BP plc (BP) forecasts that global oil demand will reach its zenith next year, marking a pivotal shift as wind and solar capacities are set for exponential growth. This projection, highlighted in BP’s annual Energy Outlook, scrutinizes the evolution of the global energy system up to 2050 and underscores substantial transformations in energy consumption patterns and carbon emissions. The energy behemoth has sounded an alarm: delaying the transition to renewable energy could be “costly.”
Scenarios and Emissions
BP’s Energy Outlook delineates two primary scenarios: the Current Trajectory and the Net Zero scenario. Both project that carbon emissions, predominantly from fossil fuels, will peak in the mid-2020s. The Current Trajectory scenario is anchored in existing climate policies and carbon reduction commitments. In contrast, the Net Zero scenario envisions stringent climate policies aligned with the Paris Agreement, targeting a 95% reduction in carbon emissions by mid-century.
In the Current Trajectory, primary energy demand escalates until the mid-2030s before plateauing. By 2050, energy demand is forecasted to be about 5% higher than in 2022. Conversely, the Net Zero scenario predicts energy demand will peak mid-decade and then decline, culminating in a 25% reduction by 2050 compared to 2022 levels.
Oil and Natural Gas
The outlook anticipates oil demand peaking at around 102 million barrels per day (bpd) in 2025 under both scenarios. The subsequent decline, however, varies. In the Current Trajectory, oil consumption is projected to fall to approximately 75 million bpd by 2050. Meanwhile, the Net Zero scenario envisions a steeper drop to between 25-30 million bpd. By 2035, oil demand is expected to stabilize at around 97.8 million bpd under the current global energy trajectory—an upward revision of more than 5% from last year’s forecast, which had previously seen BP significantly tempering its growth expectations for both oil and gas.
Natural gas demand presents divergent trends across the two scenarios. Under the Current Trajectory, demand is set to increase by roughly 20% by 2050, buoyed by significant growth in emerging economies. Conversely, in the Net Zero scenario, gas demand is expected to peak mid-decade and then halve by 2050, with 80% of consumption abated through carbon capture and storage (CCS) technology. BP’s forecast for natural gas demand in 2035 has also seen a 3% increase compared to last year’s projection.
The last upward revision in oil demand projections for 2030 occurred in 2022, with gas projections previously raised in 2018. Despite rising fossil fuel demand, BP anticipates that CO2 emission levels will be lower by 2050 under both scenarios.
Renewable Energy
Both scenarios envisage a dramatic expansion of renewable energy. Wind and solar power are predicted to grow eight-fold by 2050 in the Current Trajectory scenario and fourteen-fold in the Net Zero scenario. Until 2035, China and developed economies will spearhead this expansion, each contributing 30-45% of new capacity.
LNG Demand
Liquefied natural gas (LNG) demand is projected to surge until 2030, with increases of 40% and 30% in the Current Trajectory and Net Zero scenarios, respectively, compared to 2022 levels. Post-2030, LNG demand will continue to rise by over 25% in the Current Trajectory, necessitating additional liquefaction capacity. However, the Net Zero scenario predicts a reversal post-2030, with global LNG trade dropping 40% below 2022 levels by 2050.
Conclusion
BP’s Energy Outlook paints a picture of a global energy landscape on the brink of critical transitions. While the report refrains from detailing the reasons behind the revised forecasts, it notes that under the Current Trajectory, the decline in oil use for road transport is offset by its increasing application in the petrochemicals industry.
In emerging economies, burgeoning prosperity and rising living standards are anticipated to underpin robust oil demand. BP’s latest outlook signals a complex and evolving energy terrain, where accelerating the transition to renewable energy is imperative to meet global targets and mitigate the potential costs of delay.
