Ukraine war, demand resurgence exacerbate lack of emissions progress in 2021: BP

The global energy system faces challenges and uncertainties greater than at any time since the 1970s oil crises, with the Ukraine war exacerbating a lack of progress curbing emissions as energy demand continues rising, BP said in its Statistical Review of World Energy 2022, published June 28.

Introducing the annual survey of energy trends, BP chief economist Spencer Dale said climate pledges by national governments have "yet to translate into tangible progress on the ground: carbon emissions have risen in every year since the Paris goals were agreed" with the exception of 2020. "The world remains on an unsustainable path," Dale said in an introduction.

In energy terms, the Ukraine war and associated shortages and price rises "highlight the continuing importance of energy 'security' and 'affordability' alongside 'lower carbon,'" Dale said.

"As COVID-19 restrictions... are relaxed and economic activity recovers, energy consumption is expanding sharply, increasing the demands on available energy supplies, and highlighting fragilities in the system," he added.

The Review showed global energy demand had risen by 5.8% in 2021 to 595 Exajoules, more than reversing the pandemic-related fall in 2020, with primary energy use rising to 1.3% above 2019 levels.

Among the fuel types, energy from renewables, excluding hydropower, jumped by 15% in 2021 to 39.9 Exajoules, up from 9% growth in 2020, led by solar and wind, with China driving the increase for both renewable energy types, BP said.

Fossil fuel consumption was broadly flat between 2019 and 2021 at 490 Exajoules, while accounting for 82% of total energy consumption, down from 83% in 2019 and 85% five years ago.

Oil tightness

Oil consumption rose by 5.3 million b/d to 96.9 million b/d, up 6% from 2020, but other than 2020 the lowest level of consumption since 2016, with gasoline and diesel/gasoil leading growth. However, oil production, not including biofuels, rose by just 1.4 million b/d to 89.9 million b/d, BP said.

And in the downstream, global refining capacity fell for the first time in 30 years, by 500,000 b/d, led by a 1.1 million b/d drop in OECD economies. OECD refining capacity hit its lowest since 1998, BP said.

Coal consumption grew by 6% in 2021 to 160 Exajoules, its highest level since 2014.

Natural gas demand grew 5.3% in 2021 to 4.04 trillion cubic meters, recovering above 2019 levels and the first time it has crossed the 4 Tcm mark. Gas remained at the previous year's share of energy demand, at 24% of the total, the Review said.

CO2 emissions from energy use and industrial processes rose 5.7% on the year to 39 Gigatons of CO2-equivalent, BP said.

S&P Global Platts Commodity Insights' own analysis shows global oil consumption grew by just over 5% to 98.5 million b/d in 2021.