The oil era is coming to a close
World demand for oil may never recover to its 2019 level, says British giant BP
BP’s annual Energy Outlook exploring different scenarios for the global energy system leading up to 2050 says that world oil demand has already peaked and is unlikely to grow again over the next 30 years. Even the most optimistic assumptions would have demand for oil on a plateau, with no further growth.
BP becomes the first of the great transnational oil companies daring to make such a bold statement proclaiming the end of the oil era. The company recently said it intended to focus on diversification of energy sources, including renewable sources, and to become the world’s largest energy company.
The annual report produces three possible scenarios.
The first assumes a “rapid transition” to low-carbon energy owing to a rise of 70 percent in costs associated with carbon emissions. Under this scenario, demand for oil will fall by 50 percent and demand for energy sources as a whole will rise by 10 percent. The share of oil as fuel in transport will decline to 40 percent of the total from 90 percent at present.
Under the second “net zero” scenario, hydrocarbon emissions will plunge by 95 percent by 2050 as a result of tough climate policies and a major change in the behaviour of consumers and society as a whole. It foresees an 80 percent decline in oil consumption by 2050, with the share of oil for use in transport falling to 20 percent of the total – with demand for energy overall rising by 10 percent.
The third “business as usual” scenario assumes that world energy policies will evolve according to the current established model with no serious changes in policy or in societal behaviour. It assumes a dip in demand for oil of 10 percent over the next 30 years compared to 2019 levels with overall demand for energy climbing 25 percent. The share of oil in the transport sector would dip slightly to a level of 80 percent.
Gas appears to be more stable under the three scenarios. According to the first scenario, demand for gas would undergo practically no change, while under the second scenario it would fall by 40 percent. The third scenario would see a rise in demand of 35 percent.
BP forecasts a reduction in coal consumption according to all the scenarios. And the use of renewable energy sources would undergo a sharp rise – hitting 45 percent in the first scenario against the current five percent, climbing to 60 percent according to the second scenario and 20 percent under “business as usual”.