BP report is disturbing news on global warming

Every year for the last 67 years, British Petroleum (BP) has been publishing a comprehensive report, “Statistical Review of World Energy.” The BP report is like the Bible for the energy industry, with charts and tables on different energy sources like oil, coal, natural gas, nuclear, hydropower, modern renewables like wind and solar, etc. Energy experts eagerly wait for it to learn how the world energy scenario has changed over the year. Since an important industry like energy does not show dramatic changes every year, the report does not get much coverage in the media. However, this year should have been different.

The latest report, published in June, reveals that carbon emission from energy consumption has increased by 1.6% after three years of little or no growth. It is a partial step back from the exceptional momentum of recent years towards a lower carbon energy system. This, despite the continuing energy transition from fossil fuels to renewables.

Such a dramatic change in carbon emission shows that energy transition is not happening at the required pace. Why didn’t this disturbing news catch the attention of the world community which is increasingly concerned about global warming?

Renewables grew at a rapid rate of 16.6% in 2017. Natural gas was the largest source of energy growth last year. Major coal consumer China is continuing to switch from coal to gas. Still, it consumed marginally more coal in 2017, after continuous decline during the previous three years. The rate of decline in coal consumption in OECD countries last year was insignificant. As a result, coal consumption grew last year (up by 0.7%) – the first rise in four years. India alone accounted for 76% of the increase in world coal consumption, a distinction not to be proud of.

Energy experts, climate scientists and world leaders should take the findings of the BP report seriously to explore more efficient strategies to reduce carbon emission. Otherwise, the world has little or no chance of keeping the temperature rise to less than two degrees centigrade above the pre-industrial level this century, let alone the 1.5 degree centigrade that world leaders agreed to at Paris in 2015. The world is running out of time to achieve even the former.

The BP report’s findings on the global power sector are even more astonishing. The share of coal in meeting power needs in 2017 was exactly the same as in 1998, despite everyone now being aware of the harmful impact of using coal. The share of non-fossil fuels in the power sector in 2017 was less than in 1998. This was because the growth in renewables could not compensate for the reduction in the share of nuclear power. These statistics show that the world community should take steps to adapt energy efficiency and renewables on a war footing. In addition, we need to question the need to go after the goal of ever increasing per capita GDP, especially in the developed world.

Global oil consumption growth averaged 1.8%, or 1.7 million barrels per day (b/d), above its 10-year average of 1.2% for the third consecutive year. Increase in Brent price from $43.73 per barrel in 2016 to $54.19/b in 2017 did not seem to have much of an impact.

Global power generation, which absorbs 40% of total primary energy, grew by 2.8% in 2017, close to its 10 year average. Almost all of that growth came from the developing world. The increase in global power generation was driven by strong expansion in renewable energy, led by wind and solar, which accounted for almost half of the total growth in power generation, despite accounting for only 8% of total generation. Though this is an encouraging development, it is not enough.

Step up

India’s energy scenario continued to differ considerably from that of the rest of the world in 2017. While this by itself is not bad, Indian energy experts, especially those at Niti Aayog, should analyse it for lessons to learn. It may be to the credit of the NDA government that India is now developing renewables faster than it did a few years ago. For example, the UPA added about 2,728 MW of solar generating capacity during its last three years, the NDA has added 15,757 MW during its first three years. What is more impressive is the target of 100 GW of solar by 2022.

But the NDA, like the UPA, has not succeeded in reducing the contribution of coal. Coal consumption has not only increased by 4.5% in 2017 but also continues to have a large energy share of 56.3%, against a world average of 27.6%. It is in the natural gas sector that India has failed miserably. This is because of irrational pricing policy followed by both the UPA and NDA governments. As the gas market gets integrated internationally because of the rapid growth in LNG, India should develop a policy to exploit the opportunities offered by liberalising the gas market.

When the shares of different energy sources in 2017 are compared with the two scenarios — Business As Usual (BAU) and Ambitious — developed by Niti Aayog in their Draft Energy Plan for 2040, it becomes obvious that India should redo the energy plan. The share of fossil fuels decreases in BAU case from 92.5% to 85.1% under BAU and 78% under Ambitious. Though Niti Aayog has been criticised after the publication of the draft plan, it has failed to finalise its plan even after the passage of a year.

While redoing the draft energy plan, Niti Aayog should attempt to draw up plans to reduce coal consumption even more than originally proposed. There is ample scope to replace coal by renewables. Niti Aayog should also be more creative in developing the gas sector to promote more gas imports while liberalising the gas market to unleash India’s potential in gas exploration.