The scale of global carbon emission declines observed in 2020 as a result of the Covid-19 pandemic would need to be replicated every year for the next 30 years for the world to be on track to meet the Paris climate goals, BP said today.
In its annual Statistical Review, BP questioned Opec's ability to offset "a sustained and growing fall in oil demand" that a transition to 2050 net zero emissions would entail.
Carbon emissions fell last year to levels last seen in 2011, BP said. Carbon emissions from energy use dropped by more than 6pc, the largest fall since 1945, while the carbon intensity of the energy mix declined by 1.8pc, also one of the largest falls since that date.
"If carbon emissions declined at the same average rate as last year for the next 30 years, global carbon emissions would decline by around 85pc by 2050," broadly consistent with keeping global temperature rises well below 2°C, the company said.
"Last year's fall in carbon emissions was obviously driven by the huge loss in economic output and activity," BP's chief economist Spencer Dale said. "A simple calculation comparing the fall in emissions with the decline in world output equates to an implied carbon price of almost $1,400/t. Scarily high."
TotalEnergies' chief executive Patrick Pouyanne said in May that his firm factors in a carbon price of at least $40/t to calculate its hydrocarbons projects' profitability, and said that this is $100/t for projects beyond 2030. BP has previously said that carbon prices need to increase to $100/t in order to rapidly speed up deployment of renewable electricity, hydrogen, carbon capture, utilisation and storage (CCUS) and biofuels.
Dale said today that the task is to "reduce emissions without causing massive disruption and damage to everyday lives and livelihoods".
BP said that oil demand dropped by 9.3pc last year as a result of pandemic-related lockdowns, accounting for about three-quarters of the total fall in global energy consumption.
Last year showed that Opec+ countries were "both able and willing to step in and stabilise oil markets", Dale said, but "whether this means it will always be able to do so, depends on the type of shock affecting oil markets."
Opec is best able to stabilise a relatively short-lived, temporary demand shock, such as a global pandemic followed by a successful vaccine, but "the ability and incentive for Opec to offset a sustained and growing fall in oil demand as the world transitions to net zero is less clear", he said.
"In this case, there may be a greater incentive for individual Opec members to worry more about protecting and growing their market shares and less about stabilising markets," he said.
Dale also said that the single most important thing in terms of the energy transition has been the strong growth of renewable energy, of around 18pc/yr over the past five years. This rate of growth is Paris-consistent and will need to be sustained over the next decade.
"The challenge is to maintain the recent pace of growth as the overall size of renewable energy expands", Dale said.
