BP has released the 2023 edition of its World Energy Outlook, and as usual it is packed with interesting observations and predictions. Broadly, BP sees the energy future as dominated by four broad trends – the declining role of hydrocarbons, the rapid expansion of renewables, increasing electrification, and the growing use of low-carbon hydrogen, though the implementation of energy efficiencies could be counted as a fifth and even primary one.

The Outlook uses three scenarios to explore the effect on greenhouse gas emissions (excluding from sources such as agriculture and land-use change) of the extent that each of these trends occurs to 2050. Two of the scenarios are “broadly in line with ‘Paris consistent’ IPCC scenarios”, with one being closer to the more ambitious 1.5 ^oC target, whilst the other is closer to the 2.0^oC target, and the third scenario is closer to a ‘current trajectory’.

It also incorporates consideration of the long-term effects of the Russian invasion of Ukraine and the passing of the Inflation Reduction Act in the USA, two of the landmark drivers of change in the energy landscape since the 2022 edition of the World Energy Outlook. Some of the key takeaways are that:

• Total final consumption of energy needs to peak by the mid-to-late 2020s for the Paris Agreement scenarios to be met, with 2050 energy demand being 15-30% lower than 2019. This highlights the vital importance of energy efficiency in this and coming decades; electrification will provide some of these efficiency gains, while more efficient use of materials through recycling and reuse, and greater energy conservation will have to provide much of the rest. The necessary efficiency gains over the coming decades must occur “much quicker than over the past 20 years”, a daunting prospect, especially considering the huge gains in efficiency in lighting in the past two decades. Discrepancies in the energy efficiencies of developed and developing economies will persist, with the former becoming more efficient sooner than the latter.
• Failing to meet energy efficiency targets would mean an even faster rollout of low/zero carbon energy would be required.
• Meeting the Paris-consistent scenarios will require the tightening of environmental policy.
• In the scenario closest in alignment to the 1.5^oC target, fossil fuels would constitute around 20% of energy supply by 2050. Coal and oil use fall particularly sharply.
• As would be expected, faster electrification, faster deployment of low-carbon hydrogen and faster rollout of renewables (and falling use of fossil fuels) all push towards better climate outcomes. In reality, of course, sometimes there are perverse outcomes from poorly designed policies or from unforeseen circumstances.  As the report notes, if the world did indeed come to consume less fossil fuels, it would be the ”first time in modern history that there has been a sustained fall”. A predicted step-change in the efficiency of solar cells, to ~40% from the current maximum of ~26%, could help accelerate the transition to renewables.
• As much as 21% of primary energy could be used to produce low-carbon hydrogen by 2050.
• The effects of the Russian invasion of Ukraine on the global energy sector include lower global demand for energy, a shift to more locally-produced (low carbon) energy, and a greater push for energy efficiency, all leading to fewer GHG emissions, as does the Inflation Reduction Act. Russia’s production of oil and gas will fall (oil by 1 to 1.5 million barrels per day, even as far out as 2050), as its potential markets shrink. BP’s estimate of the effect of the Russian invasion of Ukraine on global GDP is almost a 6% decline by 2050 compared to its pre-war estimate.
• The Inflation Reduction Act accelerates reductions in US carbon emissions by ~22% by 2030 (compared to the scenario from 2019) in the ‘current trends’ scenario. The difference is 60% by 2050; the Paris-aligned scenarios assume strong policy support such as the IRA in the first place, hence the passing of the IRA has little effect on emissions in those scenarios. The real-world effects of the IRA, the report notes, will depend on its implementation.

The report is well worth reading, and clearly demonstrates that the world’s collective choices will have a huge impact on climate outcomes.