One of the biggest international oil companies has concluded that oil consumption will peak this decade. That’s the main takeaway from BP Plc’s annual energy outlook published this week outlining a handful of scenarios for the future of global fuel and electricity demand, and it’s a big admission in its own right. Even bigger is the way BP concludes it will happen: not because of aggressive policies aimed at reaching net-zero global greenhouse gas emissions by 2050, nor as a result of carbon prices or other interventions aimed at limiting global temperature rise to 2° Celsius over pre-industrial levels. No, BP says that even if energy policy keeps evolving at pretty much the pace it is today, oil demand will still start declining.
Even if governments take no drastic action on climate, BP sees oil consumption topping out not much higher than it is now: around 100 million barrels of oil per day, the same level as last year, though higher than June’s mid-pandemic 83 million barrels per day. In scenarios involving dramatic action by governments to limit climate change, the company determines that demand has already peaked.
Under BP’s business-as-usual scenario, peak demand doesn’t mean a dramatic demand drop-off by 2050. The other two scenarios are far more drastic in this regard.
Calling the Top
Global oil demand in three scenarios
Source: BP
Not only does overall demand fall in every scenario, demand also falls in every energy-use sub-category save one: “other transport,” which is mostly marine and aviation. Even that will only be good for 2.2 million barrels per day of demand growth in the next three decades.
Down, Way Down, Way Way Down
Change in oil demand 2018-2050 in three scenarios
Source: BP
Note: “mbpd” is million barrels of oil per day
Scenarios are visions of the future, informed by data points, trends, and many variables. Other companies aren’t likely to change their stance on peak demand just because BP said its a thing. But there have been a handful other announcements in just the past week or so that all point in the direction of less oil consumption, not more.