He would be taking away three key learnings, said BP CEO Bob Dudley at the recent publication of the 68th edition of the BP Statistical Review of World Energy. Firstly, although the level of global electrification is rising, the expansion of renewable energy is struggling to keep up. And then, of course, there is the boom of the fossil fuels oil and gas in the US which is experiencing a production growth spurt of historic proportions. Yet, according to Dudley, the following realisation was the hardest pill to swallow: “The world needs carbon emissions to fall dramatically, but they continue to grow.”
This will not come as a complete surprise. Prosperity and the global economy are improving in most countries across the world, and demand for energy is rising along with them. However, demand rose notably faster in 2018 than the average for 2007 to 2017. Last year, after an annual growth rate average of 1.5 percent, this figure suddenly almost doubled to an increase of 2.9 percent – and that, as stressed by Spencer Dale, Chief Economist for BP, despite a backdrop of modest GDP growth.
The fact that China and India are numbered amongst the worst culprits in driving demand is old news. However, the realisation that the USA has again experienced an increase in energy consumption – and that by a solid 3.5 percent – is making heads turn. According to BP it was the fastest increase in 30 years and signified a clear trend reversal, as in the previous ten years the US had lowered its energy consumption by 0.4 percent on average annually. Dale pointed to the weather as one possible explanation for this development, as both extremely cold and particularly hot days had caused energy consumption increase.
On the other hand, the mild winter in Europe, particularly in Germany, is said to have curbed energy demand. According to the BP figures, Germany was one of the world’s energy savers in 2018 – with a deficit of 3 percent. And this although Europe, as a whole, saw energy consumption stagnate in 2018 after it had decreased annually by an average 0.6 percent between 2007 and 2017.
According to BP, emissions from energy consumption rose faster in 2018 than in any of the previous seven years, namely by two percent. It is not possible to simply put this down to the fact that more and more people are using airplanes and cars: “despite the rapid gains in renewable energy, the pace of growth in power demand has meant that overall carbon emissions from the power sector have increased substantially over the past three years.”
The thing is: not much has changed when it comes to the composition of the global energy mix. The proportion of coal may have recently decreased to make room for renewables, but the general formula has remained unchanged for around 20 years: one quarter of power comes from gas and oil power plants, whilst coal-fired power and green energy each contribute a solid third. This is precisely why, according to Chief Economist Dale, the growing level of electrification has thus far had little effect on greenhouse gas emissions: “Electrification without decarbonizing power is of little use.”
In light of the rise in global energy demand, in order to compensate for the related increased greenhouse gas emissions alone, renewables would have had to have grown more than two times faster than they already have over the last three years. Instead of the average 800 terawatt hours (TWh), their contribution would have had to have risen by 1,800 TWh per year. To illustrate the size of this gap, Dale explained in his presentation, “that additional renewable generation of around 1,000 TWh is roughly equivalent to the entire renewable generation of China and the US combined in 2018.”
Photo credits: © BP p.l.c. 2019