bp Energy Outlook
2023 edition

Updated July 2023

2 |Energy Outlook
2023 explores
the key trends
and uncertainties
surrounding theenergy transition.

Energy Outlook 2023 is focused on three main scenarios: Accelerated,
Net Zero and New Momentum. These scenarios are not predictionsof what is likely to happen or what bp would like to happen. Rather
they explore the possible implications of different judgements andassumptions concerning the nature of the energy transition and theuncertainties around those judgements. The scenarios are basedon existing technologies and do not consider the possible impact ofentirely new or unknown technologies.
The many uncertainties surrounding the transition of the global energy
system mean that the probability of any one of these scenariosmaterializing exactly as described is negligible. Moreover, the three
scenarios do not provide a comprehensive range of possible paths forthe transition ahead. They do, however, span a wide range of possible
outcomes and so help to illustrate the key uncertainties surrounding
energy markets out to 2050.

The scenarios in this year’s Outlook have been updated to take accountof two major developments over the past year: the Russia-Ukraine
war and the passing of the Inflation Reduction Act in the US. Asidefrom updating for those two developments, the scenarios are basedlargely on the analysis and scenarios in Energy Outlook 2022. They
do not include a comprehensive assessment of all the changes anddevelopments since Outlook 2022.
The Outlook, that was published in January, uses the scenarios
discussed for different fuels and energy sources, such as oil, naturalgas, renewables and low-carbon hydrogen. An additional chapter,
published in July, contains further analysis that uses the same three
scenarios to discuss the outlook for end-use energy demand, inparticular in the industry, buildings and transport sectors.
The Energy Outlook is produced to inform bp’s strategy and ispublished as a contribution to the wider debate about the factors
shaping the energy transition. But the Outlook is only one source
among many when considering the future of global energy markets
and bp considers a wide range of other external scenarios, analysis andinformation when forming its long-term strategy.

3 | bp Energy Outlook: 2023 edition

4 |From an energy perspective, thedisruptions to Russian energy
supplies and the resulting global
energy shortages seem likely tohave a material and lasting impact
on the energy system.

Welcome to the2023 edition of bp’s
Energy Outlook.
The past year has been
dominated by the terrible
consequences of the RussiaUkraine war and its awful toll
on lives and communities. Ourthoughts and hopes are with all
those affected.

Most importantly, the desireof countries to bolster theirenergy security by reducing theirdependency on imported energy– dominated by fossil fuels – andinstead have access to moredomestically produced energy –much of which is likely to comefrom renewables and other nonfossil energy sources – suggeststhat the war is likely to accelerate
the pace of the energy transition.
The scale of the economic andsocial disruptions over the past
year associated with the loss ofjust a fraction of the world’s fossil
fuels has also highlighted theneed for the transition away fromhydrocarbons to be orderly, suchthat the demand for hydrocarbons
falls in line with available supplies,
avoiding future periods of energy
shortages and higher prices.

5 | bp Energy Outlook: 2023 edition

Global energy policies anddiscussions in recent years havebeen focused on the importanceof decarbonizing the energy
system and the transition to net
zero. The events of the past year
have served as a reminder to us
all that this transition also needs
to take account of the security
and affordability of energy.
Together these three dimensionsof the energy system – security,
affordability, and sustainability –make up the energy trilemma.
Any successful and enduring
energy transition needs toaddress all three elements of thetrilemma.

These issues, together with thebroader implications of the energy
transition, are explored in thisyear’s Energy Outlook using threemain scenarios: Accelerated,
Net Zero and New Momentum.
Together these scenarios spana wide range of the possible
outcomes for the global energy
system over the next 30 years.
Understanding this range of
uncertainty helps bp to shapea strategy which is resilient to
the different speeds and ways
in which the energy system maytransition.
The continuing rise in carbon
emissions and the increasing
frequency of extreme weather
events in recent years highlight
more clearly than ever theimportance of a decisive shift
towards a net-zero future. The
events of the past year havehighlighted the complexity and

Last year’s Energy Outlook did
not include any analysis of thepossible implications of the war in
Ukraine. The scenarios in Outlook
2023 have been updated to takeaccount of the war, as well asof the passing of the Inflation
Reduction Act in the US.
At the time of writing, the war
is continuing with no end insight. As such, any analysis of
its possible implications must betreated as preliminary. However,
the experience from the majorenergy supply shocks of the
1970s suggests that events
that heightened energy security
concerns can have significant
and persistent impacts on energy
markets.

interconnectedness of the global
energy system and the need toaddress all three dimensions of
the energy trilemma. I hope thisyear’s Energy Outlook is useful toeveryone trying to navigate thisuncertain future and accelerate
the transition to global net zero.
As always, any feedback on
the Outlook and how it canbe improved would be mostwelcome.

Spencer Dale
Chief economist

6 |Core Beliefs
This year’s Outlook can be used
to identify aspects of the energy
transition that are common acrossthe main scenarios. These trends
help shape core beliefs about how
the energy system may evolve overthe next 30 years.
The carbon budget is running
out. Despite the marked increasein government ambitions, CO2
emissions have increased every
year since the Paris COP in 2015(bar 2020). The longer the delay
in taking decisive action to reduce
emissions on a sustained basis,the greater are the likely resulting
economic and social costs.
Government support for theenergy transition has increased in a
number of countries, including thepassing of the Inflation Reduction
Act in the US. But the scale of

The prospects for natural gas
depend on the speed of the energy
transition, with increasing demandin emerging economies as theygrow and industrialize offset by thetransition to lower carbon energy
sources, led by the developed
world.
The recent energy shortages
and price spikes highlight theimportance of the transition
away from hydrocarbons beingorderly, such that the demandfor hydrocarbons falls in line withavailable supplies. Natural declines
in existing production sources
mean there needs to be continuing
upstream investment in oil andnatural gas over the next 30 years.

the decarbonization challengesuggests greater support isrequired globally, including policies
to facilitate quicker permitting andapproval of low-carbon energy andinfrastructure.
The disruption to global energy
supplies and associated energy
shortages caused by the RussiaUkraine war increases theimportance attached to addressing
all three elements of the energy
trilemma: security, affordability,
and sustainability.
The war has long-lasting effects
on the global energy system.
The heightened focus on energy
security increases demand fordomestically produced renewables
and other non-fossil fuels, helping
to accelerate the energy transition.

The global power system
decarbonizes, led by the increasing
dominance of wind and solar
power. Wind and solar account for
all or most of the growth in power
generation, aided by continuing
cost competitiveness and anincreasing ability to integrate highproportions of these variable powersources into power systems. The
growth in wind and solar requires
a significant acceleration in thefinancing and building of new
capacity.
The use of modern bioenergy –modern solid biomass, biofuelsand biomethane – grows rapidly,
helping to decarbonize hard-toabate sectors and processes.
Low-carbon hydrogen plays acritical role in decarbonizing theenergy system, especially in hardto-abate processes and activities inindustry and transport. Low-carbon

7 | bp Energy Outlook: 2023 edition

The structure of energy demandchanges, with the importance offossil fuels declining, replaced by a
growing share of renewable energy
and by increasing electrification.
The transition to a low-carbon
world requires a range of otherenergy sources and technologies,
including low-carbon hydrogen,modern bioenergy, and carbon
capture, use and storage.
Oil demand declines over theoutlook, driven by falling use inroad transport as the efficiencyof the vehicle fleet improves andthe electrification of road vehicles
accelerates. Even so, oil continues
to play a major role in the global
energy system for the next 15-20
years.

hydrogen is dominated by green
and blue hydrogen, with greenhydrogen growing in importanceover time. Hydrogen trade is a mixof regional pipelines transporting
pure hydrogen and global seaborne
trade in hydrogen derivatives.
Carbon capture, use and storage
plays a central role in enabling
rapid decarbonization trajectories:
capturing industrial process
emissions, acting as a sourceof carbon dioxide removal, andabating emissions from the use offossil fuels.
A range of methods for carbon
dioxide removal – including
bioenergy combined with carbon
capture and storage, natural
climate solutions, and direct air
carbon capture with storage – will
be needed for the world to achievea deep and rapid decarbonization.

Contents

8 |Overview

10

Three scenarios: Net Zero, Accelerated
and New Momentum

12

Comparison with IPCC pathways

14

Final energy demand

16

Trends in energy demand

18

Changes since Energy Outlook 2022

20

Impacts of the Russia-Ukraine war

22

The effects of the war on economic growth24

A shifting energy mix

26

Oil and natural gas trade

28

Change in carbon emissions

30

Russian production of oil and gas

32

EU natural gas demand and sources of supply

34

Oil

38

Oil demand40

Oil in transport

42

Oil supply

44

Natural gas

46

Natural gas demand48

LNG trade50

LNG exports

52

Renewable energy

54Wind and solar

56

Bioenergy

58

Inflation Reduction Act

36

Electricity

60

How energy is used

86

Electricity demand

62

Energy demand by sector

88Electricity generation by fuel64

The fuel mix across sectors

90

Electricity generation by region

66

Carbon emissions by sector

92

Industry: energy demand94

Low-carbon hydrogen

68

Industry: the fuel mix

96

Low-carbon hydrogen demand70

Industry: fuels used as feedstocks98

Low-carbon hydrogen supply

72

Buildings: energy demand by end-use

100

Carbon mitigation and removals

74

Carbon capture use and storage76

Carbon dioxide removals

78

Investment and critical minerals

80

Levels of implied investment

82

Demand for critical minerals

84

9 | bp Energy Outlook: 2023 edition

Buildings: developed vs emerging regions

102

Transport: road - light vehicles

104

Transport: road - medium and heavy vehicles

106

Transport: aviation

108

Transport: marine

110

Annex

112

Data tables

114

Modelling the impact of the Russia-Ukraine war

116

Economic impact of climate change

118

Investment methodology

120

Carbon emissions definitions and sources

122

Other data definitions and sources

124

10 |

Overview

Three scenarios to explore the uncertainties surrounding
the speed and shape of the energy transition to 2050
Accelerated and Net Zero are broadly in linewith ‘Paris consistent’ IPCC scenarios
Final energy demand peaks in all three scenarios
as gains in energy efficiency accelerate
The future of global energy is dominated by four trends: decliningrole for hydrocarbons, rapid expansion in renewables, increasing
electrification, and growing use of low-carbon hydrogen

11 | bp Energy Outlook: 2023 edition

Overview

12 |Three scenarios to explore the uncertainties surrounding
the speed and shape of the energy transition to 2050
Carbon emissions
Gt of CO2e
45
40
35
30
25
20
15
10
5

Accelerated
Net Zero
New Momentum

0
2000
2010
2020
Carbon emissions include CO 2 emissions from energy use, industrial processes,
natural gas ﬂaring, and methane emissions from energy production.

2030

2040

2050

Key points
bp’s Energy Outlook 2023 uses three
scenarios (Accelerated, Net Zero and New
Momentum) to consider a range of possible
pathways for the global energy system to2050 and to help shape a resilient strategy
for bp.
The scenarios are not predictions of what
is likely to happen or what bp would liketo happen. Rather, the scenarios aredesigned to span a wide range of theoutcomes possible out to 2050. In doing
so, they inform bp’s core beliefs about
the energy transition and help shapea strategy that is resilient to the many
uncertainties surrounding the speed andnature of the energy transition.
The scenarios in this year’s Outlook havebeen updated to take account of two
major developments over the past year:
the Russia-Ukraine war and the passingof the Inflation Reduction Act in the
US. Aside from updating for those twodevelopments, the scenarios are largely
based on the analysis and scenarios in
Energy Outlook 2022.
13 | bp Energy Outlook: 2023 edition

The scenarios consider carbon emissions
from energy production and use,most non-energy related industrial
processes, and natural gas flaring plus
methane emissions from the production,transmission, and distribution of fossil
fuels (see pages 122-123 of the Annex for
more details).
Accelerated and Net Zero explore
how different elements of the energy
system might change in order toachieve a substantial reduction in carbon
emissions. In that sense, they can beviewed as ‘what if’ scenarios: what
elements of the energy system mightneed to change if the world collectively
takes action for CO2-equivalent emissions(CO2e) to fall by around 75% by 2050
(relative to 2019 levels) in Accelerated
and 95% in Net Zero. Both scenarios
are conditioned on the assumption that
there is a significant tightening in climate
policies. Net Zero also embodies a shift
in societal behaviour and preferences,which further supports gains in energy
efficiency and the adoption of low-carbon
energy.

The carbon emissions remaining in Net
Zero in 2050 could be eliminated byeither additional changes to the energy
system or by the deployment of carbon
dioxide removal (CDR) (see pages 78-79).
This will depend on the costs of CDR andof abating greenhouse gasses emanatingfrom outside the energy system, neitherof which are explicitly considered in the
Outlook.
New Momentum is designed to capture
the broad trajectory along which theglobal energy system is currently
travelling. It places weight on themarked increase in global ambition
for decarbonization in recent years, aswell as on the manner and speed of
decarbonization seen over the recent
past. CO2e emissions in New Momentum
peak in the 2020s and by 2050 arearound 30% below 2019 levels.

Overview

14 |Accelerated and Net Zero are broadly in linewith ‘Paris consistent’ IPCC scenarios
Cumulative CO2e emissions from energy (2015 - 2050)

Change in fossil fuels in IPCC 1.5°C scenarios

Gt of CO2e

2019-2030 change

1200

IPCC
10 th - 90 th
percentile
IPCC
25 th - 75 thpercentile
Net Zero
Accelerated

1100

1000

0%

IPCC 1.5°C
interquartile
range
Net Zero

-20%

-40%

900
-60%
800
-80%

700

600

1.5°C

-100%

2°C

Cumulative CO 2e emissions in 2015-2050 are the addition of CO 2 emissions
from energy and industrial processes, ﬂaring, and methane emissions

Oil

Natural gas

Coal

1.5°C scenarios with no or limited overshoot and 2°C scenarioswith immediate action. See Annex for selection of IPCC scenarios

Key points
The pace and extent of decarbonizationin Accelerated and Net Zero are broadlyaligned with a range of IPCC scenarios
which are consistent with maintaining
global average temperature rises well
below 2ºC and 1.5ºC above pre-industrial
levels in 2100 respectively (see annex
pages 122-123 for more details of IPCC
scenarios used).
The Energy Outlook scenarios extend
only to 2050 and do not model all formsof greenhouse gasses or all sectors of theeconomy. As such, it is not possible tomap directly between the scenarios andtheir implications for the carbon budget
and the implied increase in average global
temperatures by 2100.
However, it is possible to provide
an indirect inference by comparing
the cumulative carbon emissions in
Accelerated and Net Zero for the energy
sector over the period 2015 to 2050
with the ranges of corresponding carbon
trajectories taken from the scenarios
included in the IPCC Sixth Assessment
15 | bp Energy Outlook: 2023 edition

Report – Climate Change 2022: Impacts,
Adaptation and Vulnerability.
Cumulative CO2e emissions in
Accelerated are broadly in the middle ofthe interquartile range of well below 2ºC
IPCC scenarios. The trajectory for carbon
emissions in Accelerated lies within the
IPCC range over the entire outlook.
For Net Zero, cumulative CO2e emissions
are within the 10th to 90th percentiles of
IPCC scenarios consistent with 1.5ºC(with no or limited overshoot), but area little above the interquartile range.
Carbon emissions in Net Zero decline
more slowly than the range of IPCC 1.5ºC
scenarios out to 2030, before falling more
quickly than the median scenario furtherout.
In the median IPCC scenario consistent
with 1.5ºC (with no or limited overshoot),
net CO2 emissions decline by 48% by2030 (relative to 2019 levels). Within this,CO2 emissions from ‘fossil fuels andindustrial processes’ fall by 40%. This
compares with a fall of 30% in Net Zero.

The fall in fossil fuels and industrial
emissions in the median IPCC scenario
is driven largely by a 75% fall in global
coal consumption by 2030, with moremodest falls of around 10% in oil andnatural gas consumption. The falls in
oil and natural gas by 2030 in Net Zeroare consistent with the range of IPCC
1.5ºC scenarios, but the fall in coalconsumption is significantly smaller. That
reflects the continuing importance of coalas an affordable and relatively abundantfuel in many emerging economies whereenergy demand is expanding rapidly.
The time it takes for parts of the energy
sector to transition away from fossil
fuels highlights the likely importance ofcarbon dioxide removal (CDR) in helping
to reduce net carbon emissions during
the transition period while these reforms
are undertaken, as well as offsetting any
remaining gross emissions in a net zeroenergy system (see pages 78-79).

Overview

16 |Final energy demand peaks in all three scenarios
as gains in energy efficiency accelerate
Total final consumption

Total final consumption by fuel

EJ

EJ

550

600
New
Momentum

500

500

450

Other
HydrogenElectricity
Coal

Accelerated

400

Natural gas
Net Zero

400

Oil

300
350
200

300
Accelerated
Net Zero
New Momentum

250
200
2000

2010

2020

2030

2040

100

2050

0

2019

2050

Key points
Global energy demand measured at the
final point of use (total final consumption)
peaks in all three scenarios as gains inenergy efficiency accelerate, more thanoffsetting the upwards impact of increasing
living standards across much of theemerging world.
Total final consumption (TFC) peaks inthe mid-to-late 2020s in Accelerated and
Net Zero, with final energy consumption
15-30% below 2019 levels by 2050. In
contrast, TFC increases until around 2040
in New Momentum, after which it broadly
plateaus with energy consumption in
2050 around 10% above 2019 levels.
The main factor driving these differencesin final energy consumption is the paceof improvement in energy efficiency. The
gains in global energy efficiency over
the outlook – measured by comparing
growth in final energy demand witheconomic activity – are much quicker
than over the past 20 years in all three
scenarios, particularly in Accelerated
and Net Zero. That reflects a number
17 | bp Energy Outlook: 2023 editionof factors including: the increasing useof electricity at the final point of use,
more efficient use of materials throughincreased recycling and reuse, and agreater focus on energy conservation,
given greater impetus by the heightened
focus on energy security (see pages 2223).
The assumed increase in the pace ofenergy efficiency improvements in
Accelerated and Net Zero is a central
element in facilitating a rapid reduction incarbon emissions, without which there
would need to be even faster growth in
low-carbon energy to achieve the sameoutcome.
Final energy demand in emerging
markets continues to grow over the
coming decade and beyond in New
Momentum and Accelerated, driven
by increasing prosperity and improving
living standards. In contrast, demand indeveloped economies peaks in the next
few years in all three scenarios.

