual scenario where the temperature change remained at the current level. The regional impacts are distributed according to the evolution of their temperatures relative to the concave function estimated by OE. These estimates are hugely uncertain and incomplete; they do not, for example, explicitly include impact from migration or extensive coastal flooding.
The mitigation costs of actions to decarbonize the energy system are also uncertain, with significant variations across different external estimates. Most estimates, however, suggest that the upfront costs increase with the stringency of the mitigation effort, suggesting that they are likely to be bigger in Accelerated and Net Zero than in New Momentum. Estimates published by the IPCC (AR5 – Chapter 6) suggest that for scenarios consistent with keeping global temperature increases to well below 2°C, median estimates of mitigation costs range between 2-6% of global consumption by 2050.
Given the huge range of uncertainty surrounding estimates of the economic impact of both climate changes and mitigation, and the fact that all three of the main scenarios include both types of costs to a greater or lesser extent, the GDP profiles used in the Outlook are based on the illustrative assumption that these effects reduce GDP in 2050 by around 3% in all three scenarios, relative to the counterfactual in which temperatures are held constant at recent average levels.
Implied levels of oil and gas investment are derived from the production levels in each scenario. Upstream oil and natural gas capital expenditure includes well capex (costs related to well construction, well completion, well simulation, steel costs and materials), facility capex (costs to develop, install, maintain, and modify surface installations and infrastructure) and exploration capex (costs incurred to find and prove hydrocarbons). It excludes operating costs and midstream capex such as capex associated with developing LNG liquefaction capacity.
Asset level production profiles are aggregated by geography, supply segment (onshore, offshore, shale and oil sands), supply type (crude, condensates, NGLs, natural gas) and developmental stage, i.e., classified by whether the asset is currently producing, under development, or non-producing and unsanctioned. As production from producing and sanctioned assets declines, incremental production from infill drilling and new, unsanctioned assets is called on to meet the oil and gas demand shortfalls. The investment required to bring this volume online is then added to any capital costs associated with maintaining producing and sanctioned projects. The average 2022-2050 decline rate for assets currently producing and under development is around 5.0% p.a. for oil and 5.5% p.a. for gas but varies widely by segment and hydrocarbon type. All estimates are derived from asset-level assessments from Rystad Energy.
Wind and solar energy investment requirements are based on the capital expenditure costs associated with the deployment profiles of each technology in each scenario.
Wind and solar deployment profiles include both renewable power capacity for end-use and for green hydrogen production. The deployment profiles also consider the potential impact of curtailment.
Capital expenditure costs are assigned to each scenario based on their historical values and estimated future evolution. They are differentiated by technology, region and scenario using a combination of internal bp estimates and external benchmarking. The capital expenditure figures do not include the incremental wider system integration costs associated with wind and solar deployment.
Power sector post-combustion capture costs are based on internal bp estimates drawn from a wide range of sources. Capture costs for industry, heat and hydrogen are based on the 2019 US National Petroleum Council Report Meeting the Dual Challenge: A Roadmap to At-Scale Deployment of Carbon Capture, Use, and Storage. Transportation and storage costs were based on internal expert judgment on primary storage archetype (onshore or offshore) for each region and internal assessment of either pipeline or shipping costs.
Unless otherwise stated, carbon emissions refer to C02 emissions from energy use (ie the production and use of energy in the three final end-use sectors: industry, transport and buildings), most non-energy related industrial processes, and natural gas flaring, plus methane emissions associated with the production, transmission and distribution of fossil fuels, expressed in CO2 equivalent terms.
CO2 emissions from industrial processes refer only to non-energy emissions from cement production. CO2 emissions associated with the production of hydrogen feedstock for ammonia and methanol are included under hydrogen sector emissions.
As in the bp Statistical Review, historical data for natural gas flaring data is taken from VIIRS Nightfire (VNF) data and produced by the Earth Observation Group (EOG), Payne Institute for Public Policy, Colorado School of Mines. The profiles for natural gas flaring in the scenarios assume that flaring moves in line with wellhead upstream output.
Historical data on methane emissions associated with the production, transportation and distribution of fossil fuels are sourced from IEA estimates of greenhouse gas emissions. The profiles for future methane emissions assumed in the scenarios are based on fossil fuel production and take account of recent policy initiatives such as the Global Methane Pledge. The net change in methane emissions is the aggregation of future changes to fossil fuel production and methane intensity.
