S. Korean farmers suffer from effects of abnormal climate patterns

Typhoons and prolonged monsoon season have led to poor harvests and steep price hikes for produce

Posted on : Sep.15,2020 

Chili peppers infected with canker on Yun Myeong-ok’s farm in North Chungcheong Province. (Oh Yoon-ju)

When Yun Myeong-ok, 73, spoke with the Hankyoreh at his chili pepper farm in Cheongcheon Township, Goesan County, North Chungcheong Province, on Sept. 4, he was racking his brain about his debt.

“1,050 bags of compost cost 3.78 million won [US$3,202] five pesticide treatments cost 2.5 million won [US$2,118], 12 bags of seeds cost 210,000 won [US$178], 32 bags of fertilizer cost 320,000 won [US$271], the manure cost 320,000 won, and the plastic sheeting cost 280,000 won [US$237]. Not including wages for workers, I guess everything cost about 10 million won [US$8,472]. But as for farming — I think I’m going to have to quit,” Yun said.

Yun said he harvested 2,400 kilograms (kg) of chili peppers on his 4,000 square-meter farm last year. “I only managed to collect 96kg of peppers this year,” said Yun, as he chopped down mildewed chili pepper plants bearing sickly peppers.

“What with the canker and the rot, none of my peppers are usable. Crops can’t grow when you have more than 50 days of rain. Most of the farms around here are in a similar situation. It just breaks my heart.”

The main reason for the unprecedented paucity of this year’s harvest was the unusual frequency of rainfall this summer, taking the place of the heat. According to data from the agricultural measurement office at the Korea Rural Economic Institute (KREI), cumulative rainfall measured 716 millimeters (mm), well over double the amount in typical years (263mm).

The agricultural measurement office predicted that between 62,624 and 64,784 tons of chili peppers will be harvested on 31,146 hectares (ha) of farmland around the country. That’s 17.4-20.2% less than the 78,468 tons typically harvested on 30,883ha of land.

Lack of sunlight combined with continual torrential rains bring canker and blight

“The harvest appears to have fallen considerably because of poor conditions. The main chili pepper cultivation areas in North Chungcheong and North Gyeongsang Province only got half as much sunlight as they do in normal years, sunlight being essential for peppers to grow. On top of that, those areas had twice as much rain as normal, which brings canker and other forms of blight,” said Cho Nam-uk, a researcher at the agricultural measurement office.

Korea’s longest monsoon season in history, flash floods, and back-to-back typhoons have left the country’s croplands in disarray at the onset of fall. Farmers complain that this is the toughest year they’ve ever seen, and urban residents already battered by the COVID-19 outbreak now have to worry about the soaring price of produce in the runup to the Chuseok harvest festival, when Koreans typically prepare big feasts for family members.



Kim Gwang-su inspects fallen ears of rice ravished by Typhoon Maysak on Sept. 4 on his farm in South Jeolla Province. (Kim Yong-hee)

Kim Gwang-su, 60, cultivates an early variety of organic rice — which is harvested at the end of August — on a farm in Haenam, South Jeolla Province. “The grains of rice have to turn gold and be at least 90% full to get the normal price, but the rice from this harvest is only 80% full, is still green because it hasn’t fully ripened, and has a lot of blank grains mixed in. I expect the harvest this year will be about 10% lower than normal,” Kim complained.

“A 1,000 square-meter rice paddy typically produces 530kg of rice, but this year that production is likely to fall by 26.5kg,” predicted South Korea’s Rural Development Administration, which has surveyed the condition of rice cultivation seven times this year. Not only did the area of cultivated land decrease from 730,000ha last year to 726,000ha this year, but the average grains of rice per square meter has fallen from 34,005 in normal years to 33,841 because of the shortage of sunlight during the protracted monsoon season. Because most of Korea’s rice cultivation consists of varieties that are planted late and then harvested in September or October, farmers are still hopeful that a sunny September could give them an average harvest.

The situation isn’t any better for fruit farmers in Cheongsong County, North Gyeongsang Province, and in Naju, South Jeolla Province. Farmers report that the unusual weather has disrupted fruit setting and fostered pests and blight that have lowered the quality of the fruit that has managed to grow. The typhoons caused so much fruit to fall off trees that orchards are unlikely to cover their costs this year.

