Global carbon emissions are expected to fall quicker than previously expected as a result of the war in Ukraine and Joe Biden’s efforts to encourage green investment, BP has said.
The oil and gas company said carbon emissions would fall more rapidly than it forecast a year ago thanks to renewed efforts by countries to pursue greater energy security by supporting domestic, renewable energy supplies.
In its annual energy outlook report, BP said it had reduced forecasts for global emissions in 2030 by 3.7% and by 9.3% in 2050. It expects oil demand to be 5% lower and gas demand to have fallen by 6% by 2035. The company said deployment of renewables projects would be 5% higher at current rates.
Countries moved rapidly last year to wean themselves off Russian gas supplies after the invasion of Ukraine.
In the short term this has resulted in other fossil fuels such as coal being ramped up or kept on standby to fill the gap. However, demand for renewable projects to provide a cheap long-term replacement has also improved.
Biden’s Inflation Reduction Act, which came into force in August, is credited with encouraging a new wave of investment in renewables in the US. Policymakers in the UK and EU have been encouraged to follow suit.
BP’s new outlook forecasts that global emissions will peak during the 2020s and fall by 30% on 2019 levels by about 2050. However, that would still be short of the target of net zero by 2050 needed to avoid extremely damaging global heating. The UK has legally committed to this goal.
The BP chief economist, Spencer Dale, wrote in the report: “From an energy perspective, the disruptions to Russian energy supplies and the resulting global energy shortages seem likely to have a material and lasting impact on the energy system.
“Global energy policies 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 this transition also needs to take account of the security and affordability of energy.”
The BP chief executive, Bernard Looney, set a target of making the company net zero by “2050 or sooner” on taking charge in 2020.
Looney has been attempting to revamp BP’s image and increase its focus on renewables. However, it faced criticism over plans to spend up to double the amount on oil and gas projects than on renewable investments this year.
In its outlook report, BP expects oil demand to level out at about 100m barrels a day over the next 10 years or so before falling to about 75m barrels a day by 2050. To hit global net zero goals, this would need to be reduced by 20m barrels a day.
BP’s profits have soared after Russia’s invasion of Ukraine sent already inflated gas prices even higher and led ministers to introduce a windfall tax on North Sea oil and gas operators. The company is expected to reveal fourth-quarter underlying profits of about $5bn next week.
