Released September 15, 2020 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The COVID-19 pandemic will have a persistent negative long-term impact on the global economy, primary energy demand and oil demand, executives from BP Plc (NYSE:BP) (London, England) told a worldwide virtual conference on Monday in releasing the company's annual energy outlook report.
"The COVID-19 pandemic is foremost a humanitarian crisis, but the scale of the economic cost and disruption is also likely to have a significant and persistent impact on the global economy and energy system," said the report, Energy Outlook 2020 Edition. "At the time of writing, the number of new cases from the pandemic is still increasing and so assessing its eventual impact is highly uncertain."
That said, however, the company prepared two scenarios to assess COVID-19's long-term impact on the global economy and energy markets.
The first scenario, named "Rapid," assumes that global economic activity partially recovers from the impact of the pandemic over the next few years as restrictions are eased, but that some effects persist. This scenario envisions global gross domestic product (GDP) declining by 2.5% in 2025 and 3.5% in 2050. In this scenario, primary energy demand falls 2.5% in 2025 and 3% in 2050. But the effects of this scenario are more pronounced on oil demand, which falls about 3 million barrels per day (BBL/d) by 2025 and an additional 2 million BBL/d in 2050.
"There is a risk," BP continued, "that the economic losses from COVID-19 may be significantly bigger, especially if there are further waves of infection. This possibility is explored in the 'Greater Impact' case, in which COVID-19 reduces the level of global GDP by 4% in 2025 and almost 10% by 2050." In this scenario, primary energy demand falls by about 3.5% in 2025, and oil demand drops 5 million BBL/d. Farther out, in 2050, primary energy demand drops another 4% while oil demand falls an additional 5 million BBL/d.
Click on the image at right to see BP's projection of how the COVID-19 pandemic could affect global GDP, primary energy demand and oil demand in 2025 and 2050 under two scenarios.
The pandemic could induce behavioral changes among consumers, which could have an influence on GDP, primary energy demand and demand for oil, the report noted. "For example, people (could) choose to travel less, switch from using public transportation to other modes of travel or work from home more frequently. Many of these behavioral changes are likely to dissipate over time as the pandemic is brought under control and public confidence is restored. But some changes, such as increased working from home, may persist."
The report and the BP executives who spoke on Monday emphasized that the energy outlook is not a prediction. Rather, it considers three main scenarios "which explore different pathways for the global energy system to 2050. The scenarios are not predictions of what is likely to happen or what BP would like to happen. Rather, the scenarios help to illustrate the range of outcomes possible over the next 30 years, although the uncertainty is substantial and the scenarios do not provide a comprehensive description of all possible outcomes."
In other words, the scenarios and the assumptions underlaying them help analysts and planners better understand the uncertainties of the large, global and increasingly interconnected energy market.
Global carbon dioxide (CO2) emissions from the energy industry accounted for about 30 gigatons of CO2 emissions in 2016, about 65% of emissions from all segments of the global economy, BP said, citing estimated from the World Resources Institute.
In their remarks Monday, BP Chief Executive Officer Bernard Looney, and Group Chief Economist Spencer Dale, echoed one of the foundational assertions in the report: "The world is on an unsustainable path. A rapid and sustained fall in carbon emissions is likely to require a series of policy measures, led by a significant increase in carbon prices. These policies may need to be reinforced by shifts in societal behaviors and preferences. Delaying these policies measures and societal shifts may lead to significant economic costs and disruption."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
"The COVID-19 pandemic is foremost a humanitarian crisis, but the scale of the economic cost and disruption is also likely to have a significant and persistent impact on the global economy and energy system," said the report, Energy Outlook 2020 Edition. "At the time of writing, the number of new cases from the pandemic is still increasing and so assessing its eventual impact is highly uncertain."
That said, however, the company prepared two scenarios to assess COVID-19's long-term impact on the global economy and energy markets.
The first scenario, named "Rapid," assumes that global economic activity partially recovers from the impact of the pandemic over the next few years as restrictions are eased, but that some effects persist. This scenario envisions global gross domestic product (GDP) declining by 2.5% in 2025 and 3.5% in 2050. In this scenario, primary energy demand falls 2.5% in 2025 and 3% in 2050. But the effects of this scenario are more pronounced on oil demand, which falls about 3 million barrels per day (BBL/d) by 2025 and an additional 2 million BBL/d in 2050.
"There is a risk," BP continued, "that the economic losses from COVID-19 may be significantly bigger, especially if there are further waves of infection. This possibility is explored in the 'Greater Impact' case, in which COVID-19 reduces the level of global GDP by 4% in 2025 and almost 10% by 2050." In this scenario, primary energy demand falls by about 3.5% in 2025, and oil demand drops 5 million BBL/d. Farther out, in 2050, primary energy demand drops another 4% while oil demand falls an additional 5 million BBL/d.
Click on the image at right to see BP's projection of how the COVID-19 pandemic could affect global GDP, primary energy demand and oil demand in 2025 and 2050 under two scenarios.The pandemic could induce behavioral changes among consumers, which could have an influence on GDP, primary energy demand and demand for oil, the report noted. "For example, people (could) choose to travel less, switch from using public transportation to other modes of travel or work from home more frequently. Many of these behavioral changes are likely to dissipate over time as the pandemic is brought under control and public confidence is restored. But some changes, such as increased working from home, may persist."
The report and the BP executives who spoke on Monday emphasized that the energy outlook is not a prediction. Rather, it considers three main scenarios "which explore different pathways for the global energy system to 2050. The scenarios are not predictions of what is likely to happen or what BP would like to happen. Rather, the scenarios help to illustrate the range of outcomes possible over the next 30 years, although the uncertainty is substantial and the scenarios do not provide a comprehensive description of all possible outcomes."
In other words, the scenarios and the assumptions underlaying them help analysts and planners better understand the uncertainties of the large, global and increasingly interconnected energy market.
Global carbon dioxide (CO2) emissions from the energy industry accounted for about 30 gigatons of CO2 emissions in 2016, about 65% of emissions from all segments of the global economy, BP said, citing estimated from the World Resources Institute.
In their remarks Monday, BP Chief Executive Officer Bernard Looney, and Group Chief Economist Spencer Dale, echoed one of the foundational assertions in the report: "The world is on an unsustainable path. A rapid and sustained fall in carbon emissions is likely to require a series of policy measures, led by a significant increase in carbon prices. These policies may need to be reinforced by shifts in societal behaviors and preferences. Delaying these policies measures and societal shifts may lead to significant economic costs and disruption."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
