Its energy outlook for 2016 has predicted that over the next two decades, the growth in the use coal will slow to just half a per cent per year, whilst gas use will see yearly increases of 1.8 per cent. The report said oil will remain the world’s most used source of energy, although its share in the energy mix will decrease significantly.
Analysts predicted renewables will be the fastest growing source of energy, with their use increasing by 6.6 per cent per annum. However fossil fuels are expected to “remain the dominant source of energy”, still accounting for four-fifths of the energy supply.
Chief executive Bob Dudley said: “Gas looks set to become the fastest growing fossil fuel, spurred on by ample supplies and supportive environmental policies. In contrast, the growth of global coal consumption is likely to slow sharply as the Chinese economy rebalances. Renewables are set to grow rapidly, as their costs continue to fall and the pledges made in Paris support their widespread adoption.”
Energy consumption will carrying on growing, the report said, albeit at a reduced rate due to improvements in energy efficiency. Whilst the world’s GDP is expected to double over the period, the consumption of energy is expected to rise by just a third, bringing it broadly in line with population growth.
The majority of new consumption is predicted come from energy generation “as the long-run trend towards global electrification continues”. The report said coal’s share of the generation mix will to fall to around a third, whilst the share for non-fossil fuels will reach 45 per cent.
Shale gas production is expected to grow by 5.6 per cent each year. According to the outlook it will more than double its share of overall production, accounting for nearly a quarter of all gas supplies by 2035. Whilst most of the growth is predicted to come from the US, China is also expected to play a significant role towards the end of the period.
The report said liquefied natural gas (LNG) will surpass pipeline imports as the dominant form of traded gas. It added that the growing importance of LNG trade “is likely to cause regional gas prices to become increasingly integrated.”
The rate of growth of carbon emissions is predicted to halve over the next two decades. Dudley said: “Despite this, carbon emissions are likely to continue to increase, indicating the need for further policy action. In BP, we believe carbon pricing has an important part to play as it provides incentives for everyone to play their part.”
This week the price of EU carbon allowances fell to its lowest point in 22 months.