Total final consumption decarbonizes as
the direct use of fossil fuels declines, theworld electrifies and the power sector isincreasingly decarbonized.
Within TFC, fossil fuels used at the
final point of energy use decline from ashare of around 65% in 2019 to 20-50%
by 2050 across the three scenarios.
Within hydrocarbons, the share of coalfalls particularly sharply as the world
increasingly shifts to the use of electricity
and low-carbon hydrogen in industry, as
does the share of oil, driven primarily by
the falling use of oil in road transport (seepages 42-43).
The role of electricity increases
substantially and broadly uniformly
across all three scenarios, with electricity
consumption increasing by around 75%
by 2050.

Overview18 |The future of global energy is dominated by four trends: decliningrole for hydrocarbons, rapid expansion in renewables, increasing
electrification, and growing use of low-carbon hydrogen
Fossil fuels

Renewables

Share of primary energy

Share of primary energy

80%

80%

60%

60%

40%

40%

20%

20%

0%
2019

2025

2030

2035

2040

2045

2050

0%
2019

2025

2030

2035

2040

Electricity

Low-carbon hydrogen

Share of total final consumption

Share of primary energy used in production of hydrogen

60%

25%
20%

40%

15%

2050

2045

2050

Accelerated
Net Zero
New Momentum

10%

20%
0%
2019

2045

5%
2025

2030

2035

2040

2045

2050

0%
2019

2025

2030

2035

2040

Key points
The changing composition of energy
demand over the outlook is characterized
by four trends: a gradual decline in the roleof hydrocarbons, rapid growth in renewableenergy, and an increasing electrificationof the world, supported by low-carbonhydrogen in processes and activities which
are hard to electrify.
The role of hydrocarbons diminishes as
the world transitions to lower carbon
energy sources. The share of fossil fuelsin primary energy declines from around
80% in 2019 to between 55-20% by
2050.
The total consumption of fossil fuelsdeclines in all three scenarios over theoutlook. This would be the first time inmodern history that there has been asustained fall in the demand for any fossil
fuel.

19 | bp Energy Outlook: 2023 edition

Renewable energy is largely made up
of wind and solar power and bioenergy,
and also includes geothermal power.
Renewables expand rapidly over theoutlook, offsetting the declining role offossil fuels. The share of renewables in
global primary energy increases fromaround 10% in 2019 to between 35-65%
by 2050, driven by the improved costcompetitiveness of renewables, together
with the increasing prevalence of policies
encouraging a shift to low-carbon energy.
In all three scenarios, the pace at which
renewable energy penetrates the global
energy system is quicker than any
previous fuel in history.
The growing importance of renewableenergy is underpinned by the continuing
electrification of the energy system. The
share of electricity in total final energy
consumption increases from around a
fifth in 2019 to between a third and a halfby 2050.

The decarbonization of the energy
system, especially in Accelerated and Net
Zero, is supported by the growing useof low-carbon hydrogen in hard-to-abate
processes which are difficult or costly
to electrify. The share of primary energy
used in the production of low-carbonhydrogen increases to between 13-21%
by 2050 in Accelerated and Net Zero.

20 |Changes since
Energy Outlook 2022

The Russia-Ukraine war is likely to have long-lasting effects on the global
energy system
The Russia-Ukraine war leads to a downward revision in the outlook for
global GDP and energy demand
Increased energy security concerns trigger a shift towards a more local,
lower-carbon energy mix
Energy security concerns reduce the role of oil and natural gas imports
The Russia-Ukraine war and the Inflation Reduction Act lower the outlook
for carbon emissions
Russian production of oil and natural gas revised down as a result of the war
EU’s need for LNG imports in 2030 depends on its success in reducing
natural gas demand
The Inflation Reduction Act provides significant support for low-carbon
energy and technologies in the US
21 | bp Energy Outlook: 2023 edition

Changes since Energy Outlook 2022

22 |The Russia-Ukraine war is likely to havelong-lasting effects on the global energy system
Heightenedenergy security

Weakereconomic growth

Changing mix
of global
energy supplies

Key points
The Russia-Ukraine war is likely to have apersistent effect on the future path of the
global energy system, increasing the focus
on energy security, weakening economic
growth, and changing the mix of energy
supplies.
The past year has been dominated by the
terrible consequences of the RussiaUkraine war and its awful toll on lives andcommunities. Our thoughts and hopes
are with all those affected.
From an energy perspective, this year’s
Outlook has modelled the impact of theRussia-Ukraine war as operating throughthree main channels: energy security,
economic growth, and compositionof global energy supplies. At the timeof writing, the war is continuing withno end in sight; as such this analysis
should be treated as preliminary andsubject to change depending on future
developments.

23 | bp Energy Outlook: 2023 edition

Energy security: the increased focus onenergy security triggered by concerns
about energy shortages and vulnerability
to geopolitical events is assumed tocause countries and regions to strive to
reduce their dependency on imported
energy and instead consume moredomestically produced energy. It also
gives greater incentive to improve energy
efficiency, reducing the need for all typesof energy.
Economic growth: the higher food andenergy prices associated with theRussia-Ukraine war have contributed to a
sharp slowing in global economic growth.
The direct economic impact of thiscommodity price shock is set to persist
for the next few years. Further out, thewar is assumed to reduce somewhat
the pace of global integration and trade,as countries and regions heighten theirfocus on domestic resilience and reduce
their exposures to international shocks.
This slower pace of globalization leads toa small reduction in average economic
growth over the next 30 years.

Composition of global energy supplies:
the future of Russian energy supplies is
uncertain. The scenarios in this year’s
Outlook assume a persistent reductionin Russian exports of hydrocarbons. In
the near term, this reflects the impact
of voluntary and mandatory sanctions
on Russian energy exports. Further
out, it stems from the assumption thatsanctions affecting Russia’s access toforeign investment and technologies
ease only gradually.
More details on the assumptions used tomodel the impact of the Russia-Ukraine
war can be found in the Annex (pages
116-117).

Changes since Energy Outlook 2022

24 |The Russia-Ukraine war leads to a downward revisionin the outlook for global GDP and energy demand
Impact of Russia-Ukraine war on global GDP

Change in total final consumption in Accelerated

Change relative to EO22

Change relative to EO22

0%

0%

-2%

-2%

-4%

-4%

-6%

World

Due toeﬃciency gains
Due tolower GDP

-6%

Developed
Emerging-8%2025
EO22 = Energy Outlook 2022

2035

2050

-8%

2035

2050

Key points
The prospects for global GDP and energy
demand are weaker than in last year’s
Outlook, reflecting the short- and longerterm impacts of the Russia-Ukraine war.
The level of global GDP underlying all
three scenarios in this Outlook is around
3% lower in 2025 and 2035 than Energy
Outlook 2022 and around 6% lower in
2050.
The weaker profile for economic activity
over the near term is mostly driven by
the commodity price shock associatedwith the Russia-Ukraine war. The direct
impact of the commodity price shock
largely fades by 2030, although the war
is assumed to have a more persistentscarring effect on the Russian andUkrainian economies.

25 | bp Energy Outlook: 2023 edition

Beyond 2030, the lower level of GDP
reflects the growing impact of theslower average (or trend) economic
growth associated with the lower
assumed paths of international tradeand interconnectedness. Global GDP
growth averages around 2.4% p.a. (on aPurchasing Power Parity basis) over theoutlook, compared with 2.6% in Energy
Outlook 2022.

As in recent Energy Outlooks, theassumed trajectory for global GDP
includes an estimate of the impact ofclimate change on economic growth.
This includes the impact of bothincreasing temperatures on economic
activity and the upfront costs of actions
to reduce carbon emissions. More detailsof the approach and its limitations can befound in the Annex (see pages 118-119).

The impact of this reduction in trend
economic growth is greatest in thoseregions that benefit the most frominternational trade and productivity
transfers. In 2050, GDP in China is 7%
lower than in last year’s Outlook and is
12% lower in Africa, but is only 1% lower
in the US.

The level of total final energy
consumption is also weaker than in theprevious Outlook, down by around 3.5%
in 2035 across all the scenarios and by
between 5.5%-6% in 2050.
In 2035, slightly over half of thedownward revision in energy
consumption in Accelerated reflects theweaker profile for GDP. The remainder
is driven by greater gains in energy
efficiency reflecting both the heightened
focus on energy security and the impactof higher energy prices. By 2050, thelower level of GDP accounts for aroundthree-quarters of the revision to energy
consumption.

Changes since Energy Outlook 2022

26 |Increased energy security concerns trigger a shift towards
a more local, lower-carbon energy mix
Change in primary energy in New Momentum

Change in carbon intensity in New Momentum

Change in 2035 relative to EO22

Change relative to EO22

6%

0%

4%
-0.5%
2%
-1%

0%
-2%

-1.5%

-4%
-2%
-6%
-8%
Total

Oil

Natural gas

Coal

Nuclear Renewables Hydro

-2.5%

2025
2030
2035
2040
2045
Based on total ﬁnal consumption. Impact of IRA not included.

2050

Key points
The increased importance placed onenergy security as a result of the RussiaUkraine war leads over time to a shift awayfrom imported fossil fuels towards locally
produced non-fossil fuels, accelerating theenergy transition.
Since oil and natural gas are the twomost heavily traded fuels internationally,
they are most impacted by the increased
focus on energy security (see pages
22-23). In New Momentum, the 2%
lower level of primary energy demand in2035 relative to Energy Outlook 2022 islargely accounted for by a 5% downward
revision to oil demand and 6% lower
natural gas demand. These effects aremost concentrated in emerging Asia andthe EU, both of which currently havesignificant reliance on oil and natural gas
imports.

27 | bp Energy Outlook: 2023 edition

Coal consumption is also lower thanin last year’s Energy Outlook, but the
downward revision is smaller than foroil and natural gas. This reflects thecontinuing heavy use of domestic coalresources in many parts of Asia.
In contrast to the downward pressureon oil and natural gas imports, anddespite the lower level of overall energy
demand, the consumption of energythat is produced locally is boosted as aresult of the heightened energy security
concerns. This particularly increases theuse of non-fossil fuels as they tend to be
produced and consumed locally. The useof renewables and nuclear energy in New
Momentum in 2035 are higher than inlast year’s Outlook, while hydropower islargely unchanged.

This shift towards locally produced nonfossil fuels at the expense of importedhydrocarbons helps to accelerate theenergy transition (see pages 28-29).
The carbon-intensity of the fuel mix in
New Momentum by 2035 in this year’s
Outlook is around one percentage point
lower than in Outlook 2022, and around
two percentage points lower by 2050.

Changes since Energy Outlook 2022

28 |Energy security concerns reduce
the role of oil and natural gas imports
Oil & gas imports as a share of primary energy in New Momentum
EU
China

India

Share

Share

Share

55%

35%

35%

50%

30%

30%

45%

25%

25%

40%

20%

20%

35%

15%

15%

30%

10%

10%

25%

5%

5%

20%
2000

2010

2020

2030

2040

2050

0%
2000

2010

2020

2030

2040

2050

Energy Outlook 2022
Energy Outlook 2023

0%
2000

2010

2020

2030

2040

2050

Key points
The increased preference for locally
produced energy stemming fromheightened energy security concerns
reduces imports of oil and natural gas.
The impact of increased energy security
concerns on energy trade is mostpronounced on oil and natural gas, which
are the two most heavily traded fuels.
This impact is especially marked in China
and India, who currently import between
75%-85% of the oil they use andbetween 40-55% of their natural gas.

29 | bp Energy Outlook: 2023 edition

The effect of heightened energy security
concerns is also particularly evident in
the EU given its previous dependence onnatural gas imports from Russia, and its
heavy dependence on oil and gas imports
more generally. Together, the EU, China
and India accounted for around 45% of
global oil imports and around 50% of
natural gas imports in 2021.
In all three regions, heightened energy
security concerns lead to a permanently
lower share of imported oil and gas inprimary energy. In 2035, their combined
imports of oil and natural gas are over
10% lower in New Momentum thanin Outlook 2022. Similar effects areapparent in Accelerated and Net Zero.

The limited scope to increase domestic
production of oil and natural gas in thesecountries and regions means that the
reduced share of imported oil and gas
in primary energy is offset by greater
consumption of domestically produced
renewables.

Changes since Energy Outlook 2022

30 |The Russia-Ukraine war and the Inflation Reduction Act
lower the outlook for carbon emissions
Change in carbon emissions:
EO23 versus EO22

Carbon emissions:
EO23 versus EO22 in New Momentum

Mt of CO2

Gt of CO2e

0

45

-500

Net Zero40

Net Zero-1000

Net Zero35

New-1500 Momentum

30
-2000

-2500

Lower
carbonintensity
Lower GDP

New
Momentum

-3000

2030
2040
CO 2 emissions form combusted fuels only
EO23 = Energy Outlook 2023

25
New
Momentum

2050

Energy Outlook 2022
Energy Outlook 2023
20
2000

2010

2020

2030

2040

2050

Key points
The impact of the Russia-Ukraine war,
together with the policy support provided
by the Inflation Reduction Act, reducescarbon emissions over the outlook.
Carbon emissions in this year’s New
Momentum are around 1.3 GtCO2 (3.7%)
lower in 2030 than in Energy Outlook
2022. This downward revision increases
to around 2.0 GtCO2 (6.4%) in 2040 and
2.6 GtCO2 (9.3%) in 2050.
The lower level of carbon emissions in
New Momentum is largely driven by
the weaker GDP profile caused in thenear term by the impact of the war oncommodity prices, and further out by the
reduction in the pace of growth of global
integration and trade. The impact of
weaker economic activity increases over
the outlook as the effect of the slower
trend rate of growth compounds overtime.

31 | bp Energy Outlook: 2023 edition

The lower profile for carbon emissions
in New Momentum also reflects more
rapid reductions in the carbon intensity of
GDP – the amount of carbon emitted perunit of GDP produced – largely reflecting
the shift towards locally produced nonfossil fuels prompted by heightenedenergy security concerns. The support
for low-carbon energy sources andtechnologies in the US provided by the
IRA also contributes to this faster decline
in the carbon intensity of GDP (see pages
26-27).
The downward revision to carbon
emissions in New Momentum from 2035
onwards averages around 2.2 GtCO2e
per year – roughly the amount by which
global carbon emissions fell in 2020 as aresult of COVID lockdowns.

The downward revision of carbon
emissions in Net Zero is less than in
New Momentum, averaging around 0.8
GtCO2 per annum over the outlook. This
smaller impact reflects the greater levelof decarbonization in Net Zero, whichmeans that the reduced level of energy
demand stemming from the weaker GDP
profile leads to a smaller saving in carbon
emissions than in New Momentum.
The reduction in carbon intensity in
Net Zero by 2050 compared to that in
Outlook 2022 is also less than in New
Momentum, reflecting the smaller impact
of energy security concerns in Net Zeroas the energy system decarbonizes andbecomes increasingly dominated by nonfossil fuels – the majority of which areproduced locally.

Changes since Energy Outlook 2022

32 |Russian production of oil and natural gas
revised down as a result of the war
Change in Russian oil production:
EO23 versus EO22 in New Momentum

Changes in natural gas by type of supply and in LNG
trade in 2030: EO23 versus EO22 in New Momentum

Mb/d

Bcm

0

100

Pipeline
trade
Domestic
production
LNG trade

50
-0.5

0

LNG exports(excl. Russia)
RussiaLNG exports
Net change

-50
-1
-100
-150

-1.5

-200
-2

2022

2030

2035

2040

2045

2050

-250

Gas Demand

LNG Trade

Key points
Prior to the Russia-Ukraine war, Russia
was the world’s largest energy exporter.
The impact of the war reduces Russia’s
production of both oil and natural gas.
Oil: The prospects for Russian oil
production in the near-term are affectedmost significantly by the formal andinformal sanctions on imports of Russianoil. Further out, the outlook is mostheavily influenced by the impact ofsanctions on Russia’s access to western
technology and investment.
In New Momentum, Russian oil
production over much of the outlook isaround 1.3 Mb/d (13%) lower than in
Outlook 2022. This reflects a combinationof faster decline rates of existing
operating assets and a curtailing of newprospective developments. There aresimilar-sized downward revisions in
Accelerated and Net Zero. As a result,
Russian oil production declines fromaround 12 Mb/d in 2019 to between 7
and 9 Mb/d in 2035 across the three
scenarios.
33 | bp Energy Outlook: 2023 edition

Natural gas: The combination of weaker
GDP and a reduced preference forimported gas due to energy security
concerns means that natural gas demandin the three scenarios in 2030 is between
130-250 Bcm (3.5-5%) lower in thisyear’s Energy Outlook than in Outlook
2022.
Most of this downward revision in gas
demand is matched by reduced pipelinegas trade, driven by the almost totalelimination of Russian pipeline exports tothe EU. Production of gas for domestic
use is also slightly lower. Outside of
Russia, this fall takes place principallyin the US as the shift to the use ofalternative lower carbon energies there
accelerates.

The level of global LNG trade in 2030
in the three scenarios is similar tothat in last year’s Outlook. However,
the geographical pattern of that trade
is different. Restrictions limiting
Russia’s access to external finance andtechnology mean that the significant
expansion in Russia’s LNG exports
envisaged in Energy Outlook 2022 largely
fails to materialize. Offsetting that, thelevel of non-Russian LNG exports in
2030 in this year’s Outlook has beenrevised up by around 25-40 Bcm in New
Momentum and Accelerated, with the US
accounting for more than half of thoseadditional exports.

Changes since Energy Outlook 2022

34 |EU’s need for LNG imports in 2030 depends
on its success in reducing natural gas demand
EU natural gas demand and sources of supply: EO23 compared with EO22
Bcm
500
Accelerated

Net Zero

New Momentum

400

Domestic
production
Other net
pipeline imports
Russianpipeline imports
LNG imports

300

200

100

0

2019

EO22

EO23

EO22

EO23

EO22

EO23

Key points
The EU is at the epicentre of the disruptions
to global natural gas markets following the
reductions in Russian pipeline gas exports.
The extent to which the loss of Russian
pipeline exports requires the EU to source
alternative supplies of gas depends on how
successful it is in reducing its demand fornatural gas as it decarbonizes its energy
system.
The EU’s desire to reduce its dependency
on imported gas given the increased
energy security concerns, combinedwith the weaker GDP profile, means EU
natural gas demand in the three scenarios
in 2030 is around 50-60 Bcm lower inthis year’s Outlook relative to Energy
Outlook 2022.