Poor harvests lead to steep prices for city dwellers ahead of Chuseok holiday

Whereas the poor harvest is a source of anxiety for farmers, city dwellers are worried about the rising cost of groceries. Price trends tracked by the Korea Agro-Fisheries and Food Trade Corporation and the Korea Rural Economic Institute show that the price of agricultural products including chili peppers, cucumbers, squash, apples, pears, and grapes have remained 25% higher than normal years for more than a month now.

Napa cabbages and daikon radishes, two of the most commonly used vegetables in Korean cuisine, cost nearly twice as much as they did last year. As of Sept. 13, 10kg of high-altitude napa cabbages cost 24,740 won (US$21), up 81.1% from 13,660 won (US$12) last year, while 20kg of high-altitude daikon radishes cost 25,480 won (US$22), up 96.0% from 13,000 won (US$11) last year. Four kilograms of young summer radishes sold for 11,640 won (US$10), an increase of 23.8% from 9,400 won (US$8) last year. A 10kg box of green chili peppers was going for 76,600 won (US$65), 24.5% more than 61,480 won (US$52) last year, while a box of red chili peppers was 54,840 won (US$47), 22.0% more than 44,920 won (US$38) last year. Dried chili peppers, which are sold in batches of 30kg, have doubled in price as customers jockey to secure an adequate supply before kimchi-making season. The scarcity of lettuce caused prices to double and even triple in mid-August; prices didn’t stop rising until about 10 days ago.


A farmer inspects apples that were blown off trees by typhoons in an orchard in North Gyeongsang Province. (Kim Il-woo, staff reporter)

When it comes to fruit, a 10kg box of Hongro apples cost 65,020 won (US$55), 68.9% higher than 38,480 won (US$33) last year, while a 15kg box of Wonhwang pears was 45,940 won (US$39), 60.6% higher than 28,600 won (US$24) last year. Meanwhile, a 20kg bag of regular rice was 50,780 won (US$43) on Monday, up 2.8% from 49,356 won (US$42) on the same day last year.

“When I visited my neighborhood supermarket last month, a 100g bag of lettuce was selling for 4,000 won [US$3.39]. It was shocking to see lettuce more expensive than pork belly. Since then, I’ve been getting by without lettuce — I don’t even look at it,” said a 20-something office worker in Seoul. Koreans often wrap slices of pork belly in lettuce before eating them.



“Because of COVID-19, I have to prepare three meals a day at home for my kids, and I’m stressed out by the rising cost of produce. A watermelon is 25,000 won [US$21], a napa cabbage is 10,000 won [US$8.47], a daikon radish is 4,000 won [US$3.39], a zucchini is 2,500 won [US$2.12], and a cucumber is 1,500 won [US$1.27]. I’m already afraid that we can’t afford all the groceries for Chuseok,” said a housewife in her 40s in Gwangju.

Even more troubling is the fact that this won’t be the last year when abnormal weather causes a poor harvest. “Given our records of temperature, wind, and precipitation, we’re going to see climate change bring more abnormal weather. We need to figure out what crops and areas are vulnerable to abnormal weather and make people aware of those issues; we also need to amend laws about disaster relief to shift from compensation to prevention,” advised Seong Jae-hoon, assistant director of the Korea Rural Economic Institute.

“Because more rice is produced than consumed, a poor harvest doesn’t have an immediate impact on prices. But as climate change accelerates, I’m worried about whether plant breeding and technological development will be effective in preparing for abnormal weather,” said Kang Seok-ju, a member of the food industry technology team at the Rural Development Administration.

By Ahn Kwan-ok, Gwangju correspondent, Oh Yoon-ju, Cheongju correspondent, and Kim Yong-hee, Gwangju correspondent

related stories
· [Column] We can’t wait any longer to eliminate fossil fuels and convert to renewables
· Six reactors shut down due to salinity during recent typhoons
· 96% of S. Koreans say COVID-19 and torrential rains made them aware of seriousness of climate change
· S. Koreans view environmental concerns as most important issue for future society
· Climate change radically alters S. Korea’s monsoon rains

 

'I'm not comfortable living here': More Americans did actually try to move to Canada since Trump's 2016 election

Rachel GilmoreCTVNews.ca Writer

Published Saturday, September 12, 2020 

-- When Donald Trump won the presidential election in November 2016, many Americans threw up their hands and threatened to flee north of the border to live out the rest of their days in chillier climes.

And according to new figures from the government, some of them may have actually followed through on that threat.

Canada saw an uptick in Americans trying to move to Canada following Trump's win, according to the new figures from Immigration Canada.

