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Fossil fuel demand to take historic knock amid COVID-19 scars

September 16/2020

MOSCOW (MRC) -- Fossil fuel consumption is set to shrink for the first time in modern history as climate policies boost renewable energy and the coronavirus epidemic leaves a lasting effect on global energy demand, BP said in a forecast, said Hydrocarbonprocessing.

BP's 2020 benchmark Energy Outlook underpins Chief Executive Bernard Looney's new strategy to "reinvent" the 111-year old oil and gas company by shifting renewables and power. London-based BP expects global economic activity to only partially recover from the epidemic over the next few years as travel restrictions ease. But some "scarring effects" such as work from home will lead to slower growth in energy consumption.

BP this year extended its outlook into 2050 to align it with the company's strategy to slash the carbon emissions from its operations to net zero by the middle of the century. It includes three scenarios that assume different levels of government policies aimed at meeting the 2015 Paris climate agreement to limit global warming to "well below" 2 degrees Celsius from pre-industrial levels.

Under its central scenario, BP forecasts COVID-19 will knock around 3 MM barrels per day (bpd) off by 2025 and 2 MM bpd by 2050. In its two aggressive scenarios, COVID-19 accelerates the slow down in oil consumption, leading to it peaking last year. In the third scenario, oil demand peaks at around 2030. In the longer term, demand for coal, oil and natural gas is set to slow dramatically.

While the share of fuels has shrunk in the past as a percentage of the total energy pie, their consumption has never contracted in absolute terms, BP chief economist Spencer Dale told reporters. "(The energy transition) would be an unprecedented event," Dale said. "Never in modern history has the demand for any traded fuel declined in absolute terms." At the same time, "the share of renewable energy grows more quickly than any fuel ever seen in history."

Under BP's central Rapid scenario, non-fossil fuels account for the majority of global energy sources from the early 2040s onward, with the share of hydrocarbons falling by more than half over the next 30 years. Even with energy demand set to expand on the back of growing population and emerging economies, the sources of energy will shift dramatically to renewable sources such as wind and solar, Dale said.

The share of fossil fuels is set to decline from 85% of total primary energy demand in 2018 to between 20% and 65% by 2050 in the three scenarios. At the same time, the share of renewables is set to grow from 5% in 2018 to up to 60% by 2050.

In its forecast, BP said the growth in global economic activity slows "considerably" over the next 30 years from its past 20-year average, due in part to lasting effects of the epidemic as well as the worsening impact of climate change on economic activity, particularly in Africa and Latin America. BP started a three-day investor event, beginning Monday, where it will details its energy transition strategy.

Earlier this year, as MRC wrote previously, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.

And in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.


mrcplast.com
Author:Anna Larionova
Tags:petroleum products, crude oil, PP, PE, petrochemistry, British petroleum.
Category:General News
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