35 | bp Energy Outlook: 2023 edition

In last year’s New Momentum, EU gas
demand in 2030 was only modestly
lower than its level in 2019. EU gas
demand is lower in this year’s Outlook.
However, the larger fall in Russian
exports of pipeline gas means EU’s LNG
imports in 2030 in New Momentum
are around 70 Bcm higher than in 2019.
The remaining shortfall of natural gas
left by the loss of Russian pipeline gas ismet by increased pipeline imports froma combination of Norway, Algeria, andAzerbaijan.
A similar change in gas demand is seen in
Accelerated. Although EU consumption ofnatural gas in 2030 is around 30% lower
than 2019 levels, a significant increase in
LNG imports (40 Bcm) in 2030 relative
to 2019 levels is nonetheless needed tomeet demand, in the absence of Russian
pipeline gas.

In contrast, in Net Zero, a combinationof faster gains in energy efficiency,
rapid growth of wind and solar power
and increasing electrification of final
energy consumption means EU natural
gas demand in 2030 is around 50%(190 Bcm) below 2019 levels. This
reduction in demand is greater than theloss of Russian pipeline gas imports,
implying that the level of LNG imports
needed to meet the EU’s domestic gas
consumption in 2030 is lower than in2019.

Changes since Energy Outlook 2022

36 |The Inflation Reduction Act provides significant support
for low-carbon energy and technologies in the US
US Carbon emissions
Gt of CO2e
7
6
5
4
3
2
Accelerated
Net Zero
New Momentum

1
0
-1
2000

2010

2020

2030

2040

2050

Key points
The US Inflation Reduction Act (IRA),
which was signed into law in August 2022,
includes a significant package of largely
supply-side measures supporting lowcarbon energy sources and decarbonization
technologies in the US.
The modelling of the IRA in this Outlook
focuses on its potential impact on the
US energy system. The possible impacts
on other countries and regions are notconsidered, although in practice the IRA
has the potential to have positive spillover
effects by helping to reduce global
technology costs, expand internationallytradable supplies of some forms of lowcarbon energy, and increase the pressureon other countries and regions to offer
similar types of incentives.
The impact of the IRA depends
importantly on the implementation of the
incentives by the US authorities, as wellas on regulatory reform at a state andfederal level. It also hinges on the speedwith which the private sector can obtainthe various planning and permitting
approvals needed to build out low carbon
energy sources and technologies. The
scenarios in this Outlook assume
37 | bp Energy Outlook: 2023 edition

that there are no material changes inplanning and permitting processes otherthan those directly affected by IRA
provisions.
The impact of the IRA on the outlook for
the US energy system is concentrated
in the New Momentum scenario. US
carbon emissions fall by around 22%
by 2030 in New Momentum relative to2019 levels, and by around 60% by 2050.
The scale of the policy support alreadyembodied in Accelerated and Net Zeromeans the incremental impact of the IRA
provisions on these scenarios is relatively
limited.
Some of the main impacts of the IRA on
New Momentum include:
Wind and solar power: a substantial
acceleration in solar and wind
deployment, with capacity increasing
more than four-fold by 2030 from 2019
levels. By 2050 solar and wind capacity
is more than ten times higher than in
2019, with around 20% of installedcapacity used to support green hydrogenproduction. This increase is underpinned
by a corresponding acceleration inother enabling factors, particularly the
expansion of the transmission grid.

Hydrogen: significant support for lowcarbon hydrogen supply, increasing its
use to 4 mtpa in 2030 and to 26 mtpa
in 2050. The hydrogen incentives areespecially supportive of green hydrogen,which accounts for around 60% of US
low-carbon hydrogen in 2050, comparedwith around 25% in Energy Outlook 2022.
Electric vehicles: the provisions in the IRA
that support electric vehicle ownership,combined with new vehicle manufacturer
and state-level commitments, increase
the size of the US electric vehicle parc byaround 15% by the mid-2030s.
Biofuels: the additional credits includedin the IRA facilitate faster penetrationof bioderived sustainable aviation fuel(SAF), such that it reaches around 1300
PJ in New Momentum in 2050, morethan double the level projected in Energy
Outlook 2022.
Carbon capture, use and storage (CCUS):
the increased incentives for CCUS in
the IRA support its greater use in the
power sector, as well as in industry andto produce blue hydrogen. With the IRA
and other incentives, CCUS deployment
in the US reaches over 100 mtpa by 2035and close to 400 mtpa by 2050.

38 |

Oil

Oil demand falls over the outlook as use in roadtransportation declines
The role of oil in transport declines as the world
switches to lower-carbon alternatives
The changing mix of global oil supplies is dominatedby trends in US tight oil and OPEC production

39 | bp Energy Outlook: 2023 edition

Oil

40 |

Oil demand falls over the outlook
as use in road transportation declines
Oil demand

Change in oil demand in road transport
versus 2019 in Accelerated

Mb/d

Mb/d

120

30

Total distancetravelled
Fuel economy

20

100

Alternative
fuels
Total

10
80

0

60

-10
-20

40

20

2019
Accelerated
Net Zero
New Momentum

0
2019

2025

2030

-30
-40

2035

2040

2045

2050

-50

2030

2040

2050

Key points
Global oil demand plateaus over the next 10
years or so before declining over the rest of
the outlook, driven in part by the falling useof oil in road transport as vehicles become
more efficient and are increasingly fuelledby alternative energy sources.
Oil continues to play a major role in the
global energy system over the first half ofthe outlook in Accelerated and Net Zero,with the world consuming between 7080 Mb/d in 2035. The decline accelerates
in the second half of the outlook, withoil demand reaching around 40 Mb/d inAccelerated and 20 Mb/d in Net Zero in
2050.
Oil consumption in New Momentum isstronger, remaining close to 100 Mb/dthrough much of this decade, after which
it declines gradually to around 75 Mb/d by
2050.

41 | bp Energy Outlook: 2023 edition

Oil demand in emerging economies isbroadly flat or gently rising over muchof the first half of the outlook acrossthe three scenarios, but this is offset
by the accelerating declines in oil use in
the developed world. These contrasting
trends are reflected in a gradual shift in
the centre of gravity of global oil markets,with emerging economies’ share of
global oil demand increasing from 55% in
2021 to around 70% in 2050 in all three
scenarios.
The single biggest factor driving thedecline in oil consumption is the fallinguse of oil within road transport. Risingprosperity and living standards inemerging economies support an increasein both the size of the global vehicle parcand in distances driven, boosting thedemand for oil. But this is increasingly
offset by a combination of the roadvehicle fleet becoming more efficientand the growing switch away from oil toalternative energy sources.

Lower demand for oil in road transport
accounts for more than half of the
reduction in total oil demand in
Accelerated throughout the outlook. In
2030, this largely reflects the impact of
the increasing efficiency of the global
vehicle fleet, which is more than twicethat of the switch to alternative energy
sources. By 2040 these two effects arebroadly equal, and by 2050 the switch
to alternative energy sources, led by
the increasing electrification of vehicles,
accounts for more than twice the impact
on oil demand than the effects of greater
efficiency.

Oil

42 |

The role of oil in transport declines as theworld switches to lower-carbon alternatives
Global vehicle parc in Accelerated:
Light vehicles
Heavy vehicles

Total energy usage by fuel in Accelerated:
Aviation
MarineBillion vehicles

Million vehicles

EJ

EJ

3.0

160

18

14

Gas and LPG
Hydrogen140

2.5

BatteryelectricPlug-inhybridConventional
ICE

120
2.0

100

1.5

12

Hydrogen derived fuels
Biofuels10

Oil products

14
12
10

8

8

6

80
60

1.0

6

40
0.5

0.0

16

Gas

20

2030

2040

2050

0

4

4
2

2

2030

2040

2050

0

2030

2040

2050

0

2030

2040

2050

Gas includes biomethane

Key points
The role of oil falls across all modes oftransport, reflecting a shift to alternative,
low-carbon energy sources. That shift
is dominated by electrification in roadtransport and by bio- and hydrogen-derived
fuels in aviation and marine.
In road transportation, the number ofelectric (including plug-in hybrid) cars
and light-duty trucks increases fromaround 20 million in 2021 to between
550-700 million (30-35% of that vehicleparc) by 2035 in Accelerated and Net
Zero, and to around 2 billion suchvehicles (around 80%) by 2050. Electricpassenger cars account for the majorityof new car sales by the mid-2030s in
Accelerated and Net Zero, supported by
a combination of tighter regulation ofvehicle emissions, improving cost andchoice competitiveness of electric cars,
and growing preference and acceptability
among consumers.
Although the electrification of cars andlight duty trucks is less rapid in New
Momentum, there are still around 500
million such vehicles by 2035 and 1.4
43 | bp Energy Outlook: 2023 edition

billion by 2050, with electric passenger
cars accounting for around 40% of new
car sales in 2035 and 70% in 2050.
There is also a switch away from thereliance on diesel in medium- and heavyduty trucks and buses, with the shareof diesel-based trucks in the global parcdeclining from around 90% in 2021 to
between 70-75% in 2035 in Net Zeroand Accelerated and 5-20% in 2050.
The main switch is to electrification,
but hydrogen-fuelled trucks also play a
growing role, especially for heavy-duty,
long-distance use cases. The choice
between electrification and hydrogenvaries across different countries andregions depending on policies affecting
the relative price of electricity and lowcarbon hydrogen, as well as on regulatory
policies and the development of charging
and refuelling infrastructures.
Electrification of road vehicles is initiallydominated by China, Europe and North
America, which together account foraround 60-75% of the growth of electricroad vehicles* to 2035 in the three
scenarios and 50-60% of the growth
to 2050.

Oil continues to dominate the aviation
sector over the first half of the outlook,but its share declines to around 60%of energy used in aviation by 2050 inAccelerated and 25% in Net Zero, offset
by the increasing use of sustainableaviation fuel (SAF). In Accelerated, themajority of the SAF is derived frombioenergy (biojet). Biojet also provides
most of the SAF in Net Zero, althoughby 2050 there is also a greater role forhydrogen-derived fuels (synthetic jet fuel– see pages 70-71).
The main alternative to oil-based products
in marine use is provided by hydrogenbased fuels (ammonia, methanol andsynthetic diesel). The penetration ofthese fuels is concentrated in the second
half of the outlook in Accelerated and Net
Zero, where they account for between
30% and 55% of total energy used inmarine by 2050. In contrast, oil continues
to account for more than three-quartersof marine energy demand in 2050 in New
Momentum.
*Excluding e-bicycles

Oil

44 |

The changing mix of global oil supplies is dominatedby trends in US tight oil and OPEC production
Change in oil supply

OPEC market share of global oil supply

Average annual change, Mb/d

Share of total

1
Accelerated

Net ZeroNew
Momentum80%
Accelerated
Net Zero
New Momentum

70%

0

60%
-1
50%
-2

US tight oil
OPEC
Non-OPEC(excl. Russia)
Russia

-3

-4

Total
2019-30

2030-50

2019-30

2030-50

2019-30

2030-50

40%

30%

20%
2000

2010

2020

2030

2040

2050

Key points
The composition of global oil supplies shifts
over time, as US tight oil grows over the
rest of this decade after which it declines
as the most productive locations are
exhausted and OPEC competes to increase
its market share. There is a sustained
decline in Russian production.
US tight oil – including natural gas liquids(NGLs) – grows over the first 10 years or
so of the outlook, peaking at between 1116 Mb/d around the turn of this decade in
all three scenarios. Brazilian and Guyana
output also increases over the next 10
years or so, reaching around 5 Mb/d and2 Mb/d respectively by the mid 2030s.

US production falls through the 2030s
and 40s, as US tight formations mature,
and OPEC adopts a more competitive
strategy against a backdrop of
accelerating declines in oil demand. US
tight oil drops to around 2 Mb/d or less inAccelerated and Net Zero by 2050, andto around 6 Mb/d in New Momentum,
where the pressures from falling levels of
overall demand are less acute.
Russian output declines over the entire
outlook, falling from around 11.5 Mb/d in2019 to between 5.5-6.5 Mb/d in 2035
in Accelerated and Net Zero and to 2.5
Mb/d or less by 2050. The reductions in
New Momentum are less pronounced,
with Russian production falling to around
8.5 Mb/d and 7 Mb/d in 2035 and 2050
respectively.

OPEC’s production strategy reacts tothe changing competitive landscape.
OPEC lowers its output over the first
decade of the outlook in response to
the growth in US and other non-OPEC
supplies, accepting a lower market shareto mitigate the downward pressure on
prices. The fall in OPEC’s market shareis most pronounced in Accelerated and
Net Zero given the backdrop of falling oil
demand from the mid-2020s.
As the decline in oil demand gathers
pace through the second half of theoutlook and the competitiveness of US
output wanes, OPEC competes more
actively, raising its market share. OPEC’s
share of global oil production increases
to between 45-65% by 2050 in all three
scenarios.
The higher cost structure of non-OPEC
production means between 75-85% of
the fall in oil production in Accelerated
and Net Zero by 2050, and virtually all the
reduction in New Momentum, is borne by
non-OPEC suppliers.

45 | bp Energy Outlook: 2023 edition

46 |Natural gas

Prospects for natural gas depend on the speedof the energy transition
LNG trade increases in the near term, with theoutlook becoming more uncertain post 2030
LNG exports are dominated by the US andthe Middle East47 | bp Energy Outlook: 2023 editionNatural gas

48 |Prospects for natural gas dependon the speed of the energy transition
Natural gas demand

Change in natural gas demand by sector

Bcm

Change, Bcm

5000

1000
500

4000

Accelerated

Net
Zero

New
Momentum
Accelerated

Net
Zero

New
Momentum

Industry
Buildings
Total

-500
-1000

2000

-1500

Accelerated
Net Zero
New Momentum

1000

0
2000

Power
Hydrogen

0
3000

Other

2010

2020

2030

2040

-2000

2050

-2500

2019 - 2030

2030 - 2050

Key points
The prospects for natural gas dependon the outcome of two significant but
opposing trends: increasing demand in
emerging economies as they grow andindustrialize, offset by a shift away fromnatural gas to lower-carbon energy led
by the developed world. The net impactof these opposing trends on global gas
demand depends on the pace of the energy
transition.
Global demand for natural gas rises
over the rest of this decade in New
Momentum and Accelerated driven bystrong growth in China – underpinned bycontinued coal-to-gas switching – andalso by India and other emerging Asia as
they industrialize further.

49 | bp Energy Outlook: 2023 edition

In contrast, natural gas consumption
in Net Zero peaks in the mid-2020s
before then starting to decline. The
use of gas within the emerging world
grows out to 2030. But this growth isoutweighed by falling consumption in thedeveloped world, given the shift towards
electrification and lower carbon energy.
From the early 2030s onwards, natural
gas demand declines in Accelerated
and Net Zero as the sustained decline
in its use in the developed world iscompounded by falling demand in China
and the Middle East, driven by the same
patterns of increasing electrification
and rapid growth in renewable energy.
The decline is only partially offset by thegrowing use of natural gas to produce
blue hydrogen (see pages 72-73). By
2050, natural gas demand is around 40%
lower than 2019 levels in Accelerated and
55% lower in Net Zero.

In contrast, global natural gas demand in
New Momentum continues to grow formuch of the period out to 2050, driven
by growing use in emerging Asia andAfrica. Much of this growth is in the
power sector as the share of natural gas
consumption in power generation inthese regions grows and overall power
generation increases robustly. Global
natural gas demand in New Momentum
in 2050 is around 20% above 2019 levels.
The range of the difference in global
gas demand in 2050 across the three
scenarios relative to current levels
is greater than for either oil or coal,highlighting the sensitivity of natural gas
to the speed of the energy transition.

Natural gas

50 |LNG trade increases in the near term,with the outlook becoming more uncertain post 2030
LNG trade

LNG imports by region

Bcm

Bcm

1200

1200

1000

1000

800

800

600

600

New
MomentumOtheremerging
Other
emerging
Asia
India

New
Momentum

Accelerated

Developed
Asia
EuropeNet Zero

China
Accelerated

400

400
Accelerated
Net Zero
New Momentum

200

0
2000

2010

2020

2030

2040

2050

Net Zero

200

0

2019

2030

2050

Key points
LNG trade increases robustly in the nearterm but the range of uncertainty widens
post 2030, with continuing demand for
LNG in emerging markets as they grow andindustrialize, offset by falling import demandin developed markets as they transition tolower carbon energy sources.
LNG trade grows strongly over the first
10 years of the outlook, increasing byaround 60% in New Momentum andAccelerated and by a third in Net Zero.
Much of this growth is driven byincreasing gas demand in emerging Asia
(China, India, and other emerging Asia)
as these countries switch away fromcoal and, outside of China, continue toindustrialize. LNG imports are the main
source for this growing use of natural gas,accounting for 65-75% of the increase ingas consumed in emerging Asia out to2030 across the three scenarios.

51 | bp Energy Outlook: 2023 edition

European LNG imports also increasematerially out to 2030 in New
Momentum and Accelerated, reflecting
the fall in Russian pipeline imports andpersistent natural gas demand (see pages
34-35).
The range of uncertainty in LNG trade
increases materially post 2030. Importsof LNG increase by around 30% between
2030 and 2050 in New Momentum,
whereas they fall by around 40% over thesame period in Accelerated and Net Zero.
The growth in LNG demand post-2030 in
New Momentum is driven by increasing
demand from India and other emerging
markets, reflecting the increasing use ofnatural gas in the power and industrial
sectors (see pages 48-49). This growthin the emerging world more than offsets
declining LNG imports in Europe anddeveloped Asian markets.

LNG demand in emerging economies
also grows for much of the period post2030 in Accelerated and Net Zero, but thisis more than offset by sharp falls in LNG
imports in developed Asian and European
markets and in China, as these regions
switch away from natural gas to lower
carbon energy sources.
The size of the LNG market in 2050 isroughly double its 2019 level in New
Momentum, broadly unchanged inAccelerated, and is around 30% lower in
Net Zero.

Natural gas

52 |LNG exports are dominated by the US and the Middle East
LNG exports by region

Russia LNG exports in 2050

Bcm

Bcm

1200

Other
New
Momentum

1000

800

Australia
RussiaNew
Momentum

Accelerated

AfricaMiddle
East
US

Net
Zero

600

Accelerated

Net Zero

New Momentum

160
140
120
100
80

Accelerated
Net
Zero

400

180

60
40

200
20
0

2019

2030

2050

0

2019

EO22

EO23

EO22

EO23

EO22

EO23

Key points
The US and Middle East establish
themselves as the main global supply hubs
for LNG exports, with the prospects for
Russian LNG exports scarred by the effectsof the Russia-Ukraine war.
The growth in global LNG demand out to2030 is met by a substantial expansion ofexports from the US and Qatar. Growthin US LNG exports account for morethan half of the increase in global LNG
supplies out to 2030 in New Momentum
and Accelerated and around two-thirdsof overall growth in Net Zero. Growing
exports from the Middle East accountfor much of the remainder. By 2030, theUS and the Middle East together accountfor around half of global LNG supplies,
compared with around a third in 2019.