Related 

• Trum
  

In 2015, a little over 6,800 Americans tried to apply for permanent residency in Canada, followed by just over 7,700 in 2016.

But in 2017, the year of Trump's inauguration, that figure jumped to over 9,000.

The number has yet to dip below 8,700 in the years since, although 2020 is on track to fall far below the years previous — likely related to the COVID-19 pandemic, which has seen borders shutter and travel restricted.

Immigration Canada cautioned that the numbers are "preliminary" and "subject to change."

Chantal Desloges, a Canadian immigration lawyer, says the modest increase "doesn't surprise" her — though she said it's not an "extreme" trend.

"We get a lot of applications from expats in the U.S. who've been working there or studying there, and now find that the immigration policies in the U.S. are so restrictive that Canada is a much more attractive destination," Desloges told CTVNews.ca in a phone interview.

Desloges said that after Trump was elected, she got a number of inquiries at her firm from Americans considering taking the jump.

"This happened at our firm when Trump was elected as well — you get a lot of consultations, right? People say they're just kind of putting out some feelers to see if they’re qualified," she said.

"I had for example a Muslim man, you know, highly educated professional, little bit older with a family, well established in the U.S., [who] said, 'you know what? I'm not comfortable living here anymore as a Muslim.'"

Andrew Carvajal, an immigration lawyer who works at the same firm as Desloges, said he received similar calls — and a lot more of them, compared to the pre-Trump days.

He said he received roughly "four times" as many calls from U.S. residents considering a move to Canada once Trump was elected

"They would basically make comments, 'I'm really concerned about what's going to happen now,' and a lot of the people just, it was just obvious from that, what they were saying," Carvajal said.

He said that, for example, some members of the LGBTQ+ community who were exploring a move to Canada said during their consultation that they "don’t know what’s going to happen" with the "federal government" in the United States.

Carvajal said he also recently got a call from an American pastor who had been living in Canada for two years.

"During the consultation, he really said, 'as a Black person in the U.S., I just don't want to go back.' This was within the context of everything that's happening right now, he’s just like 'I really want to stay in Canada, I want my children to stay in Canada,'" Carvajal said.

Desloges noted, however, that for someone to pull the trigger and actually pack up to move to Canada, there usually have be other factors at play.

"We haven’t found a great deal of just random Americans saying I'm getting out of here, I want to go somewhere else. It’s been more of, people who have a historical connection to Canada who are now saying okay, you know, I’ve had enough of this," she said.

"It's an emotional reaction at the beginning, but then once reality sinks in, you know, people usually decide to stay where they are."

The month that Trump won the election also saw a little bump in applications from Americans looking to start fresh north or the border.

While a month-by-month breakdown of 2015 and 2016 permanent residency applications from Americans to Canada saw an absolute high of 694 applications, that changed in November 2016 — a day when American politics also experienced a shockwave.

In the month of Trump's election, Canada received 829 applications from U.S. citizens trying to move to Canada. The next month, December 2016, also experienced the second highest number of applications in two years: 743.

Desloges explained that any reading of these monthly figures should be tempered by the fact that Canada has a system where it controls the flow of economic immigration applications by telling prospective applicants when they can apply — not the other way around.

"People don't decide on their own when their application goes in. They have to get an invitation from the government, and when the government sends that invitation, the person has only 90 days to perfect it or else they lose their chance," Desloges said.

"As soon as they have capacity to take a thousand more applications, they send out a thousand more invitations."

Still, Desloges says her firm has felt an increase in inquiries from Americans toying with taking the big jump across the Canada-U.S. border — more so than they’ve felt in the wake of previous elections.

"People have kind of a visceral response to him, right? He sort of provokes that exaggerated reaction from people," Desloges said.

But, she said, many of these inquiries remain just that, with very few pulling the trigger.

"You do get a lot of people who gripe about the general situation in the U.S. with Trump, like they'll complain about that, but I mean that is a big step, to actually leave a country and go to another country over a guy that might not even be there next year," Desloges said.

Still, according to the figures from Immigration Canada, enough Americans felt that push to establish a trend of increased applications. Meanwhile for Desloges, the calls keep coming from people living in the Unites States who think it's time to make the move.

"Even this morning, I got a call from somebody," she said.

