Global carbon emissions rose at their fastest pace in nearly a decade, increasing by 2 per cent as global energy consumption surged 2.9 per cent last year, BP said in its latest statistical review.
"The world needs carbon emissions to fall dramatically. They increased at their fastest rate in 10 years, driven by China and India and also demand growth in the US," BP chief economist Spencer Dale said on Tuesday.
There remains a “growing mismatch” between societal demands for action on climate change and the actual pace of progress, Mr Dale said.
"The world is on an unsustainable path,” he added.
BP’s annual statistical review, keenly followed by the industry, is a bellwether for energy demand and investment. China, the US and India account for more than two-thirds of the global increase in energy demand, the oil major said. Consumption in the US – the world’s largest oil producer – expanded at its fastest rate in three decades. The US, thanks to its shale revolution, also recorded the largest production increases for both oil and gas to date.
Renewables neared a record-breaking increase seen in 2017 by growing by 14.5 per cent, however, it only accounted for a third of the total increase in power generation.
Renewables are key to “decarbonising the power sector”, which is the biggest challenge facing the global energy system over the next two decades, BP chief executive Bob Dudley said.
"Renewable energy has a vital role to play in meeting that challenge. But it is unlikely to be able to do so on its own,” he said.
Overall global oil production rose by 2.2 million barrels per day, with the net increase nearly all coming from the US. Significant output growth was also seen in Canada, where production increased by 410,000 bpd, as well as Saudi Arabia, which produced 390,000 bpd. However, production declines in Venezuela by 580,000 bpd as well as Iran by 310,000 bpd, because of US sanctions, offset the increases.
Output from Opec producers meanwhile fell by 1.3 million bpd last year, despite an increase in production from Saudi Arabia, because of declines elsewhere, Mr Dale said.
Saudi Arabia and producers of a global alliance known as Opec+ reversed earlier curbs on supply to boost production in mid-2018. The producers eventually reversed the supply increase when prices slumped at the end of 2018.
He noted that grouping, which also consists of non-Opec producers led by Russia had “over-achieved” their target of drawing down 1.2 million bpd from the markets.
However, unexpected increases from Libya and Nigeria to the effect of 600,000 bpd, along with the waivers granted to Iran’s buyers led to a supply boost, moving the prices, which had risen to $86 per barrel in October to decline dramatically to $50 per barrel by year-end.
Opec, which has been overwhelmed by production increases in the US, has not seen its power wane, according to Mr Dale.
"The role they played in offsetting Iranian and Venezuelan production, simply reflects the difficulty of global oil production. It feels like the roller-coaster will run for some time to come,” he added.
Oil consumption also accelerated at an above-average pace reaching 1.4 million bpd, or 1.5 per cent, with much of the growth coming from China and the US.
Meanwhile, production and consumption of natural gas, considered a transitional fuel for its cleaner burning properties, rose by more than 5 per cent, one of the strongest growth rates for both demand and output in 30 years. Mr Dale said 2018 was a “bonanza year for natural gas”, even as consumption of the fuel grew by 5.3 per cent to reach 195 billion cubic metres, among the fastest growth rates since 1984. Growth in consumption was largely driven by the US, followed by China, Russia as well as Iran.
"Some of the increase in US gas production, fed new LNG [liquefied natural gas] trains, but majority was used to quench domestic demand,” Mr Dale said.
Expansion in trade in natural gas was more than double the ten-year average at 4.3 per cent, driven largely by rapid expansion in LNG. Supply growth in the super-chilled gas largely came from top producer Australia, with 15 bcm, as well as the US and Russia, with China emerging as the top importer, accounting for 21 bcm of demand.