Renewable energy capacity grew by a record amount last year despite pandemic-induced turbulence causing global energy demand to plummet, but the rise in wind and solar is not enough to hit Paris accord climate goals, according to BP.
Wind and solar power capacity grew by 238 gigawatts globally in 2020, a “colossal” 50 per cent bigger than at any time in history, according to the latest annual review of world energy by British oil and gas company BP, with China accounting for more than half of that growth.
This boosted the renewable power share in the global energy mix to 11.7 per cent from 10.3 per cent, with the share in Europe hitting 23.8 per cent, making it the first region for renewables to become the main single source of power.
“The relative immunity of renewable energy to the events of last year is encouraging” said Bernard Looney, BP’s chief executive.
While renewables were on the rise, global energy demand plummeted 4.5 per cent, the largest decline since 1945, with the fall mainly driven by a contraction in oil demand of 9.3 per cent as airlines were grounded and employees stopping travelling to offices in favour of working from home.
Spencer Dale, BP’s chief economist, said 2020 will go down as one of the most surprising and challenging years for the global energy sector.
“The global lockdowns had a dramatic impact on energy markets, particularly on oil, whose transport-related demand was crushed,” he said.
“Encouragingly, 2020 was also the year the share of renewables in global power generation recorded its fastest ever increase – a growth that came largely at the expense of coal-fired generation. These trends are exactly what the world needs to see as it transitions to net zero – strong growth in renewables crowding out coal.”
The share of coal in power generation fell 1.3 percentage points to a record low of 35.1 per cent, BP said, although coal-fired generation remained flat overall in 2015 and coal consumption rose in China and Malaysia.
While the rapid growth in renewable energy quells fears that low oil prices at the start of the pandemic and governments’ focus on fighting the crisis might slow the transition towards cleaner power, Mr Dale said it was still not sufficient to hit the Paris climate change goal to limit global warming to well below 2°C and pursue efforts towards 1.5°C.
“The rate of decline in carbon emissions observed last year is similar to what the world needs to average each and every year for the next 30 years to be on track to meet the Paris climate goals,” said Mr Dale.
While at its lowest point in April 2020, oil demand dropped about 20 per cent, the equivalent of 20 million barrels per day, this was transitory with energy demand already increasing as economies rebound from the Covid-19 crisis.
With 10 countries, along with the European Union passing net zero targets into law, the International Energy Agency recently estimated that together these commitments and intentions account for 70 per cent of global carbon emissions.
There has also been an explosion in ESG-related investments, with inflows into ESG-linked funds increasing to more than #330bn in 2020, from $30bn in 2015, an 11-fold rise in five years.
As the world now builds towards the Cop26 climate conference in Glasgow, Scotland, in November, Mr Dale said the importance of the past 70 years pales into insignificance as we consider the challenges facing the energy system over the next 10, 20, 30 years.
“To reach net zero, the level of ambition shown by countries and companies needs to translate into significant, sustained falls in emissions. Everyone, from business to governments to consumers, has a role to play in delivering that,” he said.
Nigel Topping, Britain’s high-level climate action champion, said BP’s review made it clear the world would not hit the Paris accord targets.
“There is some encouraging news in there but we're really going to have to crank up the pace of change, of deployment of renewables and of winding down the addition of hydrocarbons into the global energy mix,” Mr Topping told a panel session hosted by BP.
“We're going to see this year, a much stronger societal push for acceleration, because we're going to have the next wave of scientific reports in a couple of months, which are not going to be good news.”
BP, one of the world's biggest energy companies, has pledged to reduce emissions from the oil and gas it produces to net zero by 2050, amid pressure on the energy industry to cut greenhouse gas emissions.
Mr Looney called for energy producers and consumers, as well as companies, governments, and society, to work together “to bring about the necessary change”.
“Companies like BP with net zero ambitions, coherent plans, and near, medium and long-term aims – companies which are committed to ‘greening’ – have a hugely significant part to play in achieving the Paris goals," he said.
"Yes, the world needs more low-carbon companies, but maybe more than anything, it also needs existing energy companies to decarbonise and in so doing use their scale and expertise to help bring about the deep and complex rewiring and replumbing of the global energy system that the world wants and needs to see over the next 30 years."