BP chief: renewables won’t cut it, need carbon price

The oil giant has looked ahead to 2035 and painted a picture of carbon-ageddon - but its markets head has a solution, and it's a familiar one.

The latest BP Energy Market Outlook, which looks ahead to 2035, offers a sombre outlook on man-made climate change as renewables likely fail to gain the traction needed to bring emissions down. But a carbon price could change that, according to BP’s general manager of global energy markets and US economics, Mark Finley.

A rare positive is the oil giant’s view that renewable energy will be the fastest growing energy source over the next two decades, but even BP acknowledges that will do little to curb emissions.

“Manifestly (we are) not on a sustainable trajectory, at least in the dimension of CO2 emissions,” Finley admitted during a speech at Columbia University in New York.

“There is some positive news in the United States and in Europe, in that we expect emissions to go down. However, it is a global problem and globally emissions are going up.”

Renewables will top nuclear and rise above 10 per cent of global energy supplies by 2035, but it’s a minor victory as carbon emissions are forecast to lift 30 per cent, just shy of the 41 per cent lift in energy.

Assuming that dire forecast is realised, global emissions will be more than double 1990 levels by 2035 and well above the level needed to limit temperature rise to 2 degrees Celsius or less (see: red line in graph below).

Figure 1: Emisssions by region


Graph for BP chief: renewables won’t cut it, need carbon price

Source: BP Energy Market Outlook 2035.

The charts below highlight projected emissions growth over coming years compared to energy growth and economic growth.

While energy efficiency has forced the gap between GDP growth and energy demand to become a chasm, the same can’t be said for the growth differential in energy and carbon emissions.

Figure 2: Energy and carbon emissions


Graph for BP chief: renewables won’t cut it, need carbon price

Figure 3: GDP, energy and emissions


Graph for BP chief: renewables won’t cut it, need carbon price

Source: BP Energy Market Outlook 2035.

The distance between energy growth and emissions simply isn’t widening fast enough, with Finley confident carbon pricing is the answer.

“There is a real incentive to (become more energy efficient) because energy is expensive,” he explained.

“Whereas there’s not a real incentive to do (reduce emissions) because carbon, by and large, is not expensive.

“Market forces can be a powerful ally for tackling these challenges.”

Finley doesn’t anticipate a global carbon price within the two decade-long forecast period, though he expects several countries and regions to have their own market schemes. Still, that doesn’t mean a global carbon price should not be pursued.

“Markets work,” he concluded. “If you want to (reduce emissions), put a price on carbon.”

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