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What if COVID-19 leads to a process of deglobalization?

The disruptions associated with COVID-19 may lead to a process of deglobalization, as countries seek to increase their resilience by becoming less dependent on imported goods and services. Concerns about energy security may also increase, particularly in countries which are highly dependent on energy imports.


What impact could deglobalization have on the global energy system?

 

 

Our approach to this question: Deglobalization scenario

  1. We assume that an increase in deglobalization leads to a slight reduction (0.2 percentage points) in trend global GDP growth.
  2. Increased concerns about energy security lead countries to attach a small risk premium (10%) on imported sources of energy.

What impact would this have?

  • The level of world GDP by 2050 is 6% lower in Deglobalization than in our Rapid scenario.
  • Energy demand is around 5% lower in Deglobalization than in Rapid.
  • Those falls are more concentrated in countries and regions most exposed to reduced foreign trade. 
  • The small risk premium on imported energy means that the fall in energy demand is concentrated in traded fuels, especially in oil and natural gas. 
  • By 2050, the carbon-intensity of the global fuel mix is slightly lower in Deglobalization compared with Rapid. This is due to the fall in traded fossil fuels, relative to domestically produced energy, in particular renewable energy.  

Deglobalization vs rapid: Global GDP and energy in 2050

Net exports of oil and gas in 2050 (EJ)

  • All these falls lead to a pronounced narrowing in energy deficits and surpluses around the world. 
  • For example, China’s net imports of oil and gas in Deglobalization are 30% lower than in Rapid by 2050. 
  • Likewise, US net exports of oil and gas are around 50% lower by 2050.
Want to know more?
 

Take a look at the section on Deglobalization in the Energy Outlook.

The Charting the Energy Transition series is based on the data and scenarios described in the 2020 edition of bp’s Energy Outlook.  The Energy Outlook considers a range of possible pathways the energy transition may take over the next 30 years, ‎although the uncertainty is substantial.  In particular, the scenarios do not provide a comprehensive ‎description of all possible outcomes and they are not predictions of what is likely to happen or what bp would like to happen.

Energy Outlook 2020

Explore the report, download the data or watch the replay of Spencer Dale's 2020 presentation