How BP's Energy Outlook 2030 tells the story behind the end of Keystone XL
- 19 Jan 2012, 18:27
- Ros Donald
Republicans and the conservative press have panned Barack
Obama's decision on
Wednesday to deny Canada tar sands company Transcanada the
right to build a pipeline connecting the two countries, labelling
it a hit to job creation and energy security.
But the market has barely noticed - with Transcanada's stock
declining by just one per cent today - possibly because Obama has
left open the possibility of reapplication for permission by the
company. More broadly, it's unlikely that the death of the Keystone
project will leave the US dependent on oil imports from further
afield, as BP's
Energy Outlook 2030 report, released today, suggests.
That the pipeline was essential to US energy independence was a
key argument of the pro-Transcanada lobby, but it looks like it
might have been a bit of a red herring.
According to pressure group Nebraskans
for Jobs and Energy Independence, for example:
"The Keystone XL Pipeline is good for
America. Through it, oil will flow from our good friend and
neighbor Canada, to help replace the five million barrels of oil
the U.S. imports daily from the Mideast and Venezuela. Every barrel
that passes through Nebraska to the U.S. Gulf Coast refineries will
be used to fuel America not other nations."
Republican politicians also stressed the pipeline's symbolic
link to the idea of energy independence in their
criticism of the decision. Says Senator Joe Manchin:
"As our country has a continued need for
oil, it only makes sense to me that we would buy it from our
friends in Canada, rather than continuing to buy it from countries
around the world that seek to do us harm."
But BP's report exposes the extent to which such political
rhetoric on the issue has become divorced from energy market
reality. It highlights that the US has plenty of its own
unconventional fossil fuel sources in the shape of shale gas and
oil - so much so that according to the analysis, the country is on
track to becoming a net energy exporter by 2030.
According to BP's report - informed by this
paper - US unconventional oil supply will increase by 2.2
million barrels per day. Overall, they predict a rise of eight
million barrels per day in overall oil supply from the Americas -
including Brazilian deepwater oil and Canadian tar sands.
What's more, the US is expected to significantly step up
production of shale gas. BP predicts "shale gas and coal bed
methane (CBM) will account for 63 per cent of North American
production by 2030." This also means the US could be exporting LNG
The BP report doesn't address a key fear often
expressed by environmentalists and scientific bodies like the
Tyndall Centre when unconventional energy is mentioned - that
reliance on the prospect of new home-grown fossil fuel sources
might displace investment in renewables.
It's not that renewables aren't expanding. As this
source paper says, they are set to become the fastest-growing
fuel source of all, increasing by eight per cent by 2030 and
outstripping natural gas use, which is expected to rise by around
two per cent. In the OECD, BP predicts renewables will begin to
displace oil in transport and coal in power generation.
But this is all relative - renewables are still only expected to
represent a small percentage of the world's energy mix - around
five per cent by 2030. Meanwhile coal - one of the biggest sources
black carbon emissions - is expected to stay steady at around a
quarter of world energy output. This would present a challenge to
attempts to "lighten the carbon load", as the report puts it,
through energy efficiency and switching to 'cleaner' fossil fuels
such as gas.
The unconventional fuel industry is still in its infancy, so it
remains to be seen whether investors will depart from renewables
investment to sources such as shale gas. But the BP report, for all
that it is the product of a major oil company, exposes the
challenge for a decarbonisation agenda. Renewable energy
development faces an uphill struggle in the US, with significant
weight of political opinion dedicated to the development of
domestic fossil fuels over renewables.
Bloomberg also notes that global investment in renewable energy
sources dropped 17 per cent last year. Meanwhile,
last month BP closed its solar panel manufacturing