With files from CTV News' Mahima Singh

 

Coronavirus: Biden compares US COVID-19 deaths to Canada, comments on vaccine touted by Trump

                             THE DIFFERENCE IS WE HAVE SOCIALIZED HEALTH CARE

China accuses U.S. at U.N. of trying to take world back to 'jungle age'


By Michelle Nichols

NEW YORK (Reuters) - China accused the United States on Friday of “fabricating lies” and trying to take the world back to the “jungle age” after Washington blamed Beijing and U.N. agencies for “the murder of millions of baby girls.”

The United Nations Population Fund (UNFPA) on Friday said it regretted the accusations by U.S. Education Secretary Betsy DeVos, which were made at a U.N. General Assembly meeting on Thursday on the anniversary of a landmark 1995 women’s conference.

UNFPA Executive Director Natalia Kanem told reporters that any coercion of women was “against our practice and policy.”


“We accord the highest priority to voluntary sexual and reproductive health, rights, and procedures,” she said. “We have invited reviews of, in the case of UNFPA, our practice and procedures in the country of China, and for the past four years, the United States has not visited our programs.”

U.S. President Donald Trump’s administration cut funding in 2017 for UNFPA, saying it “supports ... a program of coercive abortion or involuntary sterilization.” The United Nations said that was an inaccurate perception.

DeVos and U.S. Secretary of State Mike Pompeo, who issued a statement on Thursday, both accused China of subjecting Uighurs and other minorities to forced abortion, forced sterilization, and involuntary implantation of birth control devices.

A spokesperson for China’s U.N. mission in New York said in a statement that the remarks were “sheer fabrication.”

“Some U.S. politicians lie and cheat as a habit,” the spokesperson said. “They maliciously create political confrontation and undermine multilateral cooperation. The United States, going against the trend of the times, is becoming the biggest destroyer of the existing international order and trying all means to take the world back to the ‘jungle age.’”

Long-simmering tensions between the United States and China have hit the boiling point at the United Nations over the coronavirus pandemic, spotlighting Beijing’s bid for greater multilateral influence in a challenge to Washington’s traditional leadership.

The Great Rethink: It's time to reassess how our provinces manage natural resource wealth

A generation of decision-makers opted to maximize resource wealth in the present, rather than save it for future use

Author of the article:Geoffrey Morgan
Publishing date:Sep 11, 2020 •

The Hartwick Rule states that exhaustible natural resources such as oil should be replaced with a substitute asset when they are extracted or else a jurisdiction will erode its total net worth. PHOTO BY BEN NELMS/BLOOMBERG FILES

The policy consensus that has guided economic decision-making for decades is being challenged like never before. In a new series, the Financial Post explores the opportunities and unknown costs of the Great Rethink.

John Hartwick calls the economics rule that bears his name “boring,” even though it’s been embraced by governments in places such as Norway, Chile, Kuwait and Botswana.

“There are a bunch of mathematical equations that fit together like a jigsaw puzzle. That’s why economists consider it exciting,” said the emeritus professor of economics at Queen’s University in Kingston, Ont.

The Hartwick Rule, published in 1977 in the American Economic Review with an assist from famed post-war economist Robert Solow, states that exhaustible natural resources such as oil should be replaced with a substitute asset when they are extracted or else a jurisdiction will erode its total net worth.

Norway has most famously followed the Hartwick Rule. As a result, it will confront whatever comes in the wake of the COVID-19 pandemic with a US$1-trillion sovereign wealth fund. But Gulf states such as Kuwait have hundreds of billions of dollars in reserves from oil wealth, effectively turning a physical asset into a financial asset.

Developing countries like Botswana and Chile, too, have established funds from diamond and copper mining. Even sub-national governments, including Alaska and New Mexico, have seen fit to turn the proceeds from resource extraction and the sale of state land into portfolios that offer the prospect of continuous returns.

But in Hartwick’s home country, the rule has largely been ignored. “People don’t invite me to the Rotary Club to talk about this stuff,” he said.

That could soon change. The coronavirus pandemic has blown holes in provincial budgets across the country, hitting provinces with large natural resource industries particularly hard. But Canada, blessed with both a sophisticated financial industry and vast supplies of natural resources, will have to finance the recovery phase of the COVID-19 crisis largely out of pocket, because a generation of decision-makers opted to maximize resource wealth in the present, rather than save it for future use.

