A new report from BP has highlighted the role of government support in pushing the energy transition, but says more needs to be done.
The oil major’s Energy Outlook laid out three scenarios for the evolution of the global energy system, with all three expecting a decline in fossil fuels in favour of more renewable energy and increasing electrification.
The report noted that government support for the energy transition has increased further in several countries, such as in the US with the passing of the Inflation Reduction Act.
However, it also warned that the scale of the decarbonisation challenge suggests greater support is required, including policies to facilitate quicker permitting and approval of low-carbon energy and infrastructure.
Wind and solar account for all or most of the growth in power generation, aided by continuing cost competitiveness and an increasing ability to integrate high concentrations of these variable power sources into power systems.
The growth in wind and solar requires a significant acceleration in the financing and building of new capacity.
And despite demand falling, all three scenarios envision oil playing a major role in the global energy system for the next 15-20 years.
While one scenario expects global carbon emissions to peak in the 2020s and fall to around 30% below 2019 levels by around 2050, it noted that that, despite government ambitions, CO2 emissions have increased in every year since the Paris COP in 2015 (bar 2020).
The longer the delay in taking decisive action to reduce GHG emissions on a sustained basis, the greater are the likely resulting economic and social costs.
But the report noted that the Russian invasion of Ukraine has heightened the global focus on energy security, increasing demand for domestically produced renewables and other non-fossil fuels helping to accelerate the energy transition.
Chief economist at BP Spencer Dale said: “Global energy polices and discussions in recent years have been focused on the importance of decarbonising the energy system and the transition to net zero.
“The events of the past year have served as a reminder to us all that the transition also needs to take account of the security and affordability of energy. Any successful and enduring energy transition needs to address all three elements of the so-called energy trilemma: secure, affordable and lower carbon.”