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OPEC Cheating Will Cap Oil At $52

OPEC Cheating Will Cap Oil At $52

Oil prices rallied strongly following…

Lack Of Political Will Could See World Miss Carbon Targets

This graph illustrates the extent to which BP’s Energy Outlook 2035 sees renewable energy sources having a meaningful impact in the years ahead.

SharesOfPrimaryEnergy

Source: BP

Although coal and oil will decline relative to other energy sources the three carbon fuels will still dominate the supply market down from 86% now to 81% by 2035 – not exactly a low carbon future.

Power generation is expected to account for an ever-increasing share of primary energy consumption, BP says, as the world continues on a long-term trend of electrification: even if the share rises from 42% today to only 47% by 2035. While coal is set to fall as a percentage of the whole and renewables are projected to rise by 2035, BP does not expect to see wind or solar farms on every open space. They will contribute only 8% by 2035 up from 3% today.

Related: China Ramps Up Emissions Efforts With New Carbon Market

Although predictions by other bodies such as the US Energy Information Administration vary, they all show an increase in total carbon emissions from energy consumption of a similar nature. BP’s and the EIA are two of the closest showing an increase of around 25% between 2013 and 2035 (1% p.a.), with the rate of growth declining from 2.5% over the past decade to 0.7% in the final decade of the Outlook.

Even so, the profile for emissions is well above that recommended by the scientific community and will add fuel to the fire for further legislation. The danger is that governments keen to burnish their green credentials will push through new laws and controls unilaterally. That may be good for the planet but potentially disastrous for domestic industry. One trend that BP’s report does show is nearly all the growth in emissions will come from non OECD economies, particularly Asia Pacific economies.

PrimaryEnergyProduction

Source: BP

China and India are the principal drivers of non-OECD growth and are projected to grow by 5.5% per year between 2013 and 2035. By 2035, they will be the world’s largest and 3rd largest economies respectively, jointly accounting for about one-third of global population and GDP and a corresponding proportion of emissions.

Related: Obama Pledges Cleaner Future In State Of The Union

While China has invested heavily in wind farms it has also been investing heavily in coal fired electricity production. Although China and the US recently agreed to limit the growth in emissions, policy changes that do not firmly anchor these growing economies into the mix are doomed to have only minor impact.

Europe has led from the front in this respect at great expense to its power consumers and economies and minimal impact on global carbon emissions or obvious benefit in persuading others to follow. The US has so far dragged its heels in terms of setting hard targets arguing, not unreasonably, that unless emerging economies are included in the same rules the benefits will be minimal but the costs high.

Change is coming and it may well be as BP suggests in the form of a carbon tax. Providing that can be agreed and accepted by all countries it could show benefits but it will only be part of the solution. Governments may have struggled to pass effective laws in the past but as the years go by and carbon levels continue to rise pressure will mount for action. Politicians aren’t renowned for making good policy while under pressure. Whilst some would argue no solution is needed, as we said at the outset, that’s like putting one’s head in the sand. Pressure for solutions is building and we will all be impacted by the application of those solutions.

By Stuart Burns of http://agmetalminer.com/ 

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  • Katherine on February 23 2015 said:
    "The US has so far dragged its heels in terms of setting hard targets arguing, not unreasonably, that unless emerging economies are included in the same rules the benefits will be minimal but the costs high." It's funny though that the US seems to have no problems paying energy directors 21% more than the average director compensation for all other industries. (Source: https://www.bdo.com/insights/industries/natural-resources/bdo-600 ).

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