A pedestrian crosses a street in Oslo, Norway. The country will confront whatever comes in the wake of the COVID-19 pandemic with a US$1-trillion sovereign wealth fund. PHOTO BY TOMM W. CHRISTIANSEN/BLOOMBERG FILES

There’s a palpable sense of regret as finance ministers overhaul their budgets and reckon with credit downgrades, so it may be time to invite Hartwick out to talk about this stuff since there are growing calls to rethink how natural resource revenues and wealth are managed.

Much of the debate about managing resource wealth in Canada has focused on Alberta’s failure to keep up with Norway’s savings rate, much to the ire of Albertans, who point out the province is a sub-national government, and one that makes major payments into the wider Confederation, while Norway is a sovereign and autonomous state.

Alberta’s Heritage Savings Trust Fund was established under former premier Peter Lougheed, who ran the province from 1971 to 1985, and it exists today with about $17.2 billion in assets. But successive governments since his reign have scaled back contributions and, since 2008, Alberta has only added enough each year to ensure the principal isn’t eroded by inflation and population growth.

Alberta Finance Minister Travis Toews said that, for now, Premier Jason Kenney’s government will continue to use funds from natural resources to help correct a budget deficit that is projected to be $24.2 billion this year as a result of the pandemic, or 230 per cent higher than its initial budget deficit estimate of $7.4 billion.

However, in a notable turn for the United Conservative government, Toews suggested new revenues could be back in play after previously resisting the idea of new taxes.

“We will be rolling out, basically, a budget reset in 2021,” he said. “Once we have a definitive plan to balance the budget, and at the point we get there, that would be an appropriate time to be asking the question of whether we should be investing in the Heritage Fund or paying down debt.”

Toews also noted the province is reviewing its options for “additional fiscal capacity” and revenue sources to lessen its dependence on natural resource extraction.

“Down the road, we will need to be looking at our revenue structure and our tax structure and the Heritage Trust Fund and its relationship to non-renewable resource revenues,” he said.Alberta Finance Minister Travis Toews. PHOTO BY COURTESY ALBERTA GOVERNMENT

Toews’ situation might be a cautionary tale for other provinces.

None were blessed with Alberta’s vast stores of both oil and natural gas, but several produce significant quantities of non-renewable natural resources of their own.

Currently, the only dedicated Canadian fund that’s sharply growing is Quebec’s Generations Fund, established to eliminate the province’s debt. The fund is projected to grow using revenues from hydroelectricity and mining to $11.7 billion by March 31, 2021, from $8.3 billion this year.

But British Columbia now produces a third of Canada’s total natural gas output, and that proportion is growing. Saskatchewan is home to uranium extraction, potash mining and oil and gas. And Ontario and the territories produce significant quantities of copper, zinc, gold, diamonds and other minerals.

“We are not any different than Alberta,” said University of British Columbia Sauder School of Business professor Werner Antweiler, who counts environmental economics and resource management among his research interests. “When you point at Alberta, there are four fingers pointing back at your own jurisdiction.”

Former B.C. premier Christy Clark established the Prosperity Fund in 2013 with $100 million and intended to create a $100-billion reserve from the returns on liquefied natural gas (LNG) development. The fund earned $8 million last year and has not been built up even though B.C. wells produce more than five billion cubic feet of natural gas per day.

When you point at Alberta, there are four fingers pointing back at your own jurisdiction
WERNER ANTWEILER

The temptation, always, with these funds is to use the money generated on political pet projects such as investing in the local economy, trying to spur economic diversification or building infrastructure.

B.C.’s government posted a $1.5-billion budget surplus in 2019, but Premier John Horgan chose to spend the excess funds on infrastructure rather than make a deposit into the Prosperity Fund. The province’s natural resource revenues almost perfectly matched that budget surplus: not including forestry royalties, the province pulled in $1.4 billion in natural resource revenues that year.

Antweiler said there’s a case to be made for using sovereign wealth funds to build infrastructure such as schools and universities in developing countries like Chile, but using those same funds in developed countries, where the need is arguably less, has had a checkered history of success.

“Governments aren’t always effective in placing the money in the right spots,” he said. “The future wealth is disappearing because of incompetent management.”

Oddly, Canada’s most disadvantaged communities follow the Hartwick Rule to the letter and, partly due to strict regulations, have turned physical assets into financial assets.


The future wealth is disappearing because of incompetent management
WERNER ANTWEILER

Laurence Booth, a professor of finance at the University of Toronto’s Rotman School of Management, said the Indian Act requires that one asset be replaced with another, so bands have been forced to save their resource wealth and, in a frustrating exercise for many bands, ask the federal government before they’re allowed to spend.