53 | bp Energy Outlook: 2023 edition

The fall in LNG exports in the second
half of the outlook in Accelerated and Net
Zero is borne disproportionately by the
US. US LNG exports fall by more thana half between 2030 and 2050 in these
two scenarios, reflecting the increasing
competition and the higher transport
costs for US supplies to the remaining
demand centres in Asia relative to thecost of LNG from the Middle East andAfrica.
Australian LNG exports decline post2030 in all three scenarios reflecting
increasing costs and constraints on
upstream natural gas production inAustralia.
Russian LNG exports out to 2030 are
constrained by continuing restrictions on
Russia’s access to western technology
and funding. As such, Russian exports
over the first decade of the outlook arebroadly flat, with only those projects
close to completion before the start of
the war assumed to start up.

The constraints on Russia’s access totechnology and funding are assumed
to ease gradually post-2030, allowing
Russian LNG exports to more thandouble by 2050 in New Momentum. In
contrast, the falls in global LNG demandin the 2030s and 40s in Accelerated
and Net Zero means that Russian LNG
exports do not have a chance to recovereven as sanctions are eased. Russian
LNG exports are between 10-60 Bcm
lower in 2035 and 15-50 Bcm lower in
2050 across the three scenarios than inlast year’s Energy Outlook (see pages 3233).

54 |RenewableenergyWind and solar power expands rapidly, requiring significant
acceleration in financing and building new capacity
Modern bioenergy expands rapidly, helping to decarbonize
hard-to-abate sectors and processes

55 | bp Energy Outlook: 2023 edition

Renewable energy

56 |Wind and solar power expands rapidly, requiring significant
acceleration in financing and building new capacity
Installed wind and solar capacity

Range of wind and solar capacity build rates
in the three scenarios 2022-2035

GW

GW per year

25000

20000

250

Accelerated
Net Zero
New Momentum

200

15000

150

10000

100

5000

50

0
2000

2010

2020

Maximum historicalbuild rate

2030

2040

2050

0

US

EU

China

India

Rest ofWorld

Key points
Wind and solar power expands rapidly,
driven by increasing cost competitivenessand policies supporting a shift to lowcarbon electricity and green hydrogen.
Wind and solar installed capacity
increases by around 15 fold over theoutlook in Accelerated and Net Zero and 9
fold in New Momentum.
Most of this capacity provides electricity
for final consumption, although around aquarter to a third of the capacity by 2050
in Accelerated and Net Zero is used to
produce green hydrogen.
The rapid expansion in wind and solar
power is largely underpinned by falls
in their costs – which resume after
recent short-term inflation pressures,
especially over the first 10-15 years of
the outlook. Solar and wind technology
and production costs fall with growing
deployment, supported by increases
in module efficiency, load factors andproject scales for solar, and by higher loadfactors of increasingly large turbines andlower operating costs for wind.
57 | bp Energy Outlook: 2023 edition

The pace of cost reductions slows
and eventually plateaus in the final
two decades of the outlook as falling
generation costs are offset by thegrowing expense of balancing powersystems with increasing shares ofvariable energy sources. The outlook forcosts assumes that the availability of thecritical metals used in the manufacturingof photovoltaic modules and windturbines increases sufficiently to avoid asustained increase in prices (see pages
84-85). More generally, the scenarios
are underpinned by an assumption that
supply chains develop and expand so
as to avoid excessive dependence on
individual countries or regions for key
materials, and the challenges around the
security of supply of critical materials thatmight imply.
The expansion in installed capacity by
2035 requires a significant accelerationof the pace at which new capacity isfinanced and built. The average rateof increase in installed capacity inAccelerated and Net Zero out to 2035 is450-600 GW per year – around 1.9 to
2.5 times faster than the highest rate ofincrease seen in the past.
In addition to a significant increase ininvestment (see pages 82-83), this
rapid acceleration in the deploymentof wind and solar capacity depends ona number of enabling factors scaling
at a corresponding pace, including
the expansion of transmission anddistribution capacity, developmentof market frameworks to manageintermittency, the speed of planning andpermitting, and the availability of route-tomarket mechanisms.
The growth in installed wind and solar
capacity out to 2035 is dominated by
China and the developed world, eachof which accounts for 30-40% of theoverall increase in capacity in all three
scenarios. This pattern of growthswitches significantly in the second halfof the outlook, with emerging economies
excluding China accounting for around75-90% of the growth in the 2040s in
Accelerated and Net Zero.

Renewable energy

58 |Modern bioenergy expands rapidly,
helping to decarbonize hard-to-abate sectors and processes
Bioenergy supply by type inAccelerated (2019-2050)

Bioenergy demand by sector in Accelerated (2019-2050)

EJ

EJ

100

100

Buildings
Industry
Transport

80

80

60

60

40

40

Heat andpower
Hydrogen

Biomethane
Biofuels

20

20

Modern solid
Traditional

0

0
2019

Modernsolid

Biofuels Biomethane Traditional

2050

2019

HydrogenHeat and power

Transport

Industry

Buildings

2050

Key points
The use of modern bioenergy – modern
solid biomass (such as wood pellets),
biofuels and biomethane – increases
significantly, helping to decarbonize hard-toabate sectors and processes, and displacing
the use of traditional biomass – such aswaste wood and agricultural residues – forcooking and heating.
There is a substantial shift from traditional
to modern bioenergy in Accelerated and
Net Zero, with modern bioenergy morethan doubling to reach around 65 EJ by
2050, more than offsetting the phasingout of traditional biomass. Growth ofmodern bioenergy in New Momentum
is slightly less pronounced, reachingclose to 50 EJ by 2050. The expansion
in modern bioenergy is achieved without
any change in land use, with the vast
majority sourced regionally throughresidues (from agriculture and forestry)
and wastes which are accessible without
detrimental effect to their ecosystems.
The largest growth in demand formodern bioenergy is in solid biomass.
Biomass is used mainly in the power
sector, with its use in this sector almost
59 | bp Energy Outlook: 2023 edition

tripling over the outlook in Accelerated.
Much of the remainder is used to help
decarbonize hard-to-abate industrial
processes, especially in cement andsteel manufacturing. In Accelerated, 5 EJof biomass is used in conjunction withcarbon capture and storage (BECCS) by
2050, predominantly in the power andindustrial sectors. This use of BECCS
in the power sector is concentrated in
the developed world. Within emerging
economies, biomass in the power sector
is used in new biomass cogeneration
plants and in co-firing plants with coal.
The use of BECCS globally in Net Zero is
greatest reaching 13 EJ in 2050, aroundhalf of which is deployed in the power
sector, with much of the remainder used
to produce hydrogen.
The production of biofuels roughly triples
in Accelerated and Net Zero by 2050 toaround 10 EJ, with most of these fuels
being used in the aviation sector. By
2050, bio-derived sustainable aviationfuel (biojet) accounts for 30% of total
aviation demand in Accelerated and 45%
in Net Zero, with 50-60% of the growthin biojet in the US and Europe, supported
by increasing incentives and mandates.

Biomethane grows significantly in all
scenarios, from less than 0.2 EJ in 2019
to between 6-7 EJ in Accelerated and
Net Zero by 2050 and 4.3 EJ in New
Momentum. Biomethane is blended into
the natural gas grid as a direct substitutefor natural gas and is shared broadly
equally across industry, buildings, andtransport.
In contrast to modern bioenergy, therole of traditional biomass is largely
phased out by 2050 in Accelerated and
Net Zero. That largely reflects its current
use in buildings in emerging economies
disappearing as access to electricity andclean-cooking fuels increases. The useof traditional biomass is more persistentin New Momentum reflecting the slower
electrification of energy systems inemerging economies.
The growth of modern bioenergy inall three scenarios is dominated byemerging economies, which account foraround three quarters of the growth to2050 in all three scenarios.

60 |Electricity

Electricity demand expands significantly as prosperity
in emerging economies grows and the world
increasingly electrifies
The global power system decarbonizes, led by theincreasing dominance of wind and solar power
The mix of power generation differs between
developed and emerging economies

61 | bp Energy Outlook: 2023 edition

Electricity

62 |Electricity demand expands significantly as prosperity in emerging
economies grows and the world increasingly electrifies
Electricity as a share of total final consumption

Range of electrification
across end-use sectors in 2050

Share

Share of total final consumption

60%

100%
Accelerated
Net Zero
New Momentum

50%

2019
Accelerated
Net Zero
New Momentum

80%

40%
60%
30%
40%
20%
20%

10%

0%
2000

2010

2020

2030

2040

2050

0%

Transport

Industry

Buildings

Key points
Electricity demand grows robustly over
the outlook, driven by growing prosperity
in emerging economies and increasing
electrification of the global energy system.
Final electricity demand increases
by around 75% by 2050 in all three
scenarios. The vast majority of thisgrowth (around 90%) is accounted for by
emerging economies as rising prosperity
and living standards support a rapid
expansion in the use of electricity.
In developed markets, the increasing
electrification of end energy uses
underpins some growth in electricity
consumption. But this growth is very
modest compared with that in emerging
economies.

63 | bp Energy Outlook: 2023 edition

Electricity demand in India grows by
between 250-280% over the outlook
across the three scenarios, comparedwith 10-30% in the EU. Even so,
electricity consumption per capita in the
EU in 2050 is still around double that inIndia.
The increasing electrification of theenergy system is most pronounced inAccelerated and Net Zero, with the shareof electricity in total final consumption(TFC) increasing from 20% in 2019 to
between 40-50% by 2050. Despite theslower pace of decarbonization, the shareof electricity in TFC in New Momentum
still increases to over 30% by the end of
the outlook.

The increase in electrification isapparent across all-end-use sectors.
The greatest scope for electrification isin buildings, where at least half of final
energy demand is electrified by 2050 in
all three scenarios. The higher degreeof electrification of buildings’ energy
demand in Accelerated and Net Zero islargely driven by the greater adoption ofheat pumps.
The transport sector has the largest
increase in the share of electrification
relative to its current low level, largely
reflecting the electrification of roadtransport (see pages 42-43).
Compared with the other sectors, thescope for significant increases in theelectrification of final energy use inindustry is more limited, particularly forprocesses requiring high temperatures(>200ºC).

Electricity

64 |The global power system decarbonizes, led by
the increasing dominance of wind and solar power
Electricity generation by fuelCarbon intensity of power generationin Accelerated

TWh

gCO2/kWh

70000

Other
Net Zero

60000

New
Momentum

40000

Emerging (excl. China)
China
Developed

Gas

Accelerated

50000

1000

Coal

800

Other
low-carbon
600
NuclearWind and
solar

400

30000
200

20000

0

10000
0

-200
2019

2050

2000

2010

2020

2030

2040

2050

Key points
Global power generation decarbonizes,
enabled by rapid growth in wind and solar
power which accounts for all or most of
the increase in power generation over theoutlook.
By 2050, wind and solar power accountfor around two-thirds of global power
generation – and closer to 75% in themost advantaged regions – in Accelerated
and Net Zero. That share is around a halfby 2050 in New Momentum.
Although direct electricity consumption
is similar across the three scenarios (seepages 18-19), total power generation ishigher in Accelerated and Net Zero, withan additional 15-20% of total generation
by 2050 used to produce green hydrogen(see pages 72-73).
Other sources of low-carbon power
generation (nuclear, hydro, bioenergy andgeothermal) continue to play a significant
role, accounting for around 25% of global
power generation in 2050 in Accelerated
and Net Zero, similar to their share in
2019.

65 | bp Energy Outlook: 2023 edition

Within that, nuclear power generation
increases by around 80% by 2050 inAccelerated and more than doubles in
Net Zero. Investment in new nuclear
capacity is concentrated in China – which
accounts for 50-65% of the growthin nuclear power in Accelerated and
Net Zero – supported by new capacity
in other emerging economies and an
extension of lifetimes and restartingof existing plants in some developed
economies.
Coal is the fuel that loses most groundto the increasing dominance of lowcarbon power, as its share in global
power generation falls from close to
40% in 2019 to a little over 10% in New
Momentum by 2050 and close to zero inAccelerated and Net Zero.
The role of natural gas in global power
generation is relatively stable over the
first part of the outlook in Accelerated and
New Momentum, given its continuing
importance in the emerging world. But
its use declines sharply in the second
half of the outlook in Accelerated and Net
Zero as the expansion of wind and solar
power gathers pace. In 2050, 60-95% of

the remaining gas-fired power generationin Accelerated and Net Zero is used inconjunction with carbon capture, use andstorage (CCUS, see pages 76-77).
In the second half the outlook, lowcarbon hydrogen also emerges as a fuelin the power sector: although its overall
share of generation is very small, it plays
an important role as dispatchable lowcarbon power in electricity systems witha high share of solar and wind.
The increasing dominance of low-carbon
energy, together with the use of CCUS,
cause carbon emissions from power
generation in Accelerated to fall byaround 55% by 2035 and to be virtuallyeliminated by 2050. The reduction in
the carbon intensity of global power
generation over the first part of theoutlook is led by the developed world
and China, with emerging economies
catching up over the second half of theperiod. Similar trends are also apparent
in Net Zero, where the greater use of
bioenergy combined with CCUS resultsin the power sector being a source ofnegative emissions by 2050.

Electricity

66 |The mix of power generation differs between
developed and emerging economies
Change in generation by source and region
Wind and solar
Gas power

Coal power

TWh

TWh

TWh

4000

2000

30000

25000

Developed

Accelerated

Net Zero

Emerging(excl. China)
China

New
Momentum

2000

Total
20000

15000

Accelerated Net Zero

Accelerated Net Zero

Accelerated Net Zero

0

-4000

Net Zero
Accelerated

-2000

-6000

New
Momentum

5000

0

-2000

Net ZeroNew
Momentum

0

New
Momentum

Accelerated

10000

New
Momentum

New
Momentum2019-30

2030-50-4000

2019-30

2030-50-8000

2019-30

2030-50

Key points
The energy sources used to fuel the growthin power generation vary across developedand emerging economies, reflecting
differences in their stages of development
and in the maturity and size of power
generation markets.
Growth in wind and solar generation over
the rest of this decade is dominated by
China and the developed world, which
together account for 80-85% of thegrowth in wind and solar power out to2030 in the three scenarios.
This share declines to 35-60% in the
period after 2030 as the growth inrenewable power generation in emerging
economies (excluding China) rises
sharply, underpinned by strong growth inpower demand and the increasing abilityof these markets to support a rapid build
out of wind and solar capacity.

67 | bp Energy Outlook: 2023 edition

The growth in gas-fired power generation
over the rest of the current decade isconcentrated in emerging economies. In
Accelerated and Net Zero, the increasein gas-fired power generation andthe rapid expansion in wind and solar
power facilitate a modest reduction incoal generation by 2030 in emerging
economies. That higher level of gas-fired
power generation is relatively short-lived
in Accelerated and Net Zero, as the push
to decarbonize the power sector, led bya sharp acceleration in wind and solar
power generation, triggers a reduction inboth gas- and coal-fired generation after
2030.
In contrast, the slower growth in power
demand in developed economies,
together with robust increases inrenewable power generation, cause
gas-fired generation in the developed
world to plateau in the next few years in
Net Zero and Accelerated before declining
thereafter.

The move to decarbonize the power
sector causes coal-fired generation
to decrease markedly in all regions in
Accelerated and Net Zero. The use of coalis more persistent in New Momentum,with a small increase in coal generationin China and other emerging economies
over the rest of this decade. But that rise
is more than reversed by a sharp fall in
Chinese coal generation in the final 20
years of the outlook. At a global level,
the fall in total coal-fired generation isdominated by China, which explainsaround half of the total decline inAccelerated and Net Zero and more than
the total in New Momentum.

68 |Low-carbon hydrogen

Low-carbon hydrogen plays a critical role inhelping the energy system to decarbonize
Low-carbon hydrogen is dominated by green
and blue hydrogen, with trade in hydrogen a
mix of regional pipelines and global shipping

69 | bp Energy Outlook: 2023 edition

Low-carbon hydrogen

70 |Low-carbon hydrogen plays a critical role in helping
the energy system to decarbonize
Low-carbon hydrogen demand

Low-carbon hydrogen demand in transport

Mt

Mt

500

250
Net Zero

Other*
Feedstocks
400

200

Industry
Transport
Accelerated

300

150

Road heavy(hydrogen-derived fuels)
Aviation(hydrogen-derived fuel)Marine(hydrogen-derived fuels)
Road and rail(pure hydrogen)

Net Zero

Accelerated
200

100

100

50
Accelerated

Net Zero

02030*Other includes hydrogen demandfor power, heating, and buildings

Accelerated
2050

0

2030

Net Zero
2050

Key points
The use of low-carbon hydrogen grows as
the world transitions to a more sustainableenergy system, helping to decarbonize
hard-to-abate processes and activities inindustry and transport.
The use of low-carbon hydrogen is mostpronounced in Accelerated and Net Zero,complementing growing electrification of
the energy system by acting as a carrierof low-carbon energy for activities thatare difficult to electrify. The lower degreeof decarbonization in New Momentummeans low-carbon hydrogen plays arelatively limited role.
The growth of low-carbon hydrogen
during the first decade or so of theoutlook is relatively slow, reflecting
both the long lead times to establish
low-carbon hydrogen projects and theneed for considerable policy support toincentivize its use in place of lower-cost
alternatives. The demand for low-carbonhydrogen by 2030 is between 30-50
Mtpa in Accelerated and Net Zero, themajority of which is used as a lower
carbon alternative to the existing71 | bp Energy Outlook: 2023 edition

unabated gas- and coal-based hydrogenused as an industrial feedstock in refining
and the production of ammonia andmethanol.
The pace of growth accelerates in
the 2030s and 2040s as falling costsof production and tightening carbon
emissions policies allow low-carbonhydrogen to compete against incumbent
fuels in hard-to-abate processes andactivities, especially within industry
and transport. Demand for low-carbonhydrogen rises by a factor of 10 between
2030 and 2050 in Accelerated and Net
Zero, reaching close to 300 and 460 Mtpa
(35-55 EJ) respectively.
The use of low-carbon hydrogen in ironand steel production accounts for around
40% of total industrial hydrogen demandby 2050 in Accelerated and Net Zero,where it acts as an alternative to coaland natural gas as both a reducing agent
and a source of energy. The remaining
industrial use of hydrogen is in other partsof heavy industry, such as chemicals andcement production, which also require
high-temperature heat processes. By

2050, low-carbon hydrogen accounts foraround 5-10% of total final energy used inindustry in Accelerated and Net Zero.
The use of hydrogen within transport isheavily concentrated in the productionof hydrogen-derived fuels used todecarbonize long-distance transportationin marine (in the form of ammonia,
methanol, and synthetic diesel) and inaviation (in the form of synthetic jet fuel).
These hydrogen-derived fuels accountfor between 10-30% of final aviationenergy demand by 2050 and 30-55% of
final energy use in the marine sector in
Accelerated and Net Zero. Most of theremainder is used directly in heavy dutyroad transport. By 2050, low-carbonhydrogen and hydrogen-derived fuelsaccount for between 10-20% of total final
energy used by the transport sector in
Accelerated and Net Zero.
The production of some hydrogen
derived fuels requires sources of carbonneutral feedstocks. These can be derived
from either biogenic sources or fromdirect air capture (see pages 78-79).

