BP: Global Energy Demand and Carbon Emissions Grew Rapidly in 2021

As much of the world emerged from the COVID-19 pandemic in 2021, economies rapidly expanded and global energy demand shot up, which led to sharply higher energy prices and big gains in carbon dioxide emissions,?BP plc?(NYSE:BP) (London, England) said in its Statistical Review of World Energy, released June 28.

As it has warned for several years, the path is unsustainable, BP said.

In his introduction to the report, BP Chief Economist Spenser Dale wrote, "The pronounced dip in carbon emissions in 2020 was only temporary." Despite a growing number of countries pledging to achieve net-zero carbon emissions by a future date, Dale commented, "those growing ambitions have yet to translate into tangible progress on the ground: Carbon emissions have risen in every year since the Paris goals were agreed (other than in 2020 at the height of the COVID-19 pandemic). The world remains on an unsustainable path."

Worldwide demand for primary energy rose nearly 6% last year when compared with 2020, a "sharp bounce back" that more than reversed "the sharp fall in energy consumption in 2020 as much of the world locked down," BP said. On an exajoule basis, the spike in demand was the largest in BP's seven decades of compiling the statistical report. The energy giant estimated that worldwide primary energy use in 2021 was more than 1% greater than 2019's pre-pandemic level.

Last year's economic rebound from the pandemic led to a sharp increase in carbon dioxide (CO2) emissions while quadrupling the price of natural gas in Europe, tripling it in Asia and nearly doubling it in the U.S., the report noted. Oil prices also shot up, though not as much on a percentage basis, the report said.

The effort to decarbonize the world's energy supply requires several minerals, such as cobalt and lithium, and there were sharp increases in demand for those minerals in 2021, the report noted. So far in 2022, mineral prices have continued to rise. Higher prices led to a significant gain in lithium production, but the effects of high prices on cobalt production have been more muted, the?Statistical Review of World Energy?said.

Coal prices rose "dramatically" last year compared with 2020, and they continued to rise through the first part of 2022, BP said. Coal consumption grew more than 6% in 2021 to 160 exajoules, slightly above 2019 levels and the highest level since 2014. China and India accounted for more than 70% of the growth in coal demand in 2021, increasing use by 3.7 and 2.7 exajoules, respectively, the report noted. Coal use in the North America and Europe rose last year after nearly a decade of declines.

Global oil demand rose 5.3 million barrels per day (BBL/d) in 2021, but remained 3.7 million BBL/d below pre-pandemic levels. Strong gains in demand for transportation fuels in the U.S., China and the EU pushed up global demand. But demand for aviation jet fuel continued to lag, with use about 33% below pre-pandemic levels.

This year's edition of the review said worldwide crude oil production rose about 1.4 million BBL/d in 2021, with most of the gains coming in OPEC+ countries. Libya, Iran and Canada saw the largest year-over-year production gains. Production fell most sharply in Nigeria, the U.K. and Angola.

The BP report noted that global refinery capacity declined last year for the first time in more than 30 years. The decline--almost 500,000 BBL/d--was paced by a sharp reduction among Organisation for Economic Co-operation and Development (OECD) countries. That decline pushed down OECD refining capacity to its lowest level since 1998.

Demand for natural gas around the world rose about 5.3% in 2021, which elevated it beyond its pre-pandemic 2019 level. Demand exceeded 3 trillion cubic meters (Tcm) last year for the first time. The world's supply of liquefied natural gas (LNG) rose 5.6% in 2021, or about 26 billion cubic meters (Bcm), which was its slowest rate of growth since 2015, excluding the pandemic year of 2020. LNG supply from the U.S. rose by 34 Bcm in 2021, which accounted for most of the new incremental supplies.

BP said renewable primary energy (including biofuels but excluding hydropower) increased by about 15%, which was higher than its 9% year-over-year gain in 2020 and higher than any other fuel in 2021. Within renewable energy, solar and wind capacity continued to grow rapidly in 2021, increasing by 226 gigawatts (GW), which was close to the record increase of 236 GW seen in 2020. China accounted for a large plurality of global solar and wind capacity growth last year.

The data compiled by BP was for 2021 only, but it hints at the sharp dislocations that have followed Russia's invasion of Ukraine this past February.

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