Russia’s war on Ukraine will lower oil & gas demand and speed up appetite for more ‘domestic’ renewable energy, said supermajor BP.
The ongoing conflict will have “long lasting effects on the global energy system” thanks to a greater focus on energy security by nations needing to end reliance on imported fossil fuels, said the UK-based oil giant in its latest annual Energy Outlook.
BP’s verdict chimes with numerous forecasts since the start of the war almost a year ago that the long-term impact would be positive for renewables – even if in the short-term Europe has seen aberrations such as a revival of coal power to ease supply crunches.
“The heightened focus on energy security increases demand for domestically produced renewables and other non-fossil fuels helping to accelerate the energy transition,” it said.
The supermajor in its central scenario now expects 5% lower oil demand and 6% less gas by 2035 compared to the levels seen a year ago in its 2022 outlook, with overall primary energy consumption 2% down, helping to push down emissions faster – although falls would still be way off the level needed to hit net zero goals.
By contrast wind and solar expand up to fifteen times over the course of the outlook to 2035, with up to 600GW of new renewables capacity needed a year by that date.
Up to one-third of renewables capacity could be being used to power green hydrogen production by mid-century, the forecast reckons.
Like other oil & gas players BP is also betting heavily on a role for blue hydrogen made using gas and decarbonised using carbon capture and storge technologies – seen by some as a way for the fossil fuel sector to keep one of their key products in the energy mix for longer.
Although the vast majority of its investments will continue to pour into fossil fuels, BP has also emerged as one of the oil & gas sector's most ambitious renewable energy players with a net target to have 50GW installed by 2030.
As recently as last week the oil giant was back with partner Equinor for another go at winning deals in New York's latest offshore wind procurement round.