BP's Looney is shrinking oil and gas output by 40% over the next decade and spending up to US$5 billion a year building one of the world’s largest renewable-power businesses. — AFP
Even its most bullish scenario sees demand no better than"broadly flat” for the next two decades as the energy transition shifts the world away from fossil fuels. The UK giant is describing a different future, where oil’s supremacy is challenged, and ultimately fades. That explains why BP has taken the boldest steps so far among peers to align its business with the goals of the Paris climate accord.
BP isn’t the only big oil company adapting its business to the energy transition. Royal Dutch Shell Plc, Total SE and others in Europe have announced similar pivots towards cleaner operations as customers, governments and investors increasingly call for change.BP’s report considers three scenarios, which aren’t predictions but nevertheless cover a wide range of possible outcomes over the next 30 years and form the basis of the new strategy Looney announced in August.
The impact, including lasting behavioural changes like increased working from home, will affect economic activity and prosperity in the developing world, and ultimately demand for liquid fuels, according to BP. That means it won’t be able to offset already falling consumption in developed countries.