Low-carbon hydrogen72 |Low-carbon hydrogen is dominated by green and blue hydrogen,with trade in hydrogen a mix of regional pipelines and global shipping
Global low-carbon hydrogen supply

Sources of EU low-carbon hydrogen

Mt

Mt

500

50
Net Zero

Biogenic hydrogen
400

Green hydrogen

Seaborne imports(hydrogen derivatives)
40

Blue hydrogen

Pipeline imports(pure hydrogen)
Domestic production

Accelerated

300

20

100

10

0

Accelerated

30

200

Accelerated

Net Zero

Net Zero
Accelerated

Net Zero

2030

2050

0

2030

2050

Key points
Low-carbon hydrogen is dominated by
a combination of green hydrogen, madevia electrolysis using renewable power,
and blue hydrogen, made from naturalgas (or coal) with the associated carbon
emissions captured and stored. Hydrogen
trade occurs via regional pipelines or global
shipping depending on the form in which
the hydrogen is used.
At present, the cost of producing bluehydrogen is generally lower than forgreen hydrogen in most parts of theworld. However, the combination ofrecent policy initiatives (such as theInflation Reduction Act in the US – seepages 36-37) and higher natural gas
prices in Europe and Asia as a resultof the Russia-Ukraine war (see pages
34-35) has reduced this cost advantage
in some countries and regions. This costdifferential is further eroded over theoutlook as improvements in technology
and manufacturing efficiency lower
the price of both renewable power andelectrolysers.
73 | bp Energy Outlook: 2023 edition

As a result, green hydrogen accounts
for around 60% of low-carbon hydrogenin 2030 in Accelerated and Net Zero,with that share increasing to around
65% by 2050. Most of the remaininghydrogen is provided by blue hydrogen,with a small amount produced frombioenergy combined with carbon captureand storage (BECCS). Blue hydrogenacts as an important complement togreen hydrogen providing, a lower-cost
alternative in some regions as well as
providing a source of firm (non-variable)
low-carbon hydrogen supply. The growthof blue hydrogen also reduces the extent
to which renewable energy is diverted
from decarbonizing electricity that isconsumed directly.
The nature of hydrogen trade is likely
to vary depending on its final use. For
activities and processes that requirehydrogen in its pure form – such as forhigh temperature heat processes inindustry or for use in road transport – thegas is likely to be imported via pipelines

from regional markets, reflecting thehigh cost of shipping pure hydrogen.
In contrast, for activities that can usehydrogen derivatives, such as ammonia
and methanol in marine or hydrogenderived hot briquetted iron (HBI) in ironand steel manufacturing, the lower costof shipping these derivatives allows
imports from the most cost-advantaged
locations globally.
For example, the EU produces around
70% of the low-carbon hydrogen it uses
in 2030 in Accelerated and Net Zero, withthat share falling to around 60% by 2050.
Of the low-carbon hydrogen it imports,
around half is transported as purehydrogen via pipeline from North Africa
and other European countries (Norway
and the UK); and the other half isimported by sea in the form of hydrogen
derivatives from global markets.

74 |Carbon mitigation
and removals

Carbon capture, use and storage plays a central
role in enabling deep decarbonization pathways
Carbon dioxide removal is necessary to achieve theParis climate goals

75 | bp Energy Outlook: 2023 edition

Carbon mitigation and removals

76 |Carbon capture, use and storage plays a central rolein enabling deep decarbonization pathways
Carbon capture, use andstorage by emissions source

Carbon capture, use and storage by region

Mt CO2

Mt CO2

7000
6000

New
Momentum

Accelerated

Industrial
process
emissions
BECCS

Net Zero

Coal

5000

Gas

7000
6000

4000

3000

3000

2000

2000

1000

1000

2035 2050

2035 2050

2035 2050

Accelerated

Net Zero

5000

4000

0

New
Momentum0

Developed
Other
emerging
India
China

2035 2050

2035 2050

2035 2050

Key points
Carbon capture, use and storage plays acentral role in supporting the transition toa low-carbon energy system: capturingindustrial process emissions, acting asa source of carbon dioxide removal, andabating emissions from the use of fossil
fuels.
Carbon capture, use and storage (CCUS)
reaches between 4-6 GtCO2 by 2050 inAccelerated and Net Zero, compared with
1 GtCO2 in New Momentum. The longlead times associated with developing
storage sites and their related transport
infrastructure means that most of thiscapacity is completed in the second halfof the Outlook.
In all the scenarios, around 15% of the
CCUS operating in 2050 is used tocapture and store non-energy process
emissions from cement production,
which has limited decarbonization
alternatives.

77 | bp Energy Outlook: 2023 edition

The use of CCUS with bioenergy(BECCS) provides both a source ofenergy and a form of carbon dioxide
removal (see pages 78-79). BECCS
accounts for around 10% of CCUS in
New Momentum and Accelerated in
2050 and around 20% in Net Zero.
The remaining CCUS is utilized to abate
emissions from the use of natural gas
and coal.
In Accelerated and Net Zero, thedeployment of CCUS with natural gas
is spread broadly equally across the useof natural gas to produce blue hydrogen(see pages 72-73), to abate emissions
in the power sector and to capture
emissions from the combustion of gas inindustry. The greatest use of CCUS withnatural gas occurs in the US, followedby the Middle East, Russia, and China– which combined account for around
two-thirds of CCUS deployed with natural
gas in 2050 in Accelerated and Net Zero.

The vast majority of CCUS with coalis used in regions with relatively new
coal-based assets in the power and steel
sectors, largely in emerging Asia, led by
China.
In Accelerated and Net Zero, over 70%of the global deployment of CCUS in
2050 is in emerging economies, led by
China and India. This requires a very rapid
scale-up of CCUS in these countries
relative to their historical levels of oil andgas production, which can be used as
an indicator of the geological suitability
and engineering capability to develop
industrial scale CCUS facilities*.

*Lane et al. (2021): Uncertain storage
prospects create a conundrum for carbon
capture and storage ambitions

Carbon mitigation and removals

78 |Carbon dioxide removal is necessary
to achieve the Paris climate goals
Cumulative carbon dioxide removal
in IPCC scenarios: 2015-2050

Annual carbon dioxide removal
in median IPCC 1.5°C scenario

Gt CO2Gt CO2

140

NCS

0

120
100

BECCS

-2

NCS

80

BECCS

-4

60
40
20

-6
NCS

DACCS

BECCS

DACCS
0

1.5°C

2°C

-8

2020

2025

2030

2035

2040

2045

2050

Maximum and minimum of bars are
10 th and 90 th percentiles of IPCC scenarios

Key points
The IPCC, in its Sixth Assessment Report,
stated that carbon dioxide removal (CDR)
is necessary to counteract hard-to-abate
emissions and achieve the Paris climate
goals. This includes bioenergy combinedwith CCUS, natural climate solutions, anddirect air carbon capture with storage.
Bioenergy combined with CCUS
(BECCS) has the benefit that it generates
useful energy as well as negative carbon
emissions. However, the extent to which
it can be scaled is limited by the need toensure the sustainability of the biomass
used and by the competition with otherpriority uses for that biomass.
Natural climate solutions (NCS) conserve,
restore or manage forests, wetlands,
grasslands and agricultural lands toincrease carbon storage or avoid
greenhouse gas emissions. In doing so,
NCS can either reduce CO2 emissions or
remove CO2 already in the atmosphere.
NCS can have important co-benefits,
such as promoting biodiversity, but
can face challenges in ensuring andmonitoring their effectiveness andpermanence.

79 | bp Energy Outlook: 2023 edition

Direct air carbon capture with storage(DACCS) is a process of capturing CO2
directly from ambient air and then storingit. DACCS has the advantage that it has
the potential to be scaled materially,
located in the most advantaged regions,and provide considerable certainty on
permanence and additionality. However,the current costs of DACCS are highrelative to other forms of CDR, reflecting
both its relatively low technologicalmaturity and its inherent high energy
requirements.
The uncertainties associated withall forms of CDR means that the
IPCC scenarios included in the Sixth
Assessment Report include a range ofoutcomes for the different types of CDR.
But all highlight the need for tens tohundreds of gigatons cumulatively out to
2050.
The median IPCC 1.5ºC scenario includes
a rapid scale-up of both NCS and BECCS,
reaching over 7 GtCO2 per annum by
2050. The pace at which these forms of
CDR grow means they help to accelerate
the pace of decarbonization over coming
decades, as well as offset hard-to-abate
emissions in a net zero system.

Although few of the modelled pathways
included in the IPCC’s Sixth Assessment
Report embody a material role for
DACCS, more recent analysis by the IEA
and the Energy Transitions Commission*
envisage a larger role for it.
Synthetic fuel CO2 feedstock requirement
The production of some hydrogenderived fuels - primarily synthetic jet fuel,but also synthetic diesel and methanol(see pages 42-43) – require a carbonneutral feedstock. This can be sourced
from either bioenergy with carbon
capture or direct air capture. Although
the source is not explicitly modelled in
the Outlook, the CO2 requirement forhydrogen-derived fuels by 2050 is around
200 and 500 Mtpa for Accelerated and
Net Zero, respectively.

*International Energy Agency, World Energy
Outlook 2022; Energy Transitions Commission,
Mind the Gap: How Carbon Dioxide Removals
Must Complement Deep Decarbonization to
Keep 1.5°C Alive, March 2022

80 |Investment andcritical minerals

Investment in wind and solar capacity increases
sharply and continues in oil and natural gas
The energy transition leads to a significant increasein the demand for critical minerals

81 | bp Energy Outlook: 2023 edition

Investment and critical minerals

82 |Investment in wind and solar capacity increases sharply
and continues in oil and natural gas
Average annual investment in wind and solar$2020 billion
800

Accelerated

600

Net Zero

400

New Momentum

200
02020-2021

2022-2030

2031-2050

Average annual investment in upstream oil and gas$2020 billion
800
600
400
200
0

2020-2021

2022-2030

2031-2050

Key points
The energy transition requires substantial
levels of investment across a wide range
of energy value chains. The implied levelof investment in wind and solar capacity
accelerates markedly from recent levels.
Despite declining levels of demand,
continuing investment in upstream oil andnatural gas is also required.
The investment estimates consideredhere refer to investments in wind andsolar capacity and in upstream oil and gas
production. The assumptions underlying
the implied investment requirements,
and the associated uncertainties, aredescribed in the Annex (see pages
120-121).
The energy pathways envisaged by thethree scenarios also require substantial
investment in other types of assets notincluded in these estimates, such as
electricity distribution and transmission
networks, pipelines for transporting
low-carbon hydrogen and CO2, and new
facilities for producing bio- and hydrogenbased fuels.

83 | bp Energy Outlook: 2023 edition

The central role that wind and solar
energy play in the production of lowcarbon electricity requires a substantial
acceleration in the investment in new
capacity. In Accelerated and Net Zero,the average level of annual investment
over the rest of this decade is between
20-80% higher than recent levels. The
falling cost of wind and solar energy (seepages 56-57) means that investment
expenditure in New Momentum out to2030 is lower than recent levels whilst
maintaining a similar pace of increasein new capacity deployed; investment
spending scales up in the second half ofthe outlook as deployment accelerates.
In Accelerated and Net Zero, around
70% of the investment in new wind andsolar capacity over the outlook occurs inemerging economies. This underlines theimportance that renewable developers
in these economies have good access tocapital and finance.
Although the demand for oil and gas
falls in all three scenarios, natural basedecline in existing production means that
continuing investment in upstream oiland natural gas assets is required in all

three scenarios to meet future demand.
This includes investment across a rangeof different types of supply (brownfield,
greenfield, and tight oil and naturalgas). The uncertainty surrounding theprospects for future oil and natural gas
demand means shorter-cycle and phased
production opportunities with greater
optionality become increasingly important
over time.
The implied rates of investment in
upstream oil and gas in the second halfof the outlook, especially in Accelerated
and Net Zero, are lower than levels in the
recent past and significantly less than therequired investment in wind and solar
capacity.
The average annual investment in
upstream oil and natural gas over the restof this decade in the three scenarios is
between $325-$405 billion, comparedwith $395 billion in the recent past*.

*Upstream oil and gas investment includes
capital expenditures on wells construction,
facilities and exploration. It does not include
operational expenditures.

Investment and critical minerals

84 |The energy transition leads to a significant increasein the demand for critical minerals
Copper demand

Lithium demand

Nickel demandktkt, Lithium carbonate equivalent

kt

70000

7000

10000

Net Zero

Net Zero
Net Zero

60000

6000

50000

5000
New
Momentum

40000

Accelerated

8000

Accelerated
Accelerated

30000

3000

20000

2000

10000

1000

Low
carbonpower
BasedemandNew
Momentum

6000

4000

Electriﬁcationof transport

New
Momentum

4000

2000

0

2020

2040

0

2020

2040

0

2020

2040

Key points
The shift to a low-carbon energy system
requires a substantial increase in theuse of a range of minerals critical for the
infrastructure and equipment supporting
this transition.
The increasing demands for minerals
and materials associated with theenergy transition come from across the
low-carbon energy system, including
the construction of wind and solar
facilities, batteries, hydrogen and CO2
pipelines, and new storage facilities. Twoparticularly important sources of demandin this year’s Outlook stem from:
Growth in low-carbon power requiringa substantial expansion in the grid anddistribution systems used to connect
renewable assets and deliver electricity
to its end use.
Electrification of road transport leading
to a global car parc of between 1-2 billion
electric vehicles by 2050, implying an
increased demand for annual battery
capacity within road transport of between
10-20 TWh.
85 | bp Energy Outlook: 2023 edition

The growing requirements associatedwith the energy transition, along with thebroader economic expansion envisaged
over the outlook, have important
implications for a range of minerals critical
for the transition. Below we look at justthree: copper, lithium, and nickel.
Copper: The future growth of copper isdominated by its use in the constructionof new electricity networks for lowcarbon power, which increases between
four- and seven-fold out to 2040 in thethree scenarios. Total copper demand
grows between two and three times
over this period: 65-85% of the growth isdue to the increasing demand for copper
to support the transmission of lowcarbon power and the electrification oftransport. As a result, the use of copperwithin low-carbon energy activities andelectrification of transport accounts foraround a half of total copper demandin 2040 in Accelerated and Net Zerocompared with around 15% in 2020.
Lithium: The growing demand for lithium
over the outlook is driven by its use inelectric vehicles, which grows by a factor
of between 25 and 60 out to 2040 acrossthe three scenarios. This use accounts
for 85-95% of the aggregate demand forlithium in 2040, compared with 30% in
2020.
Nickel: Increasing demand for nickel isalso driven by its role in the electrificationof transport. Total nickel demand
increases between 2.5-4 times out
to 2040 across the three scenarios –65-80% of that growth is due to theincreasing use of lithium-ion batteries inelectric vehicles.
The scenarios assume that the supplyof critical minerals scales to meet theseincreasing demands. This requires asignificant increase in investment andresources within the critical minerals
mining sector, as well as an accelerationin planning and permitting lead times. The
challenge associated with this scaling up
is compounded by the need to maintainclose scrutiny on the sustainability of new
and existing mining activity.

86 |How energy is used

Energy demand by sector
The fuel mix across sectors
Carbon emissions by sector
Industry: energy demand
Industry: the fuel mix
Industry: fuels used as feedstocks
Buildings: energy demand by end-use
Buildings: developed vs emerging regions
Transport: road - light vehicles
Transport: road - medium and heavy vehicles
Transport: aviation
Transport: marine
87 | bp Energy Outlook: 2023 edition

How energy is used – energy demand by sector

88 |Energy demand peaks in all sectors
as energy efficiency gains accelerate
Final energy demand by sector

Growth in energy usage and drivers in Net Zero

EJ

% growth 2019-2050

600
Transport
Buildings

500

Accelerated

New
Momentum

Net Zero

-80%

-40%

0%

40%

80%

120%

GDP

Industry

Total ﬁnal consumption

Feedstocks

400

Steel production
Energy use in steel

300

Passenger kilometres
200

Energy use in road transport
Buildings ﬂoor area

100

Energy use in buildings02000 2010 20192030 2050

2030 2050

2030 2050

Key points
Global energy demand peaks before
or by 2050 for all end-use sectors over
the Outlook as energy efficiency gains
accelerate. This reflects increased energy
conservation measures, increasing material
recycling and the replacement of existing
appliances, vehicles and process plants
with more efficient technology.
Three key sectors make up energy
demand, as measured at the final pointof use (total final consumption, or TFC) –transport, buildings and industry, whichin its widest sense, includes fuel used asa feedstock. Energy use in industry andfeedstocks together account for almost
half of end-use consumption today,with transport and buildings making up
roughly equal shares of the rest.
Energy consumption in all sectors peaks
by 2030 in Accelerated and Net Zero,with TFC 15-30% below 2019 levels by
2050. In contrast, TFC increases until
around 2040 in New Momentum, after
which it broadly plateaus with energy
consumption in 2050 around 10% above
2019 levels.
89 | bp Energy Outlook: 2023 edition

The main factor driving these differences
in TFC is the pace of improvement inenergy efficiency. To illustrate this at theaggregate level, TFC in Net Zero falls by
30% between 2019 and 2050 despite
economic activity (GDP) more thandoubling. This implies average annual
gains in energy efficiency (or annual
reductions in energy intensity, the energy
required for one unit of GDP) of 3.4% per
year, roughly double the pace over the
past 20 years or so (1.8% per year). There
are several examples at the sector levelillustrating how this efficiency gain in Net
Zero is achieved:
Within industry, energy use in steel
making declines by around 25% by
2050 despite a 20% increase in steel
production. That is due to the gradualreplacement of energy intensive blast
furnaces by more efficient plants(such as Direct Reduced Iron (DRI)
units) and an increase in the recyclingof scrap, which can produce steel
using a quarter of the energy used toconvert iron ore.

