The 2020 edition of the BP Energy Outlook explores possible paths for the global energy transition, how global energy markets may evolve over the next 30 years and the key uncertainties that may shape them.
- Rapid assumes the introduction of policy measures, led by a significant increase in carbon prices, that result in carbon emissions from energy use falling by around 70% by 2050 from 2018 levels. Rapid is broadly in line with scenarios that are consistent with limiting the rise in global temperatures by 2100 to well below 2°C above pre-industrial levels.
- Net Zero assumes the policy measures of Rapid are reinforced by significant shifts in societal and consumer behaviour and preferences – such as greater adoption of circular and sharing economies and switching to low carbon energy sources. This increases the reduction in carbon emissions by 2050 to over 95%. Net Zero is broadly in line with a range of scenarios consistent with limiting temperature rises to 1.5°C.
- Business-as-usual (BAU) assumes that government policies, technologies and societal preferences continue to evolve in a manner and speed seen in the recent past. In BAU, carbon emissions from energy use peak in the mid-2020s but do not decline significantly, with emissions in 2050 less than 10% below 2018 levels.
The growth of hydrogen is concentrated in the second half of the Outlook as falling technology and input costs, combined with rising carbon prices, allow it to compete increasingly against incumbent fuels.
By 2050, hydrogen accounts for around 7% of (non-combusted) total final energy consumption (excluding the non-combusted use of fuels) in Rapid and around 16% in Net Zero.
Hydrogen complements the growing role of electricity in Rapid and Net Zero because it can be used for some activities which are difficult or costly to electrify, especially in industry and transport, and because it can be more easily stored than electricity.
Hydrogen has a particular advantage in industry as a source of energy for high-temperature processes, such as those used in steel, cement, refining and petrochemicals sectors. By 2050, hydrogen accounts for around 10% of total final energy consumption in industry in Rapid and 18% in Net Zero.
The use of hydrogen in transport is concentrated in long-distance transportation, particularly heavy-duty trucks in which 7% of VKM in Rapid by 2050 are powered by hydrogen and 10% in Net Zero.
The use of hydrogen in Rapid is most pronounced in China and the developed economies which lead the world in its adoption, supported by rising carbon prices and increasing deployment of infrastructure and other polices supporting its use. This adoption is more broadly-based in Net Zero, with significant increases also in India and other parts of developing Asia.
In contrast, the role of hydrogen within BAU is far more limited, mirroring the minimal progress made in decarbonizing the energy system.
The production of hydrogen in Rapid and Net Zero is dominated by green and blue hydrogen. Green hydrogen is made by electrolysis using renewable power; blue hydrogen is extracted from natural gas (or coal) and the displaced carbon is captured and stored (CCUS).
The ability of many countries to produce either green or blue hydrogen, combined with relatively high transport costs, means that the majority of hydrogen is produced relatively locally, with a mix of blue and green hydrogen depending of local conditions.
By 2050, over 95% of hydrogen in Rapid and Net Zero comes from green and blue hydrogen in broadly equal amounts. The remainder comes from legacy facilities which produce hydrogen using natural gas or coal without CCUS (so-called grey hydrogen).
The production of blue hydrogen helps supplies of hydrogen to grow relatively quickly in Rapid and Net Zero without relying only on renewable energy. This is important for two reasons:
- First, relying exclusively on green hydrogen would require an even faster expansion in wind and solar capacity. To achieve the same level of hydrogen production as in Net Zero using only green hydrogen, would require an average build out of wind and solar capacity of around 800 GW per year over the Outlook, compared with less 600 GW in Net Zero and around 60 GW over the past 20 years.
- Second, production of green hydrogen diverts renewable energy that could potentially be used to decarbonize further the power sector. Given that the vast majority of domestic power sectors over the Outlook are not fully decarbonized in either scenario, only renewable energy which cannot be used within the domestic power sector can strictly be used to produce green hydrogen. This would be the case if the renewable energy is curtailed at certain points in time or because its location means it is not economic for it to be connected to the central grid.