BP Energy Outlook: 2017 Edition

The Energy Outlook considers a base case, outlining the ‘most likely’ path for global energy markets over the next 20 years based on assumptions and judgements about future changes in policy, technology and the economy. It examines some of the key questions and issues posed by the energy transition, and develops a number of alternative cases to explore key uncertainties.

Welcome to the 2017 edition of BP’s Energy Outlook.

The global energy landscape is changing. Traditional centres of demand are being overtaken by fastgrowing emerging markets. The energy mix is shifting, driven by technological improvements and environmental concerns. More than ever, our industry needs to adapt to meet those changing energy needs.

In the near term, much of our focus will remain on the continuing adjustment of the oil market. Considerable progress has been made but there is still a long way to go. Oil inventories are at record-high levels and the impact on supply of the significant cutbacks in investment spending on new energy projects over the past two years has not yet been fully felt.

But our response to those near-term challenges has to be informed by our understanding of the longerterm energy transition that is taking place to ensure we are able to continue to meet the energy needs of a changing world. That is the value of the Energy Outlook: to shine a light on the key trends and forces that are likely to shape global energy markets over the next 20 years.

A central feature of the energy transition mapped out by this Outlook is the continued gradual decarbonization of the fuel mix. Rapid improvements in the competitiveness of renewable energy mean that increases in renewables, together with nuclear and hydro energy, provide around half of the increase in global energy out to 2035. Natural gas is expected to grow faster than oil or coal, helped by the rapid growth of liquefied natural gas increasing the accessibility of gas across the globe.

Oil demand continues to increase, although the pace of growth is likely to slow as vehicles become more efficient and technological improvements, such as electric vehicles, autonomous driving and car sharing, potentially herald a mobility revolution. The overall demand for energy looks set to continue to expand, as increasing prosperity in fast-growing emerging economies lifts billions of people from low incomes. Plentiful supplies of energy enable this rise in living standards, with virtually all the growth in energy demand expected to come from outside the developed world.

The extent of this increase is likely to be curbed by improvements in energy efficiency, as increasing attention around the world is devoted to using energy more sustainably. Faster gains in energy efficiency combined with the gradual changes in the fuel mix mean the growth of carbon emissions from energy is expected to slow sharply relative to the past 20 years. Even so, the most likely path sees carbon emissions continuing to increase, indicating the need for further policy action. The timing and form of that action will have an important bearing on the nature of the energy transition. In BP, we continue to believe that carbon pricing has an important role to play as it provides incentives for everyone – producers and consumers alike – to play their part.

The energy transition underway poses a significant challenge – how to meet the world’s increasing demand for energy as it grows and prospers while also reducing carbon emissions. That raises important choices and opportunities for our industry. I hope you find this edition of the BP Energy Outlook a useful contribution to discussions about the energy transition and the world’s changing energy needs in the decades ahead. Bob Dudley Group chief executive

Bob Dudley Group chief executive