After oil

While high-ranking representatives of the oil industry claim that the oil renaissance is not far off, the international oil and gas corporation British Petroleum (BP) with its new report actually puts the cross on the “black gold.” Members of public environmental organizations believe that the current situation in the energy markets is a signal for reorienting the Russian economy.

In their statistical review BP Energy Outlook 2020, corporation analysts argue that after the Covid-19 pandemic, demand for oil, even in the most optimistic scenario, in the next two decades will not be able to overcome the peak of previous years. A global energy transition will lead to the elimination of fossil fuels, and clean renewable energy will replace oil. While a year ago the baseline “carbon” scenario assumed an increase in oil demand, then the new one is almost a plan to meet the goals of the Paris Climate Agreement.

This year’s BP review looks at three scenarios for the energy transition by 2050. Under the “normal” scenario, it is assumed that current trends will continue without significant changes: greenhouse gas emissions in 2050 will be 10% lower than in 2018. In the “fast” scenario, emissions will be reduced by 70% by 2050, and the “zero” scenario will be accompanied by stricter climate regulations and cause emissions to go down by 95% by 2050.

All three scenarios are united by the fact that as a result of changes in world politics and shifts in social preferences, a decrease in the share of hydrocarbons (i.e. coal, oil, and natural gas) is almost inevitable, and the “fast” scenario practically corresponds to the maximum level of ambitions of the climate agreement and the retention of warming on the planet within 1.5° C.

Renewable energy (RES), as the BP report shows, will be the fastest-growing energy source over the next 30 years, and that will be the case for all scenarios. Renewable energy use could grow from 5% of the world’s current energy consumption to 20-60% by 2050.

One of the factors slowing down the demand for oil in the coming decades is the measures to curb the production of plastics, which are produced using petrochemicals derived from fossil fuels. The reduction in consumption will also be achieved through more thorough processing and reduced use of disposable plastic.

According to BP experts, as a result of the transformations taking place in the world, the dynamics and alignment of the global energy market may radically change: analysts predict an “era of diversity” in the energy sector when no single source will dominate the energy landscape, and everyone will be forced to compete to retain a certain share of the market.

BP experts predict a revolution in Russia’s energy sector. According to analysts, the decline in primary energy consumption in 2020-2050 will range from 1% to 11%. Oil demand in Russia will slightly grow during this period: under the “normal” scenario, by 6% in 2018-2050, but will go down by 40% and 60%, respectively, in the “fast” and “zero” ones. Gas remains the leading source of energy in Russia, with its share increasing to 57% in the structure of primary energy consumption under the “usual” scenario, at 48% in the “fast” scenario, and 23% in the “zero” scenario.

BP experts predict a significant increase in the production of renewable energy in Russia under any scenario, mainly due to wind energy. The share of renewable energy sources in primary energy, as follows from BP Energy Outlook 2020, will increase to 4% in the “normal” scenario, to 20% in the “fast” and up to 48% in the “zero” ones. Thus, under an environmentally friendly scenario, renewable energy sources can become the largest source of energy in the Russian Federation by the middle of the 21st century, while CO2 emissions can be reduced in the range of 24% to 92%.

We can say that BP’s forecasts regarding Russian oil are already starting to come true: according to the Federal Customs Service, Russia’s oil export revenues for the first half of 2020 decreased by 31.4% compared to the same period in 2019.

“The world is on an unsustainable path: scenarios show that achieving rapid and sustainable emission reductions is likely to require a range of policy measures,” write the authors of the BP review. “It is possible that changes in policy will be complemented by changes in behavior and preferences of society. Delay in these measures and social shifts can significantly increase the scale of the problem and lead to significant additional economic costs and shocks.”

As it follows from the Civil Review on the implementation of the Sustainable Development Goals in Russia, in the preparation of which representatives of the Russian Social & Ecological Union (RSEU) took part, in order to achieve the goal set by the world community for the development of clean energy, Russia should abandon subsidies for traditional energy accompanied with refocusing subsidies to the RES sector and energy efficiency technologies.

Representatives of the RSEU see the current situation in the world energy sector as a challenge for the Russian economy and an impetus for an early reorientation and intensification of efforts to develop renewable energy sources. In their Position, they emphasize the urgent need for an energy transition.