Oil demand to plateau across the world before beginning to slide by 2050: BP

Global oil demand to plateau before declining by 2050: BP

Global oil demand is expected to plateau over the next 10 years before declining by 2050, according to British Petroleum (BP).

A report by BP pointed that the decline in oil demand would be driven by the falling use of oil in road transport as vehicles become more efficient and are increasingly fuelled by alternative energy sources.

“Rising prosperity and living standards in emerging economies support an increase in both the size of the global vehicle parc and in distances driven, boosting the demand for oil. But this is increasingly offset by a combination of the road vehicle fleet becoming more efficient and the growing switch away from oil to alternative energy sources,” the report said.

Oil would continue to play a major role in the global energy system over the first half of the outlook in Accelerated and Net Zero, with the world consuming 70- 80 Mb/d (million barrels per day) in 2035, said BP.

In the report, BP has taken three scenarios into consideration — Accelerated, Net Zero and New Momentum. Carbon dioxide-equivalent emissions would fall by around 75 percent by 2050, relative to 2019 levels, in Accelerated and by 95 percent in Net Zero. New Momentum is designed to capture the broad trajectory along which the global energy system is currently travelling.

Decline in oil demand accelerates in the second half of the outlook, with demand reaching around 40 Mb/d in Accelerated and 20 Mb/d in Net Zero in 2050. Oil consumption in New Momentum is stronger, remaining close to 100 Mb/d through much of this decade, after which it declines gradually to around 75 Mb/d by 2050, the report stated.

Renewable energy expansion

BP said wind and solar installed capacity would increase by around 15 fold over the outlook (by 2050) in Accelerated and Net Zero and 9 fold in New Momentum.

The rapid expansion in wind and solar power is largely underpinned by falls in their costs – which resume after recent short-term inflation pressures, especially over the first 10-15 years of the outlook, highlighted BP in the report.

“Solar and wind technology and production costs fall with growing deployment, supported by increases in module efficiency, load factors and project scales for solar, and by higher load factors of increasingly large turbines and lower operating costs for wind,” the report stated.

The British oil giant emphasised that the expansion in wind and solar installed capacity by 2035 requires a significant acceleration of the pace at which new capacity is financed and built.