Jim Boucher, the former long-time chief of the Fort McKay First Nation in northern Alberta, said his community has been saving natural resource revenues as required in a trust, which has helped diversify the community’s revenues and now generates $5 million per year.

“Our philosophy was that we never had a deficit because we couldn’t rely on anybody to bail us out,” he said

Jim Boucher, chief of the Fort McKay First Nation in northern Alberta, in 2014. PHOTO BY VINCENT MCDERMOTT/FORT MCMURRAY TODAY/POSTMEDIA NETWORK FILES

Asked whether it’s frustrating that the provincial governments haven’t followed the same strict rules, Boucher said Canadian provincial governments have a history of running deficits.

“We didn’t want to be like the province,” he said.

Political calculus has been a driving factor in many resource-wealth decisions in Canada over the years, and that has led to some questionable decisions.
\
Jack Mintz, the University of Calgary economist who in 2007 chaired a savings panel for former Alberta premier Ed Stelmach on the Heritage Fund that suggested enlarging the fund to $100 billion by 2030, said the provincial government at the time was concerned that building up a huge fund would cause future federal governments to withhold funding for Alberta projects.

“Alberta was always shy about building up too large of a Heritage Fund because they were worried that it might become a target for the federal government,” said Mintz, adding that the experiences of several U.S. states suggest that Alberta’s worry about federal pillaging was unfounded.

For example, New Mexico paid little mind to Washington when it set up its Land Grant Permanent Fund and Severance Tax Permanent Fund, which combined will pay out US$1.1 billion this year to finance new schools and hospitals.

New Mexico used its wealth fund to pay out US$1.1 billion this year to finance new schools and hospitals. PHOTO BY RICK WILKING/REUTERS FILES

As good as that sounds, in almost all cases, sovereign funds become the centre of heated debates about their effectiveness or the way they are managed.

“We have plenty of examples of sovereign wealth funds around the world, but we have few examples of success,” said Veljko Fotak, associate professor of finance at the University of Buffalo and an expert on sovereign wealth funds.

Fotak said funds have been established in some countries to save wealth for future generations, others for local economic development or diversification, and others to invest in infrastructure or to stabilize commodity price fluctuations. In each case, he said, it’s not always clear how effective the funds have been in fulfilling their mandates.

Even on the basis of returns, he said most sovereign wealth funds are selective and biased in what they disclose.

The father of the Hartwick Rule has watched these debates about saving non-renewable natural resource revenues play out in Canada and beyond with some detachment.


We have plenty of examples of sovereign wealth funds around the world, but we have few examples of success
VELJKO FOTAK

“I’m kind of an armchair fiddler, so I don’t get emotionally involved in these things,” Hartwick said.

Still, he has a theory now for why certain countries have been better at building up sovereign wealth funds with natural resource revenues than others.

Norway has such a small population relative to the size of its resource that “they’ve got the best of both worlds,” Hartwick said. “They’ve been able to assuage the current population by giving them baubles in the private sector and that’s kind of an unusual case.”

That, he said, seems to be the key to a national or sub-national government’s success in following his rule: Can you save and spend at the same time?

Financial Post

• Email: gmorgan@nationalpost.com | Twitter: geoffreymorgan

BEYOND PETROLEUM
Oil giant says the era of demand growth is over in profound break from orthodoxy

U.K. giant BP is describing a different future, where oil's supremacy is challenged, and ultimately fades

Bloomberg News Publishing date:Sep 13, 2020 •

U.K. giant BP is describing a different future, where oil's supremacy is challenged, and ultimately fades. PHOTO BY TANGANYIKA OIL COMPANY

BP Plc said the relentless growth of oil demand is over, becoming the first supermajor to call the end of an era many thought would last another decade or more.

Oil consumption may never return to levels seen before the coronavirus crisis took hold, BP said in a report on Monday. Even its most bullish scenario sees demand no better than “broadly flat” for the next two decades as the energy transition shifts the world away from fossil fuels.


BP is making a profound break from orthodoxy. From the bosses of corporate energy giants to ministers from OPEC states, senior figures from the industry have insisted that oil consumption will see decades of growth. Time and again, they have described it as the only commodity that can satisfy the demands of an increasing global population and expanding middle class.