In transport, road passenger
kilometres driven (Pkm) increaseby 84% to 2050, led by risingprosperity, particularly in the emerging
economies. Growth in total vehicle
kilometres is higher (113%), as
autonomous vehicles are projectedto add vehicle kilometres from
repositioning to provide mobility
services. Energy demand in roadtransport over the same period shrinks
by 10-30% across the scenarios asinternal combustion engine (ICE)cars and trucks are replaced by more
efficient ICE models and electricvehicles (EVs) (see pages 104–107).
Total buildings floor area is projected
to increase by more than 80% by
2050, but energy used across thislarger building stock falls by one third
relative to 2019. The fall is due to arange of different energy conservation
measures including better insulationand improved appliance efficiency.
The largest drivers of energy
efficiency gains are the displacementof fossil fuel (mainly gas) boilers
with electric heat pumps, and thesubstitution of inefficient traditional
biomass for cooking with other fuels.

How energy is used – the fuel mix across sectors

90 |Energy gradually electrifies, together with an increasingrole for hydrogen and bioenergy in hard-to-abate sectors
Final energy demand by sector and fuel in Accelerated
EJ
200

Hydrogen*Industry

Traditional
biomass
Modernbioenergy
Heat

Industry

150
Buildings
Transport

Buildings

100

Electricity
Oil

Transport

Natural
gas
Coal

50

0

2019
*Includes hydrogen-derived fuels

Feedstocks

Feedstocks

2050

Key points
The share of electricity in TFC rises in all
scenarios and in all sectors.
The greatest overall scope for electrification
is in buildings, while transport has thelargest increase in share, given current low
levels (see page 62).
In some sub-sectors within transport andindustry (so-called hard-to-abate sectors)
electrification is more difficult, leading to an
important role for low-carbon hydrogen andbioenergy in decarbonization.
The fuel mix of the main end-use sectors
varies substantially today. While transport
and industrial feedstocks rely heavily
on oil, energy demand in other sectors
is more diverse, with a mix of oil, gas,
electricity, biomass (particularly traditional
biomass for buildings in some emerging
markets) and coal (particularly for use inheavy industry).
In all three scenarios there are common
trends in the changing fuel mix. Acrossall end-use sectors, the use of fossil
fuels declines and the share of electricity
increases significantly (also discussed
91 | bp Energy Outlook: 2023 editionin pp62-63 of the Energy Outlook), withgrowing shares of low-carbon hydrogenand modern bioenergy also helping todecarbonize the energy mix.

(LPG), natural gas, modern biomass and,increasingly over the Outlook, electricity.
There is only a limited role for hydrogen inbuildings.

The transport sector has the largest
increase in the share of electrification
relative to its current low level, largely
reflecting the electrification of roadtransport (see pages 104–107). In theharder-to-abate sectors within transport
there is also a role for biofuels, lowcarbon hydrogen – particularly in heavyroad transport – and hydrogen-derived
fuels (such as methanol, ammonia
and synthetic kerosene) in marine andaviation.

Industry also sees a rise in its shareof electricity but this is more limited,particularly for processes requiring hightemperatures (>200°C). That leads to asignificant role for low-carbon hydrogenand bioenergy as a source of low-carbon
heat, particularly in Accelerated and
Net Zero. Low-carbon hydrogen also
displaces the grey (natural-gas-derived)and brown (coal-derived) hydrogenproduced today for use as a feedstock.
By 2050, hydrogen accounts for between
5% and 15% of energy across industry
and feedstocks.

The greatest scope for electrification isin buildings where at least half of final
energy demand is electrified in all three
scenarios, driven by strong growth in
the demand for air-conditioning and,particularly in Accelerated and Net Zero,the adoption of heat pumps. Risingprosperity in emerging economies
also leads to a reduction in the use of
traditional biomass for cooking andheating, displaced by liquid petroleum gas

Due to the cost of shifting to otherfuels in some hard-to-abate industrial
processes (such as iron and steel,cement and petrochemicals) there is
still a sizeable role for natural gas andcoal in industry in 2050, some of which
is abated by carbon capture usage andstorage (CCUS) – 20% in Accelerated andover 60% in Net Zero.

How energy is used – carbon emissions by sector

92 |Carbon emissions driven lower by energy
efficiency gains and changes in the fuel mix
Drivers of changes in CO₂ emissions fromenergy use in Net Zero (2019-2050)

Total carbon emissions by sector in Net Zero

Gt of CO2

GtCO2e

80

24

70

20

60

Industry

Buildings

Transport

16

Methaneand ﬂaring
Process
emissionsIndirect*Combustion

50
12
40
8
30
4

20

0

10
0

-4
2019

HigherGDP

Lower energy
Lowerintensity carbon intensity

CCUS

CO 2 from combustion, not including ﬂaring,methane emissions or process emissions

2050

2019 2030 2050

2019 2030 2050

2019 2030 2050

*Emissions from electricity, heat networks and hydrogen production
allocated based on consumption of these in each end-use sector

Key points
Energy efficiency gains and the shift inthe end-use fuel mix are key to reducing
carbon emissions over the Outlook. The
decarbonization of electricity used isalso important and is the main driver for
reductions in the first part of the outlook.
Both energy efficiency and the changing
fuel mix are key to the reduction in carbon
emissions over the Outlook. For example,
in Net Zero, improvements in energy
efficiency, measured by the reduction
in energy intensity almost offsets theimpact from rising GDP, which more thandoubles over the Outlook. Improvements
in carbon intensity are delivered throughdecarbonizing the power sector andswitching to lower carbon fuels which
together bring a similar reduction inemissions, with CCUS helping toapproach net zero emissions in 2050.

93 | bp Energy Outlook: 2023 edition

By sector, more than half of carbon
emissions today are associated withindustry. That is due to it being the largest
sector in terms of energy consumption,and other factors including its relatively
heavy use of coal (which has a higher
carbon intensity than oil or gas), process
CO2 emissions that come from cement
production, and methane emissions
and flaring associated with oil and gas
production.
Emissions associated with buildings
and transport today are roughly equal,
although more than half of buildings
emissions are ‘indirect’, stemming fromthe fossil fuels used to produce theelectricity used in buildings.
Much of the reduction in carbon
emissions by 2030 is due to thedecarbonization of the power sector (seepages 64-65), which reduces indirectemissions in industry and buildings inparticular. Electrification of demand
amplifies this effect as well as also
reducing direct emissions as fossil fueluse is reduced.

Both direct and indirect emissions
reductions then accelerate, leading
to close to a 30% drop in total carbon
emissions by 2050 in New Momentum.
In Accelerated and Net Zero, nearly allindirect emissions have been eliminatedin all three sectors by 2050 as thepower sector and other secondary
forms of energy such as hydrogen andcommercial heat are nearly carbon-free.
The remaining direct emissions areconcentrated in the hard-to-abate subsectors within industry and transport,such as cement, iron and steel, marine
and aviation.

How energy is used – industry: energy demand

94 |Energy demand in industry peaks despite continued
growth in India and other emerging Asian economies
Industry1 final energy demand by region

Industry1 final energy demand by sector

EJ

EJ
Accelerated

250

Net ZeroNew
Momentum
Other
Emerging
Other
Emerging
Asia
India

200

Accelerated

80

Net ZeroNew
Momentum

60

China

150

Developed

Other
industry
Chemicals
Energysector(own use)
Iron & steel
Other heavy
industry²

40
100
20
50

0

2000 20192030 2050

2030 2050

Includes feedstocks

102030 2050

2000

2019

2030

2050

2030

2050

2030

2050

Non-ferrous metals and non-metallic minerals

2

Key points
Energy demand in industry falls over thesecond half of the Outlook as China’s
energy demand declines, outweighing
growth in India and other emerging Asian
countries. The decline in demand isparticularly pronounced in the energy andchemicals sub-sectors in Accelerated and
Net Zero due to increasing societal andpolitical pressure on the use of oil products
and plastics.
Over the past 20 years or so China has
seen rapid growth in industrial output andits associated energy use. China is now
the largest producer of steel, cement,
and most key petrochemicals, and its
energy use in industry made up 30%
of global industrial energy demand in
2019, almost as much as in all developed
economies combined. China has
accounted for around 60% of the growthin energy use in industry since 2000.
However, China’s industrial energy
demand peaks around 2030 in all
scenarios and declines significantly by
2050 as its economy becomes more
95 | bp Energy Outlook: 2023 edition

services-orientated and production shifts
to less developed economies. India
and other emerging Asian economies
become the main regions of industrial
growth, with their combined shareof energy rising from 13% in 2019
to 18-26% by 2050. Nevertheless,improvements in industrial efficiency(see pages 88-89), causes global
energy demand in industry to peak in all
scenarios and to decline in the second
half of the outlook.
Industrial energy use in developed
economies peaked in 2000 and continues
to decline over the Outlook, driven bothby energy efficiency gains and declining
output in energy intensive industries.
Industry comprises hundreds of
distinct processes for producing goods
and materials. The largest individual
contributors to energy demand areiron and steel, chemicals (including
petrochemicals) and the energy industry
itself, due to the energy use and losses
associated with fuel production.

These sub-sectors, combined with
non-ferrous metals and non-metallic
minerals (such as cement), make up what
we refer to as heavy industry, which ischaracterised by large process plantsthat require high-temperature heat. The
remaining industrial sectors, defined hereas ‘Other industry’, are a collection of
mainly manufacturing processes, such as
food, paper and textiles.
Energy demand falls post-2030 in mostsub-sectors across the three scenarios,
driven both by process energy efficiency
and material efficiency, which includes
increased recycling and measures toreduce materials demand. These falls are
particularly pronounced for the energy
and chemicals sectors in Accelerated and
Net Zero due to increasing societal andpolitical pressures to reduce the use of oil
products and plastics.
The exceptions to these declines inenergy demand are chemicals and otherindustry in New Momentum, where
efficiency measures are outpacedby continued growth in demand for
consumer goods as incomes increase.

How energy is used – industry: the fuel mix

96 |Industry electrifies, with hydrogenand CCUS helping to decarbonize heavy industry
Mix of fuels in final energy demand by scenario
Heavy industry*
Other industry% share100% shareNew
Momentum Accelerated

Net ZeroNew
Momentum Accelerated

100

Hydrogen
Bioenergy
with CCUS
Bioenergy8080

Net Zero

Heat
Electricity

60

60

Oil

40

Natural gas
with CCUS
Natural gas

20

20

Coal
with CCUS
Coal

0

0

40

2019
2050
*Iron & steel, non-ferrous metals, non-metallic minerals,chemicals (excluding feedstocks), and energy own use & losses

2019

2050

Key points
As with other sectors, industry graduallyelectrifies but at a slower rate due to thedifficulty of electrifying high-temperature
heat in heavy industry. To decarbonize,
heavy industry increases its share of lowcarbon hydrogen and bioenergy, and abates
remaining fossil fuel use with CCUS. Other
industry shifts mainly towards electricity
and bioenergy.
Heavy industry is a grouping of energy
intensive processes such as the
production of steel and other metals,
non-metallic minerals such as cement,
petrochemicals, and oil and gas. These
processes all require high-temperature
heat (more than 200°C) which is difficult
to electrify. Today they mainly use fossil
fuels – particularly coal for cement andiron and steel (where the coal also acts as
a reducing agent) and natural gas, which
is used mainly in petrochemicals and theoil and gas industry.

97 | bp Energy Outlook: 2023 edition

Other industry consumption is currently
dominated by electricity for motors,
mechanical processes and lowtemperature heat, natural gas for use inboilers and – where available – biomass(particularly in the food and paperindustries).
Within heavy industry, in all scenarios theshare of electricity increases while theshares of coal and oil decline. The shareof natural gas remains roughly constantin New Momentum and Accelerated,but declines in Net Zero, with most of
the remaining consumption abated with
CCUS. In Accelerated and Net Zerothere is significant growth in the use of
low-carbon hydrogen and bioenergy,
given the limitations in electrifying hightemperature processes.

Iron and steel accounts for the largest
use of low-carbon hydrogen in industry(not including feedstocks) where it isused both as an energy source andas a reducing agent in the process of
reducing iron ore to iron. This is clearest
in New Momentum, where more than
75% of industrial hydrogen demand isin the iron & steel sector. In Accelerated
and Net Zero, the share is around 40%,
with the other 60% used to provide
high-temperature heat in other sectors,
for example in petrochemicals, glass,ceramics and cement.
In other industry there is greater scopefor electrification than in heavy industry,
with technologies such as industrial-scaleheat pumps capable of producing thelower temperature heat required. In Net
Zero, the energy mix for other industry
is dominated by electricity (~60% share)by 2050, with bioenergy most of theremainder (~30%).

How energy is used – industry: fuels used as feedstocks

98 |Demand for feedstock grows over the medium term
but peaks as pressure on the use of plastics increases
Use of feedstocks by fuel and scenario
EJ
50
Accelerated

Net Zero

New Momentum

Other
Bio-based feedstocks
Hydrogen (low carbon)

40

Hydrogen (grey and brown)
Oil (other feedstocks)30

Oil (petchem feedstocks)

20

10

0

2000

2010

2019

2030

2050

2030

2050

2030

2050

Key points
Consumption of fuels used as feedstock
grows until the mid-2040s in New
Momentum. This is driven by demandfor plastics and hydrogen used in refining
and the production of fertiliser andpetrochemicals. In Accelerated and Net
Zero, demand declines post-2030 due toactions to limit the use of plastics.
Fuel use as a feedstock today can bebroadly split into three categories:
oil-based petrochemicals,
predominately for plastics, whichmake up the largest share (55% inenergy terms).
oil used to make other materials likebitumen, lubricants and solvents.
grey (gas-based) and brown (coalbased) hydrogen used in oil refining,
the production of ammonia for
fertilizer and petrochemicals, and the
production of methanol (used mainlyfor petrochemicals, but also in road
fuels).
99 | bp Energy Outlook: 2023 edition

Demand for feedstock has grownstrongly since 2000 (2.3% per year from
2000-2019) and continues to grow until
the mid-2040s in New Momentum.
In Accelerated and Net Zero demand
declines post-2030, driven by fallingdemand for virgin plastics due tomeasures that limit the use of single-use
plastics and incentivise higher recycling
rates.
There is some displacement of oil bybio-based feedstocks in the second halfof the Outlook – particularly in ethanolproducing regions, such as the US and
Brazil – and by low-carbon hydrogen.
Low-carbon hydrogen can be used to
produce e-naphtha, a direct replacementfor oil-based petrochemical feedstock,and e-methanol, which can be used as
the building block for plastics via themethanol-to-olefins process.
There could be potential for morebioenergy to be used as a substitutefor oil-based petrochemical feedstocks,
but there are limits to the amount of
bioenergy that can be supplied on asustainable basis, and other sectors suchas aviation take the bulk of the available
supplies in all three scenarios.
Demand for feedstock hydrogen varies
across scenarios. In New Momentum,
demand increases by 35% between
2019 and 2050, driven by growth infertiliser use and methanol demand for
traditional uses. Demand from refining
declines slightly as refinery output falls.
In Net Zero, hydrogen demand in refining
declines significantly, as does the useof methanol in road fuels. However,this is more or less offset by newuses of hydrogen to displace oil-based
petrochemicals, such that demand in
2050 is close to 2019 levels.
Grey and brown feedstock hydrogenis gradually replaced by low-carbonhydrogen, but at very different speeds
across scenarios. Around 5-25% offeedstock hydrogen is decarbonizedby 2030, and between 35% and nearly
100% by 2050.

How energy is used – buildings: energy demand by end-use

100 |Energy demand in buildings is dominatedby heating and cooking requirements.
Energy demand by service and fuel (2019)*

Energy demand by service
in key countries and regions (2019)

EJ% share
0

10

20

30

40

0%

Space
heating

RussiaWater
heating

European
Union

Cooking
Appliances

Electricity

UnitedStates

Gas

China

20%

Heat
LightingSpace
cooling
Other

Oil

40%

60%

80%

100%
Space
heatingWaterheating
Cooking
Appliances& lightingSpacecoolingBrazilCoal
Traditional
biomass
Modernbioenergy

India
Saudi
Arabia*Excludes solar thermal

Key points
Heating accounts for around 50% of
the energy used in buildings today, withnatural gas the most commonly used fuel.
Cooking accounts for 25% of the energy
used, dominated by the inefficient use of
traditional biomass in emerging economies.
The largest requirement for energy inresidential and commercial buildings
globally is for space and water heating,which combined make up almost 50% of
the energy used in buildings. Energy forcooking makes up another 25%, with therest largely electricity used for appliances,
lighting and space cooling.
Natural gas is the most widely used fuelfor space and water heating, making
up 44% of the mix in 2019, aroundfour times more than other alternatives– electricity, oil, district heating andtraditional biomass all have shares ofroughly 10%.

101 | bp Energy Outlook: 2023 edition

Total energy demand for cooking iscurrently dominated by the use of
traditional biomass in developing
economies (62%), due to the inefficiency
of its use in traditional stoves (which
are roughly five times less efficient thatnatural gas stoves, for example). Oil,
usually in the form of LPG or kerosene,
and natural gas are also commonly usedfuels.
The services required in buildings varysignificantly by region due to differencesin weather. For example, in Russia
and the EU, around 60% of energy inbuildings is required for space heating,while in warmer climates there is little orno space-heating demand.

Within the warmer regions there arealso differences due to income, with
low-income countries such as India using
the majority of their energy in buildings
for cooking (due to their reliance on
inefficient traditional biomass) while
higher-income countries, such as Saudi
Arabia, use most energy for spacecooling.
At a global level, space cooling makes up
only 6% of energy demand in buildings.
This is because of low ownership of
air-conditioners in many of the world’s
warmest regions due to low incomes.
As incomes increase over the Outlook inthese regions, the number of householdswith space cooling rises rapidly, adding to
the growth in electricity demand.