There is a wide range of uncertainty with respect to both current estimates of methane emissions and the global warming potential of methane emissions. To ensure alignment with financial and government reporting standards, the methane to CO2e factor used in the scenarios is a 100-year Global Warming Potential (GWP) of 25, recommended by the IPCC in AR4.
Data definitions are based on the bp Statistical Review of World Energy, unless otherwise noted. Data used for comparisons, including scenarios from the Intergovernmental Panel on Climate Change (IPCC), unless otherwise noted are rebased to be consistent with the bp Statistical Review.
Primary energy, unless otherwise noted, comprises commercially traded fuels and traditional biomass. In this Outlook, primary energy is derived in two ways:
Figures and charts of primary energy are estimated using the substitution method, unless otherwise stated.
Gross Domestic Product (GDP) is expressed in terms of real Purchasing Power Parity (PPP) at 2015 prices.
This publication contains forward-looking statements – that is, statements related to future, not past events and circumstances. These statements may generally, but not always, be identified by the use of words such as ‘will’, ‘expects, ‘is expected to’, ‘aims’, ‘should’, ‘may’, ‘objective’, ‘is likely to’, ‘intends’, ‘believes’, anticipates, ‘plans’, ‘we see’ or similar expressions. In particular, the following, among other statements, are all forward looking in nature: statements regarding the global energy transition, increasing prosperity and living standards in the developing world and emerging economies, expansion of the circular economy, urbanization and increasing industrialization and productivity, energy demand, consumption and access, impacts of the Coronavirus pandemic, the global fuel mix including its composition and how that may change over time and in different pathways or scenarios, the global energy system including different pathways and scenarios and how it may be restructured, societal preferences, global economic growth including the impact of climate change on this, population growth, demand for passenger and commercial transportation, energy markets, energy efficiency, policy measures and support for renewable energies and other lower-carbon alternatives, sources of energy supply and production, technological developments, trade disputes, sanctions and other matters that may impact energy security, and the growth of carbon emissions.
Forward-looking statements involve risks and uncertainties because they relate to events, and depend on circumstances, that will or may occur in the future. Actual outcomes may differ materially from those expressed in such statements depending on a variety of factors, including: the specific factors identified in the discussions expressed in such statements; product supply, demand and pricing; political stability; general economic conditions; demographic changes; legal and regulatory developments; availability of new technologies; natural disasters and adverse weather conditions; wars and acts of terrorism or sabotage; public health situations including the impacts of an epidemic or pandemic and other factors discussed in this publication. bp disclaims any obligation to update this publication or to correct any inaccuracies which may become apparent. Neither BP p.l.c. nor any of its subsidiaries (nor any of their respective officers, employees and agents) accept liability for any inaccuracies or omissions or for any direct, indirect, special, consequential or other losses or damages of whatsoever kind in or in connection with this publication or any information contained in it.
|Level in 2050*||Change 2019-2050 (p.a.)||Share of primary energy in 2050|
|Primary energy by fuel|
|Renewables (incl. bioenergy)||74||384||418||247||5.5%||5.7%||4.0%||56%||64%||33%|
|Primary energy by fuel (native units)|
|Natural gas (Bcm)||3900||2614||1681||5020||-1.3%||-2.7%||0.8%|
|Primary energy by region|
|Level in 2050*||Change 2019-2050 (p.a.)||Share of primary energy in 2050|
|Total final consumption by sector|
|Energy carriers (generation)|
|Electricity ('000 TWh)||27||58||63||50||2.5%||2.8%||2.0%||50%||65%||33%|
|Natural gas (Bcm)||3976||2617||1681||5020||-1.3%||-2.7%||0.8%|
|Carbon emissions (Gt of CO2e)||39.8||9.9||2.4||31.1||-4.4%||-8.7%||-0.8%|
|Carbon capture use & storage (Gt)||0.0||4.2||6.0||0.9||56%||58%||48%|
|GDP (trillion US$ PPP)||127||283||283||283||2.6%||2.6%||2.6%|
|Energy intensity (MJ / US$ of GDP)||3.7||1.5||1.2||1.9||-2.9%||-3.5%||-2.1%|
|*EJ unless otherwise stated|
We aim to be net zero on our operational emissions and the carbon associated with the oil and gas we take out of the ground
We aim to be a very different kind of energy company by 2030 as we scale up investment in low carbon, focus our oil and gas production and make headway on reducing emissions