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What impact could carbon pricing have on the supply of the most emissions-heavy crudes?

Carbon emissions from the global production and transport of crude oil and condensates accounted for 5% of the total emissions from energy use*

However, not all crudes are made in the same way. Different crudes have different carbon intensities, which means there’s variation in operational emissions across countries and basins, depending on what is being produced and how.

 

Compared with the hypothetical case in which all supplies are assumed to have the same carbon intensity, those differences could have a significant impact on cost and competitiveness, depending on carbon prices.

 

In a Business as Usual scenario, where carbon prices remain relatively low over the Energy Outlook’s entire timeframe, the change in supply patterns between different crudes is minimal by 2050 – just 0.5 Mb/d.

 

But the story changes in the Outlook’s Rapid scenario, in which carbon prices start to rise significantly. Under these circumstances, the supply of crudes with the highest carbon intensity falls by almost 25%.

 

A similar set of issues applies to gas. The carbon intensity of producing gas varies from region to region but, in addition, it is also affected by the way in which it is transported. For example, liquefied natural gas has a higher carbon intensity than gas transported via pipeline.

Average carbon intensity of crude production by country

Carbon intensity: impact on volumes

Our strategy

At the heart of our new strategy is a transition to low energy, and a corresponding reduction in oil and gas production. We know oil and gas will continue to perform a vital role for the world, but we also know that demand will start to fall over the longer term.

 

At bp, we plan to create a resilient, lower-cost and lower carbon oil, gas and refining portfolio.

 

That means we’re aiming to produce around 40% less oil and gas by 2030, but that the remaining resources are high quality, lower cost and have a lower carbon impact.

Here’s how we’ll do it…

Check out our ambition and aims.

 

Gordon Birrell, head of bp’s new production and operations organization, spoke to Reimagining energy during bp Week in September 2020. Find out more in our in-depth interview

Energy Outlook 2020

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

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.
 
* In 2015. Source: Masnadi et al (2018).