At the same time, energy markets are adjusting effectively to nearer-term challenges, with the oil market in particular adjusting in 2016 to the oversupply that has dominated the market in recent years.
In 2016 global energy demand was weak for the third consecutive year, growing by just 1%, around half the average growth rate of the past decade. Once again, almost all this growth came from fast-growing developing economies, with China and India together accounting for half of all growth.
The year’s low prices drove demand for oil higher by 1.6% while growth in production was limited to only 0.5%.
As a result, the oil market returned broadly back into balance by mid-year, but prices continued to be depressed by the large overhang of built-up inventories.
The price of dated Brent crude oil averaged $43.73 per barrel in 2016, down from $52.39 in 2015.
This was the lowest annual average since 2004.
Global oil consumption grew strongly, rising by 1.6%, or 1.6 million barrels a day (mmb/d), above the 10-year average rate for a second consecutive year. Strong increases in demand were seen from India (up 0.3mmb/d) and Europe (up 0.3mmb/d) and while demand from China continued to grow (up 0.4mmb/d) it was lower than in recent years.
Weak prices impacted the growth of global oil production which rose by just 0.5% – the lowest increase since 2009 – or 0.4mmb/d.
Within this total, production from OPEC increased by 1.2mmb/d, with significant increases seen from Iran (up 0.7mmb/d), Iraq (up 0.4mmb/d) and Saudi Arabia (up 0.4mmb/d).
Natural gas production was adversely affected by low prices, growing by only 0.3%. US gas output fell in 2016, the first reduction since the advent of the shale revolution in the mid-2000s.
Renewables were again the fastest growing of all energy sources, rising by 12%. Although providing still only 4% of total primary energy, the growth in renewables represented almost a third of the total growth in energy demand in 2016.
In contrast, use of coal – the most carbon-intensive of the fossil fuels – fell steeply for a second year, down by 1.7%, primarily due to falling demand from both the US and China.
And as the Scientific Alliance’s online ‘generation clock’ display also shows, almost no electricity in the UK is generated from coal.
UK coal consumption has now fallen to levels last seen at the start of the Industrial Revolution around 200 years ago and the UK power sector recorded its first ‘coal-free’ day in April 2017.
The combination of weak energy demand growth and the shifting fuel mix meant that global carbon emissions are estimated to have grown by only 0.1% – making 2016 the third consecutive year of flat or falling emissions. This marks the lowest three-year average for emissions growth since 1981-83.
Bob Dudley, BP Chief Executive, said: “To understand these forces at work and their implications for the future, we need timely, reliable data – which is why we produce the Statistical Review – to provide the accurate global information that will contribute to discussion, debate and informed decision-making around the world.”
The BP Statistical Review of World Energy is available at www.bp.com/statisticalreview