MANILA - S&P Global raised its price outlook by $5 per barrel for 2021 as energy demand returns to pre-pandemic levels.
The financial information and analytics company said Brent Crude may average $65 per barrel for 2021, $60 per barrel for 2022, and $55 per barrel for 2023.
The Philippines follows Dubai Crude, which has also been trading around the $65 per barrel level.
S&P Global Platts said global demand for energy is recovering as countries return to pre-pandemic circumstances. But it also noted that there are certain aspects of the pandemic that will likely increase demand for traditional fossil fuels, including the greater use of personal vehicles over public transport which will support gasoline and diesel demand.
Overall, however, S&P said it still expects the global economy to move towards zero-emissions energy sources, and minimize dependence on fossil fuels.
S&P noted that the pandemic helped reduce global emissions enough to shift the trajectory of their forecasts to 5 percent lower by 2040.
However, this is still nowhere near the emission reduction needed to hit the Conference of Parties of COP 21 Paris Agreement to limit global warming by well below 2 degrees above pre-industrial levels, S&P said.
The actual percentage reduction varies from country to country, with the UK vowing to cut carbon emissions by 78 percent by 2035, and the European Union committing to cut emissions by at least 55 percent by 2030.
S&P Global noted the Philippines has yet to set its own commitments. All COP 21 signatories are expected to start reporting on their climate change goals transparently by 2024.
Kang Wu, Head of Global Demand and Asia Analytics at S&P Global Platts said he does not expect all the signatories to be able to keep pace.
“It depends if they have less incentive to do it, or if they are not required by regulations to do it, the pace will be different. The trend is for coal to peak sometime. Will it completely go away? Personally I don’t think so. It will remain as baseload for other countries and other users," Kang said.
While the Philippines has banned the construction of new coal-fired projects, it is also dealing with increasing electricity demand, in step with ambitious economic growth goals and infrastructure spending.
Minh Hoang, Director for Corporate Ratings at S&P Global Ratings noted that even though countries have announced bans on the construction of new coal plants, they still have coal plants in their respective pipelines.
The Philippines relies on coal for close to 50 percent of its power capacity.
FROM THE ARCHIVES