The Russia-Ukraine war will have long-lasting effects on the global energy systems, BP plc (LON:BP) said on Monday as it released its Energy Outlook 2023.
According to the oil group, the greater focus on energy security as a result of the war is increasing demand for domestically produced renewables and other non-fossil fuels.
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At the same time, the disruptions to energy supplies show the transition away from hydrocarbons should be orderly, it said.
BP’s latest outlook includes three scenarios -- Net Zero, Accelerated and New Momentum -- that have been updated to take into consideration the Russia-Ukraine war and the US Inflation Reduction Act.
The analysis sees four leading trends for the future global energy systems: a declining role for hydrocarbons, rapid renewables expansion, increasing electrification and growing use of low-carbon hydrogen.
Across the scenarios, the share of fossil fuels in primary energy falls from around 80% in 2019 to between 55% and 20% by 2050, while the share of renewables expands from around 10% in 2019 to between 35% and 65% by mid-century. The share of electricity in total final energy consumption grows from around one-fifth in 2019 to between one-third and a half by 2050. By that year the share of primary energy used in the production of low-carbon hydrogen also reaches 13%-21% in the Accelerated and Net Zero scenarios.
Despite the declining demand for oil, this fuel is expected to continue to play a big role in the global energy system for the next 15-20 years across all scenarios.
The prospects for natural gas are contingent on the speed of the energy transition, BP adds. Increasing demand in emerging economies will be offset by the move to lower-carbon energy sources mainly in developed countries.