- An energy outlook report published by BP on Monday suggests oil demand may never return to its 2019 peak and could halve over the next three decades.
- The oil market has failed to fully rebound through the coronavirus crisis as weakened travel activity slams consumption.
- BP laid out three scenarios in its report for how liquid fuel demand could trend through 2050.
- The firm’s most bullish scenario sees consumption climbing slowly to 2030 before falling over the following two decades.
- It’s most bearish hypothetical – which includes major shifts in policy and societal behavior toward renewable energy use – sees fuel consumption failing to retake its pre-pandemic high and tanking more than 60% by 2050.
BP dashed hopes for an oil market resurgence on Monday, saying in a new report that demand may have peaked in 2019.
The world’s most traded commodity has failed to stage the same rapid rebound seen in other markets. While investors pushed stocks to record highs as the coronavirus pandemic raged, those monitoring the oil market found new signs of lasting demand weakness. Most recently, OPEC cut its 2021 demand estimate by 1.1 million barrels per day on softer consumption estimates.
BP went a step further. While many estimates see oil consumption growing for years after the coronavirus threat fades, the industry giant’s best-case scenario calls for relatively stagnant demand over the next two decades before a steady decline. In its most bearish estimate, global demand will nosedive through the 2020s and halve by around 2045.
“The global energy system is likely to undergo a fundamental restructuring in order to decarbonize, which will create challenges and opportunities for the industry,” the company said.
BP detailed three scenarios for global fuel consumption through 2050. The company’s “Business-as-usual” hypothetical assumes policy actions, consumer behaviors, and technological innovations toward green energy continue at their current pace. Carbon emissions from energy use would decline less than 10% from their 2018 peak to 2050. The scenario reflects BP’s most conservative forecast and still sees demand only slightly growing to a peak in 2030.
In the “Rapid Transition” scenario, a series of policy measures and sharp increase to carbon prices lead to a quick shift to green energy initiatives. Carbon emissions from energy use would sink 70% by 2050. Fuel consumption would slide by nearly 50% over the next three decades and never retake its 2019 high.
The “Net Zero” scenario assumes the policy measures enacted in “Rapid” are reinforced by a societal shift in behavior and preferences. Companies and communities alike would work to create an almost completely renewable energy industry, and carbon emissions from energy use would crater 95% by 2050. Liquid fuel consumption would follow the same path as seen in the “Rapid” scenario until 2030. After that, demand would slouch more than 60% through 2050.