BP isn’t exactly synonymous with clean and green energy, given the oil blowout in their Deepwater Horizon rig in the Gulf of Mexico back in 2010. But their analysis of the future of green energy is pretty positive [PDF]. As Greenbiz summarizes:
Bringing together previously internal analysis from BP’s energy experts, the document predicts the world will have a plentiful supply of affordable energy through the next few decades thanks to advances in all forms of energy technologies — from battery storage innovations to better extraction techniques for oil.
BP predicts the global energy system will remain heavily reliant on fossil fuels for decades to come. However, it also envisages strong growth potential for clean energy systems and supporting technology such as battery storage and electric vehicles.
What struck me among the five key points was #3, regarding the need for — and effect of — carbon pricing on future energy scenarios:
3. Carbon pricing will have a massive impact on competitiveness of renewables
Without a carbon price, gas and coal will remain the lowest-cost options for generating electricity in North America through 2050, according to the BP analysis. However, with the introduction of a relatively modest carbon price of $40 per tonne of CO2, new-build gas and renewables will start to displace coal.
With a higher carbon price — $80 per tonne of CO2 — onshore wind will be cost-competitive with natural gas by 2050, according to BP. This is based on analysis that applies a grid integration cost to renewables because of their intermittent energy supply.
This conclusion points to the importance of the international talks in Paris next month, where for the first time international negotiators may finally agree to even a modest floor on carbon pricing worldwide. We’ll need it as something to build on, while subnational entities like California and more progressive nations move forward to implement their own carbon pricing, either through cap-and-trade or direct taxes.