BP’s annual report reveals renewable energy boom in pandemic coincided with slump in demand for oil
Last modified on Thu 8 Jul 2021 10.35 EDT
The world’s wind and solar energy capacity grew at a record rate last year while the oil industry recorded its steepest slump in demand since the second world war, according to BP.
The impact of coronavirus lockdowns on the energy industry led carbon emissions to plummet by 6% on the year before, the sharpest decline since 1945, according to BP’s annual review of the energy sector.
But the report says the impact of Covid on carbon emissions needs to be replicated every year for the next three decades if governments hope to limit global heating to 1.5C above pre-industrial levels.
“Yes, they were the biggest falls seen for 75 years,” said Spencer Dale, BP’s chief economist. “But they occurred against the backdrop of a global pandemic and the largest economic recession in postwar history. The challenge is to reduce emissions without causing massive disruption and damage to everyday lives and livelihoods.”
The warning echoes a report from the International Energy Agency last month which predicted that the world’s demand for oil would bounce back by 5.4m barrels a day this year, one of the fastest climbs on record, and rebound to pre-pandemic levels by the end of 2022.
BP’s annual energy review, published every year since 1952, is considered influential in the energy industry and helps to inform the company’s strategic decisions. Last year BP set out a plan to cut its oil production and increase its renewable energy generation within the next decade, en route to becoming a net zero energy company by 2050.
Bernard Looney, BP’s chief executive, said: “Yes, the world needs more low-carbon companies. But maybe more than anything it also needs existing energy companies to decarbonise, and in so doing use their scale and expertise to help bring about the deep and complex rewiring and replumbing of the global energy system that the world wants and needs to see over the next 30 years.”
BP’s latest energy review found that the world’s total energy consumption fell by 4.5% in 2020, driven mainly by a 9.7% slump in demand for crude, used to make transport fuels, or just over 9m barrels of oil a day. Dale said the collapse in demand was “far bigger than anything seen in history and far bigger than the falls” in other energy sources.
Meanwhile the “relentless expansion of renewable energy” meant electricity generated by wind, solar and hydroelectricity plants was “relatively unscathed”, Dale said.
The report found that global wind and solar power capacity grew by 238GW in 2020, more than five times greater than the UK’s total renewable energy capacity. The increase was mainly driven by China, which accounted for roughly half of the global increase in wind and solar energy production capacity, but even controlling for that 2020 was a record year for building wind and solar farms.
Dale said the trend away from fossil fuels and towards renewable energy last year was “exactly what the world needs to see as it transitions to net zero”.
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