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DMEA COMMENTARY DMEA

BP warns of peak oil demand

just around the corner

If more aggressive action is taken to curb emissions, peak demand may have already past

GLOBAL BP has warned that oil demand will peak within Under the two other scenarios consumption will
the next few years, reflecting growing belief that never again reach the pre-pandemic level of just
WHAT: the coronavirus (COVID-19) pandemic has above 100mn barrels per day (bpd).
BP now expects oil brought forward the decline of fossil fuels. The business-as-usual case sees oil demand
demand to peak in the The oil and gas major published its Energy reaching 10% below the current level in 2050,
early 2020s, if it has not Outlook 2020 on September 14, outlining three whereas the rapid and net-zero scenarios pre-
done so already. scenarios for global energy demand. The first, dict much sharper declines of 55% and 80%
business-as-usual, assumes that trends in gov- respectively. These declines will be driven by
WHY: ernment policies, technologies and societal increasing efficiency and the electrification of
Just a year ago the UK preferences continue in the way they have done road transport.
major was expecting the in the recent past. The second, rapid, assumes Carbon prices will also play a key role. The
milestone in the 2030s, a significant increase in carbon prices and the business-as-usual case assumes they will reach
but the pandemic and introduction of other aggressive policies to lower $65 per tonne in developed countries by 2050
an accelerated energy emissions. and $35 per tonne in emerging economies. But
transition have changed The third and final one, net zero, assumes the net-zero case sees them soaring to as high as
the picture. these policies are introduced but also supported $250 and $175 per tonne respectively.
by significant shifts in societal and consumer Oil use in transport will peak in the mid-to-
WHAT NEXT: behaviour and preferences. This will result in late 2020s in all three cases. Its share in the sec-
Gas will fare better, but carbon emissions dropping by over 95% by 2050, tor’s fuel mix will fall from 90% in 2018 to around
renewables are in for in line with efforts to limit global temperature 80% by 2050 under the business-as-usual case,
rapid growth. BP itself is rises to 1.5 degrees Celsius. only 40% in the rapid one and just 20% under
targeting a 40% cut in oil net-zero assumptions.
and gas production over Oil and gas The outlook for gas is markedly better, how-
the next decade. Even in the business-as-usual case, BP expects ever, supported “by broad-based demand and the
oil demand to reach plateau in the early 2020s. increasing availability of global supplies,” BP said.

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