How energy is used – buildings: developed vs emerging regions

102 |Buildings energy use electrifies
while efficiency improves in all regions
Consumption by fuel in Accelerated

Changes in consumption by fuel (2019-2050)

EJ

EJ

80

Developed economies

Emerging economies

60

-50
-40
-30
-20
-10
Tradiitional
biomass
Developed economies
Modernbioenergy Accelerated
Heat
HydrogenElectricity
Natural
gas
Oil

40

Coal
20

0

10

20

30

40

Net ZeroNew
Momentum
Emerging economies
Accelerated
Net ZeroNew
Momentum0

2019 2030 2040 2050

2019 2030 2040 2050

Residential and commercial buildings only

Key points
Growth in energy demand in buildings
slows as space heating and cooking
appliances become more efficient andenergy conservation increases. The shareof electricity in the energy mix rises asfossil fuel boilers are replaced by heatpumps, and rising incomes in the emerging
economies leads to increased use of
air-conditioning and the phasing out of
traditional biomass.
Energy use in buildings in developed
economies declines in all scenarios due
to increasing energy efficiency. This islargely due to a range of different energy
conservation measures (insulation, smart
meters, resident behaviours) and more
efficient appliances (including heating
and cooling systems). The increased useof solar thermal and waste heat via heat
networks also reduces the requirementfor other energy sources but was notmodelled explicitly in our scenarios.
The fuel mix in developed regions
gradually electrifies, driven largely by
the displacement of gas boilers by heat
103 | bp Energy Outlook: 2023 edition

pumps, although the share of heat from
district heat networks and modern
bioenergy (biomethane and biomass
such as wood pellets) also rises in all
scenarios. There is only a limited role forhydrogen.
Due to the efficient nature of heatpumps, with roughly one unit ofelectricity displacing three units of gas, as
the share of electricity in the energy mix
rises, total energy demand for heating
falls. These declines are amplified byadditional energy conservation measures,
resulting in no absolute increasein electricity demand in developed
economies in all three scenarios despite
the large increase in electricity’s share.
The largest decline in energy terms
is for natural gas demand, which falls
substantially in all scenarios by 2050.
In emerging economies, energy demandin buildings peaks between 2025 and2035 in Accelerated and Net Zero driven
by the phasing out of inefficient traditional
biomass, with roughly one joule (J) of

LPG, natural gas, modern bioenergy orelectricity displacing between 4J and 8Jof traditional biomass.
This effect masks the strong growth
in modern energy demand across all
scenarios as rising incomes boost growthin electricity for appliances, lighting andair-conditioning. Emerging economies’
energy demand excluding traditional
biomass grows 15-65% between 2019and 2050 (~15% for Net Zero and 65% in
New Momentum).
There is a transitional role for LPG andnatural gas as an alternative to traditional
biomass over the next few years, withgas demand in the emerging economies
peaking around 2030 in Accelerated.
But as climate pressures rise later in the
Outlook, the remaining fossil fuels aregradually substituted with electricity,modern bioenergy, solar thermaland district heating as in developed
economies.

How energy is used – transport: road - light vehicles

104 |As activity grows, electricity increasingly replaces
oil products as the main energy carrier for light vehicles
Light vehicle parcin Accelerated

Light vehicle kilometres:
Electricity vs hydrocarbon fuels

Light vehicle energy share

Billions% share% share

2.5

100%

100%

NM

Acc

NZ

NM

Acc

NZ

HydrogenEmerging

Electricity

Developed
2.0

80%

1.5

60%

1.0

40%

40%

0.5

20%

20%

0.0

0%

Naturalgas
Biofuels

80%

NZ
Acc
NM

Oil
products

60%

Electricity
Hydrocarbons

2019
2030
2040
2050
2020
2030
2040
*Scenario abbreviations: NM (New Momentum), Acc (Accelerated), NZ (Net Zero)

2050

0%

2019

2035

2050

Key points
In all three scenarios, two important
trends are underway for light-duty roadtransportation. First, increasing prosperity
brings increased levels of vehicle
ownership, with a larger parc of vehicles
driving more kilometres. Second, regulationand technological advances spur a shift
from oil products to electricity as themain energy carrier for light vehicles. As
electrified vehicles are significantly more
efficient, overall energy used in light-dutyroad transportation does not grow and by2030 starts to decline. The pace of thedecline, which is most pronounced in the
demand for hydrocarbon fuels, differs
across the scenarios.
The global light duty vehicle parc
continues to expand in all three scenarios.
Most of the growth is seen in emerging
economies. In developed economies,
parc growth is much more limited. By
2050, the light duty parc reaches 2.5
billion vehicles in all three scenarios, anincrease of over 60% compared to 2019.
As the parc grows and its composition
turns over it becomes more efficient.
These efficiency gains are driven by
105 | bp Energy Outlook: 2023 edition

both regulation and the diffusion of
improved technology. The retirementof older, inefficient vehicles and the
addition of new vehicles with improved
internal combustion engines enhance theefficiency of the ICE parc. Electrification,
where new vehicles with electric
powertrains replace ICE vehicles, brings
substantial additional efficiency gains aselectric motors do not produce the waste
heat of ICE engines.
The larger vehicle parc supports growth
in total vehicle kilometres driven (Vkm).
The electrification of the parc leads torapid growth in electric kilometres, and acorresponding decline in the kilometres
driven by ICE vehicles.
This change is prompted initially by policy
and regulation but is sustained by theincreasing cost competitiveness of EVs.
The cost reductions in EVs are enabled
by continuing falls in the cost of batteries
and the scale up in the manufacturing ofelectric variants and their components.
All three scenarios assume thatinvestment in charging infrastructure andsupply of critical minerals and other raw

materials is sufficient to enable the rapid
growth in the EV parc.
The shift in composition of the vehicle
parc leads to falling demand forhydrocarbon fuels in light duty vehicles.
That trend accelerates as policies to limit
sales of new ICE vehicles increasingly
bite over the second half of the Outlook.
Light duty parc electrification, alongwith a decarbonization of the power
sector, is critical to achieving broader
decarbonization. The energy mix that
results sees the share of oil products fallfrom >90% in 2019 to between 20 and
60% in 2050 in the three scenarios. In
contrast, the electricity share rises from
<1% to between 30 and 70%.
Biofuels, blended with refined products,
currently make up around 4% of thelight duty energy mix, and that share
increases a little in the near term as blend
rates trend upwards toward engine andinfrastructure limits. However, over time,
biofuel content also falls in line with oil
product demand as electrification winsout.

How energy is used – transport: road - medium and heavy vehicles

106 |The decarbonization of heavier vehicles leads to a more diverse
range of alternative fuels, with electricity taking the biggest share
Medium and heavy vehicle
parc in Accelerated

Medium and heavy vehicle kilometres:
Electricity vs hydrogen

Medium and heavy vehicle energy share

Millions% share% share150

70%
Emerging HDTEmerging MDT

120Developed HDT

60%Developed MDT

50%

90

Acc

NZ

NM

Acc

80%

Electricity
Naturalgas
Biofuels

60%

30%

NZ

Hydrogenderived
fuels
HydrogenElectricity
Hydrogen

40%

60

NM

100%

NZ
Acc
NM

Oil
products

40%

20%

30

20%
10%

0

0%

2019
2030
2040
2050
2020
2030
2040
*Vehicle abbreviations: HDT (heavy duty truck), MDT (medium duty truck)

2050

0%

2019

2035

2050

Key points
There are significant parallels with light
duty in the prospects for medium- andheavy-duty vehicles. The growth of the
global economy requires more vehicles
to transport goods, with almost all of theparc expansion taking place in emerging
economies. As regulation requires
decarbonization, liquid fuels are replacedlargely by electricity, supported byhydrogen. Natural gas including biomethane
also plays a role.
The global parc of medium- and heavyduty vehicles expands from around 75
million to over 125 million in all three
scenarios by 2050. That growth is driven
by growing prosperity and expanding
output, focused particularly in emerging
economies. While the parc has many
more medium-duty trucks (<16 metrictonnes gross vehicle weight (MT GVW),
65% of parc), the energy consumptionof heavy-duty trucks (>16 MT GVW) is
around 40% greater on a MJ per km
basis.

107 | bp Energy Outlook: 2023 edition

Today around 95% of medium- andheavy-duty trucks are fuelled bydiesel, with only a small minority using
alternatives such as compressed or
liquified natural gas. Across the three
scenarios, the mix of powertrains
becomes more diverse, with diesel being
replaced by a mix of electricity, hydrogen,and natural gas (including biomethane).
The main alternatives to diesel areelectricity and hydrogen. The choice
between electricity and hydrogen isfinely balanced and depends on use
case. The use of electricity requires
vehicles with large, expensive batteries
and time-consuming high-poweredcharging to refuel. In contrast, hydrogentrucks offer faster refuelling and greater
range flexibility, but also require costly
fuel cell stacks and gaseous storage. The
choice between fuels also depends on
the relative delivered prices of electricity
and low-carbon hydrogen. In both cases,
achieving strong adoption requires
material vehicle cost reductions, as wellas the development of charging andrefuelling networks.

Across our scenarios, electricity achieves
somewhat stronger take-up acrossthe main trucking categories, althoughhydrogen also achieves substantial
penetration, particularly in long-distanceuse cases.
Medium- and heavy-duty trucks andbuses are high consumers of oil products
today. As the parc shifts towards low
carbon solutions, the impact on oil
product demand increases.
The oil product share of total energy
demand declines from over 90% in2019 to 70-75% by 2035 in Accelerated
and Net Zero, causing oil used intrucking to fall by 2 Mb/d. Electricity
reaches 40-50% of the energy mix inthese two scenarios by 2050, while
the hydrogen share is between 20
and 30%. In contrast, electricity andhydrogen develop more slowly in New
Momentum, reaching around 25% and
15% respectively.

How energy is used – transport: aviation

108 |Aviation energy is gradually decarbonized as new supply chains
increase the availability of sustainable liquid jet fuels
Passenger kilometres in Accelerated

Aviation energy share

Trillions
COVID-19
12% shareReturn to trend growth

Emerging

9

NM

100%

Acc

NZ

NM

Acc

NZ
Sustainable
jet fuel
Fossil jet fuel80%

Developed

60%

6

40%

3

20%
0%

0
2019 2020 2021 2022

2030

2040

2050

Sustainable aviation fuel: bio-derived
Mbd
5

2019

2035

2050

Sustainable aviation fuel: hydrogen-derived% penetration

Mbd% penetration
50%% Net Zero
% Accelerated% New Momentum% Net Zero
% Accelerated% New Momentum

Net Zero

Net Zero2

Accelerated

Accelerated

20%

1

New Momentum

New Momentum

10%

4
3

0
2019

2025

2030

2035

2040

2045

2050

2019

2025

2030

40%
30%

2035

2040

2045

2050

0%

Key points
Aviation demand recovers strongly fromCOVID-19 disruption and grows significantly
to 2050 across all three scenarios. The
incumbent fleet and long-haul range
requirements mean that liquid fuelscontinue to dominate over the Outlook,with the decarbonization of aviation driven
by the increasing penetration of sustainableliquid jet fuel (SAF), in the form of both biobased and fully synthetic SAF.
Aviation was the most impacted
transportation sector during the
COVID-19 pandemic, with demand foraviation fuels falling by 50% relative to
pre-pandemic levels.
As COVID-19 restrictions were relaxed,
domestic aviation demand recovered
fastest. International demand has now
followed in many parts of the world,
although in 2023, Asia Pacific recovery is
still lagging.
Looking out to 2050, demand grows
significantly in all three scenarios, withgrowth fastest in emerging economies.
109 | bp Energy Outlook: 2023 edition

Global passenger kilometres increase70-115% between 2019 and 2050 in
the scenarios, with lower demand in
Accelerated and Net Zero reflecting
higher fuel prices and consumer choices
to avoid flying.
The combination of the slow turnoverof the current liquid-fuel based fleet andthe range requirements for longer haul
flights mean that electric and hydrogenbased solutions play a limited role in the
decarbonization of the aviation sector.
Instead, the decarbonization of aviation
is driven by the increasing role of SAF. In
New Momentum, SAF reaches around
5% of the jet pool by 2035, based largely
on bio-based SAF. In Accelerated and
Net Zero, the combination of bio- andhydrogen-based SAF reach between
10% and 20%. By 2050, in Accelerated
and Net Zero, penetration grows to
between 40 and 70%.
The increasing role played by SAF isunderpinned by a significant increasein production capacity, with between

15 and 30 world-scale facilities coming
online every year between the 2030s andmid-2040s.
The early penetration of SAF is led bybio-based fuels, initially derived from
HEFA (hydroprocessed esters and fattyacid) from sustainable vegetable oilbased feedstocks and subsequently fromFischer–Tropsch (FT)-based conversionof municipal solid waste and other nonfood biomass, as well as alcohol-to-jet
technology. Across the three scenarios,
this accounts for 5-20% of total jet fuel in
2035, and 10-40% by 2050.
Hydrogen-derived solutions to create
synthetic jet fuel form a growing partof the aviation energy mix over time,
especially in Net Zero scenario, as second
generation biojet encounters limits in
its ability to scale, and improvements intechnology and increasing production
capacity cause the relative cost ofsynthetic jet fuel to fall. In Accelerated
and Net Zero hydrogen-derived synthetic
fuels are 1-2% of total jet fuel in 2035 but
reach 10-30% in 2050.

How energy is used – transport: marine

110 |The carbon intensity of the marine sector is gradually reduced,
led by the increasing use of hydrogen-derived fuels
Cost of future marine fuels

Marine energy share$/GJ% share

80
70

50

Acc

NZ

NM

Acc

NZ

Hydrogenderived fuels
Natural gas

Green ammonia
Synthetic methanol

60

NM

100%

Blue ammonia

80%

Biofuels

Bio-methanol

Oil products

Residual fuel oil*

60%

40
40%

30
20

20%

10
0

2030 2040 2050 2030 2040 2050 2030 2040 2050 2030 2040 2050

0%

2019

2035

2050

*Historic range 2015-22

Key points
Seaborne trade grows in all three scenarios,with economical shipping of goods andraw materials a critical element of thecontinued growth of the global economy.
Decarbonization of the marine sector
requires the gradual transition of the fleet
to new fuels, led by hydrogen-based fuels(ammonia and methanol), supported by
growing roles for biofuels and natural gas.
The current marine fleet relies almost
entirely on oil products, with alternative,
low-carbon energy sources currently
significantly more expensive. The cost offuels is critical. For large ships, the costof fuel over their lifetime can be many
multiples of the initial build cost.

111 | bp Energy Outlook: 2023 edition

Both hydrogen-derived fuels and biofuels
form significant parts of the marine
energy mix in Accelerated and Net Zeroby 2050. Amongst hydrogen-based fuels,
ammonia looks set to be the lowest cost
solution at scale, although it presents
handling challenges that need to betested and determined to be safe forwidespread use. In addition, ammoniabased marine engine technology is still indevelopment although likely to come tomarket in the near future. Methanol also
has operational challenges, caused by its
low flashpoint (although dual-fuel enginesthat can use it are available today) and its
likely higher cost of supply at the scalerequired.
The initial decline in oil product fuelsis largely offset by growth in liquefied
natural gas (LNG) with the potential toincreasingly swap fossil- for bio-methane.
This reflects that in recent years,
LNG has been the strongest growing
alternative to incumbent oil products
and in the short term, continues to offer
reduced emissions versus fuel oil or gas
oil.

Further ahead, hydrogen-derived fuelsand biofuels take an increasingly large
share of the marine energy mix in
Accelerated and Net Zero. The transition
to these fuels accelerates as increasing
amounts of the existing fleet are turned
over, allowing alternative fuels to be
adopted. By 2050, in Accelerated and Net
Zero, the penetration of hydrogen-derived
fuels reaches 30-55% and biofuels 1020%, as oil products decline to between
40 and 10%.
The growth of these alternative fuels in
Accelerated and Net Zero is supported
by significant development of bunkering
facilities, including fuel storage, andrefuelling barges, as well as growth inmanufacturing capacity needed to supply
the required fuels.

112 |

Annex

Data tables
Modelling the impact of the Russia-Ukraine
war on the global energy system
The economic impact of climate change
Investment methodology
Carbon emissions definitions and sources
Other data definitions and sources
Disclaimer

113 | bp Energy Outlook: 2023 edition

Annex114 |Data tables
Acc

Net Zero

NM

Change 2019-2050 (p.a.)Acc
Net ZeroNM

Share of primary energy in 2050

2019

Level in 2050*

Acc

Net ZeroNM

Primary energy by fuel
Total
Oil
Natural gas
Coal
Nuclear
Hydro
Renewables (incl. bioenergy)

627
193
140
158
25
38
74

666
78
87
23
40
61
377

630
39
60
17
47
65
403

733
140
166
96
28
48
256

0.2%
-2.9%
-1.5%
-6.0%
1.5%
1.6%
5.4%

0.0%
-5.0%
-2.7%
-7.0%
2.1%
1.8%
5.6%

0.5%
-1.0%
0.5%
-1.6%
0.4%
0.8%
4.1%

100%
12%
13%
4%
6%
9%
57%

100%
6%
9%
3%
7%
10%
64%

100%
19%
23%
13%
4%
7%
35%

Native units
Oil (Mb/d)Natural gas (Bcm)

98
3900

42
2422

21
1658

73
4616

Primary energy by region
Developed
US
EU

234
97
65

171
76
45

162
74
42

199
89
51

-1.0%
-0.8%
-1.2%

-1.2%
-0.9%
-1.4%

-0.5%
-0.3%
-0.8%

26%
11%
7%

26%
12%
7%

27%
12%
7%

Emerging
China
India
Middle East
RussiaBrazil

393
147
42
37
30
16

495
149
88
47
30
17

468
138
88
45
26
15

534
160
94
48
32
18

0.8%
0.0%
2.5%
0.7%
-0.1%
0.2%

0.6%
-0.2%
2.4%
0.6%
-0.4%
-0.1%

1.0%
0.3%
2.6%
0.8%
0.1%
0.5%

74%
22%
13%
7%
4%
2%

74%
22%
14%
7%
4%
2%

73%
22%
13%
7%
4%
3%

Level in 2050*

Change 2019-2050 (p.a.)Share of total final
consumption in 2050

2019

Acc

Net ZeroNM

Acc

Net ZeroNM

Acc

Net Zero

NM

Total
Transport
Industry
Feedstocks
Buildings

477
119
188
38
132

398
100
153
36
110

335
90
128
27
90

513
114
203
45
151

-0.6%
-0.6%
-0.7%
-0.2%
-0.6%

-1.1%
-0.9%
-1.3%
-1.0%
-1.2%

0.2%
-0.1%
0.2%
0.6%
0.4%

100%
25%
38%
9%
28%

100%
27%
38%
8%
27%

100%
22%
40%
9%
29%

Generation by carrier
Electricity ('000 TWh)
Hydrogen (Mt)

27
66

57
301

61
460

50
165

2.4%
5.0%

2.7%
6.4%

2.0%
3.0%

52%
9%

66%
17%

35%
4%

Production
Oil (Mb/d)Natural gas (Bcm)
Coal (EJ)

98
3976
168

42
2422
27

21
1658
15

73
4616
92

-2.7%
-1.6%
-5.7%

-4.8%
-2.8%
-7.4%

-0.9%
0.5%
-1.9%

Net emissions from energy andindustry (Gt of CO2e)

39.8

9.1

2.0

28.7

-4.7%

-9.1%

-1.1%

Carbon capture use & storage
(Gt)

0.0

4.1

6.1

1.1

56%

58%

49%

128

266

266

266

2.4%

2.4%

2.4%

3.7

1.5

1.3

1.9

-2.9%

-3.5%

-2.1%

Total final consumption
by sector

Emissions

Macro
GDP (trillion US$ PPP)
Energy intensity (MJ of
TFC per US$ of GDP)

*Exajoules (EJ) unless otherwise stated
115 | bp Energy Outlook: 2023 edition

Annex116 |Modelling the impact of the Russia-Ukraine
war on the global energy system
The impact of the Russia-Ukraine war
was modelled by capturing three typesof economic shock associated withthe war: near-term commodity price(stagflation) shock, heightened energy
security concerns, and a reduced paceof globalization.
Commodity price shock
This shock is modelled as a sharp but
transitory increase in fossil fuel prices,
combined with significantly lower global
GDP. Real interest rates are also higher
as central banks tighten monetary policy
to control inflation, which increase
the levelized costs of different energy
sources, affecting the relative pricesof alternative technologies. The shock
dissipates by 2030, by which time prices
and, in almost all cases, GDP levels havereturned to their long-term trend. The
exception to this is the level of GDP in
Russia and Ukraine, where the war is

The impact from this reduced paceof globalization is assumed to havedifferent effects in different countries
and regions: with those economies
whose future economic growth isparticularly dependent on international
trade and on the sharing of ideas andproductivity the most heavily impacted.
For example, the shock has a muchlarger impact on emerging Asian
economies than on the United States.
The methodology used to calibrate thedeglobalization shock is based on the
trade growth literature, including studies
by the World Bank (2017) and Alcala andCiccone (2004).

