Shift from fossil fuel to renewable energy must avoid price shock: BP chief

British energy major BP chief executive Bernard Looney on Saturday echoed India's views on energy transition being just and orderly, saying the shift from fossil-based system of energy to renewable sources has to be done in a manner so as to avoid price shocks like the ones witnessed last year.

Looney said oil and gas will continue to be a source of energy for the world for "many, many decades to come" and companies and countries around the world have to continue investing in existing fossil fuels and in transition projects at the same time.

Speaking at the B20 Summit India organised by CII, he said the world needs a rapid and at the same time orderly transition.

Oil and gas, extracted from below ground and seabed and used to power vehicles, fly airplanes, produce power and used in several industries, make up for 55 per cent of the world's energy consumption.

Replacing it won't happen overnight and so there is a need to continue investing in today's energy system so as to meet demands of growing economies and not cause any shortage.

"We need to make sure we continue to match supply with demand," he said.

Last year, the world lost 3 per cent of gas demand and the prices went up seven-fold, resulting in countries turning to the next cheaper alternative, coal, he said adding coal usage soared to record levels in 2022.

"That is now what we are trying to achieve," he said. "Typically 10-12 per cent of GDP is spent on energy. Last year that number went up to 20 per cent. 20 per cent of GDP being spent on energy, that is not sustainable. It will not leave dollars to invest in transition."

So, the transition has to be orderly and just.

"We need a rapid transition (and) we also need to make sure that the transition is orderly, transition is just. If it is not just, there will be no transition," he said. "It is 'and' and not 'or' strategy."

'And' and not 'or' strategy means investing "like crazy in energy transition (and) we must continue to invest in today's energy system. It is an 'and' strategy and not an 'or' strategy."

India, the world's third-largest energy consumer, has been for long pressing for a just, orderly and sustainable energy transition where the energy needs of its fast-growing economy continue to be met and it is given access to technology and financing for a just and orderly transition to renewable energy sources like wind and solar, as well as lithium-ion batteries.

Some countries in Europe, which has been at the forefront of espousing the cause of energy transition, shifted to polluting coal to meet their energy needs when gas prices soared to record levels in the aftermath of Russia's invasion of Ukraine.

Later talking to reporters on the sidelines of the conference, he said the energy transition has to be both rapid and orderly.

"It needs to be rapid because every year since the Paris (Accord) the emissions have risen in the world with the exception of the pandemic. And then the emissions only fell 5.6 per cent and that's despite the world essentially grinding to a halt," he said. "At the same time it must be orderly, and the reason it must be orderly is because if we don't do it orderly, I'm worried that it can impact the pace of the transition."

Orderly transition means investing in today's energy system and the same time investing in the transition, he said echoing the stand that India has taken for a long.

On oil demand, Looney said the world continues to use oil and as per IEA projections, 2023 will see the highest oil demand in history.

"So that is a fact we must continue to invest to make sure that that production is there but at the same time, we must invest in the energy transition. That's what we have BP called an-and-not-or strategy," he said.

BP, which in India has invested in a gas field in the Krishna Godavari basin as well as in a fuel retail network that includes EV charging stations, spent 3 per cent of its capital on transition growth engines in 2019. This in years has risen to 30 per cent. It will rise to 40 per cent by the middle of the decade and 50 per cent by the end of the decade, he said.

"We will spend between USD 55 and 65 billion as BP this decade in our transition growth engines," he said. "So what the world needs both in the global north and in the Global South, is we need an and not or strategy. We need to do both. We need to invest in today's system responsibly and at the same time we must invest in accelerating the transition."

Even in the IEA's net-zero scenario, the world will consume 20 million barrels a day of oil in 2050.

"So the key question is how long will the oil and gas be around for and the answer is it's going to be around for many, many decades to come. We must continue to invest in it. And at the same time, we must continue to invest in accelerating the energy transition," he added.