BP's energy outlook shows consumption slumping 50% by 2050 in one scenario, and by almost 80% in another

The U.K. giant is describing a different future, where oil’s supremacy is challenged, and ultimately fades. That explains why BP has taken the boldest steps so far among peers to align its business with the goals of the Paris climate accord. Just six months after taking the top job, chief executive Bernard Looney said in August he’d shrink oil and gas output by 40 per cent over the next decade and spend as much as US$5 billion a year building one of the world’s largest renewable-power businesses.

That’s because he suspects oil use may already have peaked as a result of the pandemic, stricter government policies and changes in consumer behavior. BP’s energy outlook shows consumption slumping 50 per cent by 2050 in one scenario, and by almost 80 per cent in another. In a “business-as-usual” situation, demand would recover but then flatline near 100 million barrels a day for the next 20 years.

BP isn’t the only big oil company adapting its business to the energy transition. Royal Dutch Shell Plc, Total SE and others in Europe have announced similar pivots toward cleaner operations as customers, governments and investors increasingly call for change.
Three Possible Futures

BP’s report comes ahead of three days of online briefings starting Monday on its clean-energy and climate strategy. The study considers three scenarios, which aren’t predictions but nevertheless cover a wide range of possible outcomes over the next 30 years and form the basis of the new strategy Looney announced in August.

The “Rapid” approach sees new policy measures leading to a significant increase in carbon prices. The “Net Zero” course reinforces Rapid with big shifts in societal behavior, while the “Business-as-usual” projection assumes that government policies, technology and social preferences continue to evolve as they have in the recent past.

In the first two scenarios, oil demand falls as a result of the coronavirus, the report shows. “It subsequently recovers but never back to pre-COVID levels,” according to Spencer Dale, BP’s chief economist. “It brings forward the point at which oil demand peaks to 2019.”

That contrasts with what many others are forecasting. Russell Hardy, chief executive officer of trading giant Vitol Group, said on Monday that oil demand is poised for 10 years of growth before a steady decline. He predicts consumption will return to pre-virus levels by the end of next year.

BP’s outlook last year contained a scenario called “More energy,” which had oil demand growing steadily to about 130 million barrels a day in 2040. There’s no such scenario this time.

“Demand for oil falls over the next 30 years,” BP said in the report. “The scale and pace of this decline is driven by the increasing efficiency and electrification of road transportation.”
COVID Impact

The pandemic shattered oil consumption this year as countries locked down to prevent infections from spreading. While demand has since improved, and crude prices with it, the public health crisis is still raging in many parts of the world and the outlook remains uncertain in the absence of a vaccine.

The impact, including lasting behavioral changes like increased working from home, will affect economic activity and prosperity in the developing world, and ultimately demand for liquid fuels, according to BP. That means it won’t be able to offset already falling consumption in developed countries.

Demand for liquid fuels is seen falling to less than 55 million barrels a day by 2050 in BP’s Rapid scenario, and to around 30 million a day in Net Zero. The drop is mostly in developed economies and in China. In India, other parts of Asia and Africa, demand remains broadly flat in the first scenario but slips below 2018 levels from the mid-2030s in the second.

Other points in the energy outlook:

The Rapid scenario has carbon emissions from energy use falling by around 70 per cent by 2050, while they drop by more than 95 per cent in Net Zero. Business-as-usual sees them peaking in the mid-2020s.

Demand for all primary energy — the raw materials from which energy is derived — increases by about 10 per cent in Rapid and Net Zero in the period, and by around 25 per cent in the third scenario.

In Rapid, non-fossil fuels account for the majority of global energy from the early 2040s.
Growth in China’s energy demand slows sharply relative to past trends, reaching a peak in the early 2030s in all three scenarios.

Renewable energy — excluding hydro — increases more than tenfold in both Rapid and Net Zero, with its share in primary energy rising from 5 per cent in 2018 to more than 40 per cent by 2050 in Rapid and almost 60 per cent in Net Zero.

Natural gas consumption is seen broadly unchanged to 2050 in Rapid and around 35 per cent higher in business-as-usual. Demand falls by about 40 per cent by 2050 in Net Zero.

'Beyond Petroleum' No More? BP Goes Back to Basics

www.cnbc.com › ...

Apr 22, 2013 - After a very public campaign to promote renewable energy, BP is inaugurating Earth Day as a markedly less "green" company — highlighting ...

Is BP Finally Moving Beyond Petroleum? | OilPrice.com

oilprice.com › Latest Energy News

Jun 22, 2020 - Shortly before “Beyond Petroleum” was launched, BP made some instructive acquisitions. For $26.5bn, it acquired the oil-drillers ARCO. This was ...