117 | bp Energy Outlook: 2023 edition

assumed to have a persistent negative
impact on GDP.
Heightened energy security concerns
The Russia-Ukraine war is assumed
to cause governments to implement
policies to reduce their dependency on
imported energy. The shock is modelledby adding a c.30% ‘security’ premium
to the price of the energy imported into
each region or country. This premiumis increased to roughly 60% for energy
imported by the EU given its particular
exposure to war-related disruption
and the need to reduce imports from
Russia rapidly. The security premium
imposed on imported energy increases
the competitiveness of domestically
produced energy, including renewables,
nuclear and hydro power.

Although these three shocks are
assumed to take effect immediately,
their peak effects occur over different
time frames. In the short term (up until
around 2025), the commodity priceshock is the most impactful. In themedium term (around 2030-2035), theimpact from heightened energy security
concerns has the largest impact on theenergy system. In the longer term, thelower level of global activity causedby reduced pace of globalization ispreeminent.

Reduced pace of globalization
The war in Ukraine is assumed to reduce
the pace of globalization, as countries
and regions heighten their focus ondomestic resilience and reduce their
exposure to international shocks. The
lower profile for international trade andopenness has a small but negative
impact on global economic growth.
Although the effect is small on a yearlybasis – reducing average annual growthby around 0.1 percentage point – theimpact on the level of GDP compounds
over time, reducing the level of global
GDP by around 4% in 2050.

Sources:
World Bank (2017) ‘The Global Costs ofProtectionism’. Policy Research working
paper, no. WP 8277.
Alcala, F. and Ciccone, A. (2004) ‘Tradeand Productivity’. The Quarterly Journalof Economics, 119 (2), pp. 613-646.

Annex

118 |The economic impact of climate change
The GDP profiles used in the Energy
Outlook come from Oxford Economics(OE). These long-term forecasts
incorporate estimates of the economic
impact of climate change. Theseestimates draw on the latest researchin the scientific literature and follow
a similar methodology to that used
in Energy Outlook 2020 and Energy
Outlook 2022.
OE updated and extended theestimation approach developed by
Burke, Hsiang and Miguel (2015), whichsuggests a non-linear relationshipbetween productivity and temperature,in which per capita income growth rises
to an average (population weighted)
temperature of just under 15°C ((Burkeet al.’s initial assessment was 13°C). Thistemperature curve suggests that ‘cold
country’ income growth increases withannual temperatures. However, at annual
temperatures above 15°C, per capita

Given the huge range of uncertainty
surrounding estimates of the economic
impact of both climate changes andmitigation, and the fact that all three ofthe main scenarios include both typesof costs to a greater or lesser extent,
the GDP profiles used in the Outlook
are based on the illustrative assumptionthat these effects reduce GDP in 2050
by around 2% in all three scenarios,
relative to the counterfactual in which
temperatures are held constant at recent
average levels.

119 | bp Energy Outlook: 2023 edition

income growth is increasingly adversely
affected by higher temperatures.
The OE emissions forecasts are broadly
in line with the IEA STEPS scenario andassume average global temperatures
will reach 2°C above pre-industrial levels
by 2050. The results suggest that in
2050 global GDP is around 2% lower
than in a counterfactual scenario where
the temperature change remained at thecurrent level. The regional impacts are
distributed according to the evolutionof their temperatures relative to theconcave function estimated by OE.
While OE’s approach captures channels
associated with average temperatures,
these estimates remain uncertain andincomplete; they do not, for example,
explicitly include impact from migration
or extensive coastal flooding.

Sources:
Burke, M., Hsiang, S. & Miguel, E.
Global non-linear effect of temperatureon economic production. Nature 527,
235–239 (2015) https://www.nature.
com/articles/nature15725
The global aggregate mitigation costestimates in terms of GDP losses aretaken from IPCC AR5 – Chapter 6:https://www.ipcc.ch/site/assets/
uploads/2018/02/ipcc_wg3_ar5_
chapter6.pdf

The mitigation costs of actions todecarbonize the energy system are also
uncertain, with significant variations
across different external estimates.
Most estimates, however, suggestthat the upfront costs increase withthe stringency of the mitigation effort,suggesting that they are likely to bebigger in Accelerated and Net Zero thanin New Momentum. Estimates publishedby the IPCC (AR5 – Chapter 6) suggestthat for scenarios consistent withkeeping global temperature increases
to well below 2°C, median estimates of
mitigation costs range between 2-6% of
global consumption by 2050.

Annex120 |Investment methodology
Oil and gas upstream
Implied levels of oil and gas investment
are derived from the production levels ineach scenario. Upstream oil and natural
gas capital expenditure includes well
capex (costs related to well construction,
well completion, well simulation, steel
costs and materials), facility capex (costs
to develop, install, maintain, and modify
surface installations and infrastructure)and exploration capex (costs incurred
to find and prove hydrocarbons). It
excludes operating costs and midstream
capex such as capex associated with
developing LNG liquefaction capacity.

Wind and solar
Wind and solar energy investment
requirements are based on the capital
expenditure costs associated with the
deployment profiles of each technology
in each scenario.
Wind and solar deployment profiles
include both renewable power capacity
for end-use and for green hydrogenproduction. The deployment profiles
also consider the potential impact of
curtailment.

121 | bp Energy Outlook: 2023 edition

Asset level production profiles areaggregated by geography, supply
segment (onshore, offshore, shale
and oil sands), supply type (crude,condensates, NGLs, natural gas) anddevelopmental stage, i.e., classified
by whether the asset is currently
producing, under development, or
non-producing and unsanctioned.
As production from producing andsanctioned assets declines, incremental
production from infill drilling and new,unsanctioned assets is called on tomeet the oil and gas demand shortfalls.
The investment required to bring thisvolume online is then added to any
capital costs associated with maintaining

Capital expenditure costs are assigned
to each scenario based on their
historical values and estimated future
evolution. They are differentiated bytechnology, region and scenario using
a combination of internal bp estimatesand external benchmarking. The capital
expenditure figures do not include theincremental wider system integration
costs associated with wind and solar
deployment.

producing and sanctioned projects.
The average 2022-2050 decline rate forassets currently producing and underdevelopment is around 4.5% p.a. forboth oil and for natural gas, although
this varies widely by segment andhydrocarbon type. All estimates arederived using asset-level assessmentsfrom Rystad Energy.

Annex122 |Carbon emissions definitions and sources
Unless otherwise stated, carbon
emissions refer to CO2 emissions from:energy use (i.e. the production anduse of energy in the three final enduse sectors: industry, transport andbuildings),
most non-energy related industrial
processes,
natural gas flaring,methane emissions associated withthe production, transmission anddistribution of fossil fuels, expressed in
CO2 equivalent terms.
CO2 emissions from industrial processes
refer only to non-energy emissions from
cement production. CO2 emissions
associated with the production ofhydrogen feedstock for ammonia andmethanol are included under hydrogensector emissions.

IPCC scenarios and emissions
methodology
We use scenarios that are in the
database corresponding to the Sixth
Assessment Report published in
2022. This database is hosted by
the International Institute for Applied
Systems Analysis (IIASA) as part of acooperation agreement with Working
Group III of the IPCC.
The scenarios used in the analysis arethose labelled as:
Scenarios C1: these scenarios arereferred to as scenarios that limit
warming to 1.5°C (>50%) with no or
limited overshoot.
Scenarios C3a: these scenarios arereferred to as scenarios that limit
warming to 2°C (>67%) with immediate
action.
Cumulative CO2e emissions in 20152050 are the addition of CO2 emissions
from energy and industrial processes
and methane emissions from energy
supply transformed into CO2e using afactor Global Warming Potential of 25.
The AR6 Scenarios Database report123 | bp Energy Outlook: 2023 edition

Historical data for natural gas flaring data
is taken from VIIRS Nightfire (VNF) dataand produced by the Earth Observation
Group (EOG), Payne Institute for Public
Policy, Colorado School of Mines. The
profiles for natural gas flaring in the
scenarios assume that flaring moves inline with wellhead upstream output.
Historical data on methane emissions
associated with the production,transportation and distribution of fossil
fuels are sourced from IEA estimates ofgreenhouse gas emissions. The profiles
for future methane emissions assumed
in the scenarios are based on fossil fuelproduction and take account of recent
policy initiatives such as the Global
Methane Pledge. The net change inmethane emissions is the aggregation of
future changes to fossil fuel production
and methane intensity.
There is a wide range of uncertainty
with respect to both current estimatesof methane emissions and theglobal warming potential of methane
emissions. The methane to CO2e factor
used in the scenarios is a 100-year
Global Warming Potential (GWP) of 25,
recommended by the IPCC in AR4.
This conversion factor is used to ensurealignment with financial and government
reporting standards, and to ensure
consistency across all bp corporate
reporting. In particular, this is the same
factor to be used in the bp Annual
Report, also published in Q1 2023.

data for every five years. For the missing
intermediate years, a linear interpolation
is used.
SourcesAndrew, R.M., 2019. Global CO2
emissions from cement production,
1928–2018. Earth System Science Data
11, 1675–1710, (updated dataset July
2021)
IPCC 2006, 2006 IPCC Guidelines for
National Greenhouse Gas Inventories,
Prepared by the National Greenhouse
Gas Inventories Programme, Eggleston
H.S., Buendia L., Miwa K., Ngara T. andTanabe K. (eds).
VIIRS Nightfire (VNF) produced by the
Earth Observation Group (EOG), Payne
Institute for Public Policy, Colorado
School of Mines.
IEA (2021), Greenhouse Gas Emissions
from Energy Data Explorer, IEA, Paris
IPCC Fourth Assessment Report:
Climate Change 2007.
IPCC Sixth Assessment Report– Climate Change 2022: Impacts,
Adaptation and Vulnerability

IEA (2021), Methane Tracker 2021, IEA,
Paris
Sustainability Reporting Guidance for the
Oil and Gas Industry, 4th Edition, 2020.
IPIECA/API/IOGP.
Edward Byers, Volker Krey, Elmar
Kriegler, Keywan Riahi, Roberto
Schaeffer, Jarmo Kikstra, Robin Lamboll,
Zebedee Nicholls, Marit Sanstad, Chris
Smith, Kaj-Ivar van der Wijst, Alaa
Al Khourdajie, Franck Lecocq, Joana
Portugal-Pereira, Yamina Saheb, Anders
Strømann, Harald Winkler, Cornelia Auer,
Elina Brutschin, Matthew Gidden, Philip
Hackstock, Mathijs Harmsen, Daniel
Huppmann, Peter Kolp, Claire Lepault,
Jared Lewis, Giacomo Marangoni,
Eduardo Müller-Casseres, Ragnhild
Skeie, Michaela Werning, Katherine
Calvin, Piers Forster, Celine Guivarch,
Tomoko Hasegawa, Malte Meinshausen,
Glen Peters, Joeri Rogelj, Bjorn Samset,
Julia Steinberger, Massimo Tavoni,Detlef van Vuuren. AR6 Scenarios
Database hosted by IIASA International
Institute for Applied Systems Analysis,2022.

Annex124 |Other data definitions and sources
Data definitions are based on the bp
Statistical Review of World Energy,
unless otherwise noted. Data used forcomparisons, unless otherwise noted,
are rebased to be consistent with the bp
Statistical Review.
Primary energy, unless otherwise noted,
comprises commercially traded fuels
and traditional biomass. In this Outlook,primary energy is derived using:
the substitution method - whichgrosses up energy derived from nonfossil power by the equivalent amountof fossil fuel required to generate
the same volume of electricity in athermal power station. The grossing
assumption is time varying, with thesimplified assumption that efficiency
will increase linearly from 40% today
to 45% by 2050

Fuels, energy carriers, carbon andmaterials
Oil, unless otherwise noted, includes
crude (including shale oil and oil sands),
natural gas liquids (NGLs), gas-toliquids (GTLs), coal-to-liquids (CTLs),
condensates, and refinery gains.
Hydrogen-derived fuels are all fuels
derived from low-carbon hydrogen,including ammonia, methanol, and othersynthetic hydrocarbons.
Renewables, unless otherwise noted,
includes wind, solar, geothermal,
biomass, biomethane, and biofuels andexclude large-scale hydro. Non-fossils
include renewables, nuclear and hydro.
Traditional biomass refers to solid
biomass (typically not traded) used withbasic technologies e.g. for cooking.

125 | bp Energy Outlook: 2023 edition

Gross Domestic Product (GDP) isexpressed in terms of real Purchasing
Power Parity (PPP) at 2015 prices.
Sectors
Transport includes energy used in heavyroad, light road, marine, rail and aviation.
Electric vehicles include all four wheeledvehicles capable of plug-in electriccharging. Industry includes energy usedin commodity and goods manufacturing,
construction, mining, the energy
industry including pipeline transport, andfor transformation processes outside ofpower, heat and hydrogen generation.
Feedstocks includes non-combusted
fuel that is used as a feedstock to creatematerials such as petrochemicals,
lubricant and bitumen. Buildings
includes energy used in residential
and commercial buildings, agriculture,
forestry, fishing and non-specified
consumption.

Regions
Developed is approximated as North
America plus Europe plus Developed
Asia. Emerging refers to all othercountries and regions not in Developed.
China refers to the Chinese Mainland.
Developed Asia includes OECD Asia
plus other high income Asian countries
and regions. Emerging Asia includes all
countries and regions in Asia excluding
mainland China, India and Developed
Asia.

Hydrogen demand includes its direct
consumption in transport, industry,buildings, power and heat, as well as
feedstock demand for the productionof hydrogen-derived fuels and forconventional refining and petrochemical
feedstock demand.

Key data sources

Low-carbon hydrogen includes greenhydrogen, and hydrogen produced frombiomass with CCUS, gas with CCUS,
and coal with CCUS. CCUS options
include CO2 capture rates of 93-98%
over the Outlook. The global averagemethane emissions rate for the gas
or coal consumed to produce bluehydrogen is between 1.4-0.7% over the
Outlook.

International Energy Agency, World
Energy Balances, July 2021

BP p.l.c., bp Statistical Review of World
Energy, London, United Kingdom, June
2021
International Energy Agency, World
Energy Statistics, September 2021

Oxford Economics, Global GDP
Forecasts, 2022
United Nations, Department of
Economic and Social Affairs, Population
Division (2019). World Population
Prospects 2019, Online Edition. Rev. 1
IEA (2021), Methane Tracker 2021, IEA,
Paris
Sustainability Reporting Guidance for the
Oil and Gas Industry, 4th Edition, 2020.
IPIECA/API/IOGP.

Annex126 |Disclaimer
This publication contains forwardlooking statements – that is, statements
related to future, not past events andcircumstances. These statements
may generally, but not always, beidentified by the use of words such as‘will’, ‘expects, ‘is expected to’, ‘aims’,‘should’, ‘may’, ‘objective’, ‘is likely to’,‘intends’, ‘believes’, anticipates, ‘plans’,‘we see’ or similar expressions. In
particular, the following, among otherstatements, are all forward looking
in nature: statements regarding the
global energy transition, increasing
prosperity and living standards inthe developing world and emerging
economies, expansion of the circular
economy, urbanization and increasing
industrialization and productivity,
energy demand, consumption andaccess, impacts of the Coronavirus
pandemic, the global fuel mix including
its composition and how that may
change over time and in different
pathways or scenarios, the global energy
127 | bp Energy Outlook: 2023 edition

system including different pathways
and scenarios and how it may be
restructured, societal preferences, global
economic growth including the impact
of climate change on this, population
growth, demand for passenger andcommercial transportation, energy
markets, energy efficiency, policy
measures and support for renewableenergies and other lower-carbon
alternatives, sources of energy
supply and production, technologicaldevelopments, trade disputes, sanctions
and other matters that may impact
energy security, and the growth ofcarbon emissions.
Forward-looking statements involverisks and uncertainties because they
relate to events, and depend on
circumstances, that will or may occur
in the future. Actual outcomes may
differ materially from those expressedin such statements depending on avariety of factors, including: the specificfactors identified in the discussions
expressed in such statements; productsupply, demand and pricing; politicalstability; general economic conditions;demographic changes; legal andregulatory developments; availabilityof new technologies; natural disasters
and adverse weather conditions; wars
and acts of terrorism or sabotage;
public health situations including theimpacts of an epidemic or pandemic
and other factors discussed in thispublication. bp disclaims any obligation
to update this publication or to correct
any inaccuracies which may become
apparent. Neither BP p.l.c. nor any of its
subsidiaries (nor any of their respective
officers, employees and agents)
accept liability for any inaccuracies oromissions or for any direct, indirect,
special, consequential or other losses
or damages of whatsoever kind in or inconnection with this publication or any
information contained in it.

© BP p.l.c. 2023