BP Sees Oil Demand Peaking in Early 2020s
BP expects oil demand to peak in the next few years assuming current trends continues, it said in its Energy Outlook 2020 report published on September 14.
In its business-as-usual (BAU) case, which assumes that government policies, technologies and societal preferences continue to evolve in a manner and speed seen in the recent past, BP expects oil demand to plateau in the early 2020s. In its two other scenarios that assume more aggressive policies to tackle global emissions, oil consumption will never return to its level before the Covid-19 pandemic.
As recently as last year BP had forecast continued growth in oil consumption over the next decade, reaching a peak in the 2030s.
Oil demand is expected to fall by 10% by 2050 under a BAU scenario. BP's rapid scenario, which assumes a significant increase in carbon prices and the introduction other climate policies to cut emissions significantly, sees consumption slumping 55% over the next three decades. In the company's net zero case, which assumes the same policies as the rapid scenario but supported by significant shifts in societal and consumer behaviour and preferences, demand will fall by as much as 80%.
The BAU scenario assumes carbon prices will reach $65/mt in developed countries by 2050 and $35/mt in emerging economies, whereas the net-zero case sees them reaching $250/mt and $175/mt respectively.
The outlook for gas is much brighter, supported by broad-based demand and increasing availability of supplies, according to BP. The UK major expects demand to rise by a third by 2050 under the BAU scenario. Under the rapid scenario, consumption will peak in the mid-2030s but remain at broadly the same level in 2050 as in 2018. The net-zero case sees demand peaking in the mid-2020s and losing a third of its value over the next three decades.
Renewables will be the fastest-growing segment, with their share in primary energy consumption expanding from around 5% in 2018 to 60% under net zero assumptions, 45% under the rapid scenario and 20% under the BAU case. Electrification will result in the share of electricity rising from a little over 20% in 2018 to over 50% in the net zero, 45% in the rapid and 34% in the BAU cases by 2050.
Hydrogen, pitched as another means of decarbonising energy, will see its share of final energy consumption increase to 16% under the net zero and 7% under the rapid scenarios over the next three decades . Bioenergy's share will grow to 10% in the net zero and 7% in the rapid cases.