Oil demand is expected to peak next year and fossil fuels will decline to about two-thirds of the global energy mix by 2050 as renewable power grows rapidly, according to BP.
In its latest energy outlook report, the energy giant said that a rapid rise in electric cars and trucks on the road would drive oil demand to reach the top in the middle of this decade.
The share of oil within the overall energy mix would decrease from about a third in 2022 to about a quarter by 2050 under the currency trajectory and to a little over 10% under a net zero scenario.
The current trajectory scenario is based on climate policies and carbon reduction pledges already in place, according to The Times.
The net zero scenario assumes a significant tightening of climate policies aligned with the 2015 United Nations-backed Paris climate agreement to cut the world’s carbon emissions by about 95% by the middle of the century.
Growth in oil demand since 2019 — which has averaged about 500,000 barrels a day a year — has been largely driven by increasing consumption in emerging economies and increased demand for petrochemicals like diesel and jet fuel, BP said.
Consumption in developed markets has continued to slip for most of the past two decades, having fallen by about two million barrels a day in 2022, compared with the pre-pandemic level and 5.5 million barrels a day below the 2005 peak.
Spencer Dale, BP’s chief economist, said: “The world is in an ‘energy addition’ phase of the energy transition in which it is consuming increasing amounts of both low carbon energy and fossil fuels.”
The challenge is to move, for the first time in history “to an ‘energy substitution’ phase”, he said, in which low carbon energy increases sufficiently quickly to more than match the increase in global energy demand.
“This occurs only when the growth of the ‘new’ energy — this time low carbon energy — exceeds the increase in total global energy demand, so that the use of the ‘old’ energy — in this case unabated fossil fuels — declines in absolute terms,” he said.