Opinion: Is BP's Beyond Petroleum campaign back? Don't ...

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Jun 16, 2020 - As if to prove the point, BP, the former British Petroleum that is Europe's second-biggest oil company, on Monday unveiled oil and natural gas ...

After Abandoned 'Beyond Petroleum' Re-brand, BP's New ...

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Aug 4, 2020 - “We need to go beyond petroleum.” Just shy of 20 years ago, the oil giant BP infamously re-branded itself from “British Petroleum” to “beyond ...

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Feb 1, 2019 - BP's shock decision to publish a Paris Agreement consistent strategy is a huge win for investors, but who decides how to define 'consistent'?

Beyond Petroleum? | WWF

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Beyond Petroleum? Posted on 18 February 2020. It is a measure of how far the climate debate has come that BP, one of the world's largest producers of fossil ...

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BP's "Beyond Petroleum" Campaign Losing its Sheen

Submitted by Anne Landman on May 3, 2010 - 2:31pm

Back in July, 2000, British Petroleum launched a high-profile, $200 million public relations ad campaign designed by Ogilvy & Mather to position the company as environmentally-friendly. The company introduced a new slogan, "Beyond Petroleum," and changed its 70 year-old, sheild-style logo to a new, cheerful green and yellow sunburst. To many, the "Beyond Petroleum" campaign has always been ludicrous. After all, not only did it pitch BP's smallest energy sector while ignoring its major one, but BP's investment in extractive oil operations dwarfed its investment in renewable energy. BP spent a mere $45 million in 1999 to buy a solar energy company called Solarex -- a microscopic acquisition compared to the $26.5 billion it invested to buy ARCO to expand its oil drilling portfolio. BP is also the company behind the environmentally controversial (and some would say disastrous) oil sands project in Alberta, Canada. Now, in the wake of the massive oil spill in the Gulf of Mexico, BP's greenwashing campaign looks even less slick. The company's hypocrisy and greenwashing have risen to the surface, and are spreading uncontrollably.

Beyond Disastrous

The oily environmental disaster in the Gulf has drawn closer scrutiny of BP's record, and it reveals that the company is no stranger to major accidents. Pro-Publica reports that BP has been at the center of some of the worst oil and gas-related disasters in the U.S.

In 2005, a major explosion destroyed a gasoline-filled tower at BP's Texas City, Texas refinery, killing 15 people and injuring 170 more. Investigation revealed that BP had ignored its own protocols for operating the tower, and a warning system had been disabled. BP pleaded guilty to federal felony charges and shelled out more than $50 million in fines.

About a year after the Texas City accident, around 4,800 barrels of oil leaked into the snow around a pipeline in Alaska's Prudhoe Bay. BP had been warned by one of its own quality assurance specialists that they could expect a potential catastrophe from the corroded pipeline, but the company ignored the reports until it was too late.

In May, 2008, BP was one of eight big oil companies to settle a lawsuit brought by more than a hundred public water providers, who charged that the companies' activities led to widespread contamination of public groundwater sources with methyl tertiary butyl ether, or MTBE, a gasoline additive. The companies jointly paid $423 million in cash, and agreed to pay 70 percent of future cleanup costs over the next 30 years. The suit claimed the oil companies used MTBE even though they were aware of the environmental and health risks the chemical posed.

The U.S. Department of Justice has also charged BP with manipulating the market price of propane. BP agreed to pay over $300 million in fines in the case.

Spill, Baby Spill

Despite, or maybe because of, its history of fatal accidents, environmental disasters, fines and public deceit, BP is still trying to greenwash its image. Its Web pages are filled with bogus statements, like "We try to work in ways that will benefit the communities and habitats where we do business -- and earn the world's respect."

While more people are starting to see through this campaign of denial, BP still has a few cheerleaders, like failed vice presidential candidate-turned-Fox News commentator Sarah Palin, who on April 30 posted a buck-up piece in support of more domestic -- and even offshore -- drilling on her Facebook page.

If they haven't already, BP's disingenuous words of support for developing low-carbon, renewable energy sources will increasingly fall on deaf ears as the country' attention remains riveted instead on the desecration of one of the nation's most beautiful and valuable natural resources: the beleaguered Gulf coast.

https://www.prwatch.org/news/2010/05/9038/bps-beyond-petroleum-campaign-losing-its-sheen