In its January Energy Outlook, British Petroleum (BP) highlighted the four trends it believes will determine the future of global energy.
The trends, as seen by Nairametrics, include the following- the declining role of hydrocarbons, the rapid expansion of renewables, increasing electrification, and the growing use of low-carbon hydrogen.
According to the outlook, the Russia-Ukraine war will also have long-lasting effects on the global energy system and spark weaker economic growth. This will manifest in many ways including increased energy security concerns which will trigger a shift towards a more local, lower-carbon energy mix, as well as energy security concerns that can reduce the role of oil and natural gas imports across the world.
Shift towards renewables: The outlook further stated that energy security concerns as a fallout from the Russia-Ukraine war will lead to an accelerated shift towards renewable energy.
- “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 installed capacity used to support green hydrogen production. This increase is underpinned by a corresponding acceleration in other enabling factors, particularly the expansion of the transmission grid,” BP stated in its outlook.
BP noted that global oil demand will plateau over the next 10 years before declining over the rest of the outlook, driven in part by the falling use of oil in road transport as vehicles become more efficient and are increasingly fueled by alternative energy sources
Emerging economies’ context: In the BP outlook it is said that while oil use in developed countries will decelerate, oil demand in emerging economies is broadly flat or gently rising over the coming years. According to the outlook, emerging economies’ share of global oil demand will increase from 55% in 2021 to around 70% in 2050.
Global natural gas demand will grow from current times to 2050, driven by growing use in developing countries in Africa and Asia. Much of this projected growth is in the power sector as the share of natural gas consumption in power generation in these regions grows and overall power generation increases robustly.
Meanwhile. the outlook says that global liquefied natural gas (LNG) exports will be dominated by the United States of America and countries in the Middle East, stating that by 2030, the US and the Middle East together account for around half of the global LNG supplies.
Electricity demand grows robustly till 2050, driven by growing prosperity in emerging economies and increasing electrification of the global energy system. 90% of electricity growth is accounted for by emerging economies as rising prosperity and living standards support a rapid expansion in the use of electricity.
The Nigerian context: The Nigerian government has succeeded in diversifying the economy, as suggested by the Finance Minister, Dr Zainab Ahmed during her January 2023 budget presentation, where she highlighted the fact that total revenue available to fund the 2023 budget is estimated at N10.49 trillion, and the government expects 22% of projected revenues from oil-related sources, while 78% is expected from non-oil sources.
So, oil is gradually being displaced as an economic driver in Nigeria. Meanwhile, government initiatives like the National Gas Expansion Program (NGEP) are pushing natural gas as a preferred fuel for Nigeria’s industries, as well as cooking fuel for households.
Also, Nigeria’s renewable energy sector is on the path to growth due to several factors. One of which is the commitment of the Rural Electrification Agency to power rural and remote areas with off-grid alternative energy sources, funded by the World Bank and the African Development Bank (AfDB) as well as other bodies.
In a January 2023 report by the International Renewable Energy Agency (IRENA) and the Energy Commission of Nigeria (ECN), it was stated that the low rate of power infrastructure and capacity in Nigeria, provides a context for a paradigm shift towards renewable energy. According to IRENA, Nigeria has much to gain from pivoting towards domestic renewable energy sources in place of domestic fossil fuels.
For the record: Global fossil fuel employment may drop by 80% in a 2°C scenario compliant with the Paris Agreement, while renewable-based employment could increase fivefold. So, nurturing local development of abundant renewable energy resources would potentially spur local innovative renewable energy champions in such a scenario, which would enable the creation of local jobs and spin-off industries.