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The 2016 Edition of the BP Energy Outlook

The following is an Executive Summary of an article that will appear in IAEE's Energy Forum in late May 2016http://www.iaee.org/en/publications/newsletter.aspx

 

Mark Finley
General Manager, Global Energy Markets & US Economics
BP America
Washington, DC
mark.finley@bp.com
 
Arminé Thompson
Oil Supply Economist
BP America
Washington, DC

 

The 2016 BP Energy Outlook attempts to look beyond the here and now and consider what current conditions may tell us about the future of global energy markets over the next 20 years. While the long term outlook presents many uncertainties, three main themes are highlighted in this year’s edition of the BP Energy Outlook.

First, global demand for energy is likely to continue to grow over the next 20 years. As the global economy expands, more energy will be needed to drive the higher levels of activity and living standards. The growth in energy will be reduced by faster gains in energy efficiency. While there is  significant uncertainty as to how quickly global GDP will grow over the Outlook, and how rapidly energy intensity will decline, it seems clear that more energy will be required over the next 20 years to enable the world to grow and prosper.

Second, the fuel mix is likely to change significantly over the next 20 years, given a boost by the commitments made during the COP21 in Paris. Renewable energy is expected to grow strongly over the forecast period because of favorable environmental policies, improving technology and falling costs. Those same forces will support growth in natural gas, while the prospects for oil are likely to be less robust. Coal becomes the main loser as China rebalances towards a more sustainable economic growth path and a less carbon-fuelled economy.

Third, we expect a considerable slowing in the global growth of carbon emissions relative to the past 20 years. The rate of growth of carbon emissions is projected to more than halve over the Outlook period compared to the past 20 years. The slowing growth in carbon emissions reflects faster increases in energy efficiency and a shift towards lower-carbon fuels, both aided by the pledges made in Paris.

The value of the Energy Outlook is that it provides a consistent framework which can be used to explore and analyse the forces shaping energy markets over the next 20 years. This year’s Energy Outlook also looks backwards and asks what events over the past few years turned out differently than what we expected.  We also ask what are the key uncertainties over the Outlook and how might they turn out differently than expected. The Outlook includes a clear base case, a review of past revisions to the Outlook and a series of alternative cases exploring key uncertainties. More detail is available at www.bp.com/energyoutlook

 
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