The global transition to clean energy is decelerating, according to a revised outlook from BP, which now projects oil demand will peak later and remain higher for decades. The energy company’s new figures suggest the momentum required to hit the crucial 2050 net-zero emissions goal is missing, necessitating a complete overhaul of current energy policies. This report provides a sobering check on the speed of climate action.
BP’s closely observed annual report has shifted its timeline for peak oil demand, now expecting it to hit 103 million barrels per day (b/d) in 2030, a five-year delay from its prior forecast. More significantly, the long-term forecast for oil consumption in 2050 has been raised by 8%, climbing to 83 million b/d from the previous 77 million b/d projection. Natural gas demand projections for 2050 also saw a slight increase, now set at 4,806 billion cubic meters a year.
The impetus behind this sustained fossil fuel demand is clearly linked to geopolitical instability. BP points to factors like the conflict in Ukraine, Middle Eastern tensions, and the rise of trade protectionism as key drivers pushing nations to prioritize energy self-sufficiency. While this might encourage some to become ‘electrostates’ by accelerating domestic, low-carbon electrification, BP also notes the inherent risk that states will choose to rely more heavily on readily available, domestically produced fossil fuels to ensure security of supply.
The stakes for the climate are rising rapidly. BP warns that the current sluggish pace of transition means the world’s cumulative carbon emissions will exhaust the 2∘C carbon budget limit by the early 2040s. This premature breach drastically increases the potential economic disruption and social cost of future necessary, more aggressive mitigation measures. The company stresses that achieving net-zero by 2050 requires a far sharper decline, specifically a drop in oil use to approximately 35 million b/d by that date.
Despite this continued reliance on hydrocarbons, the report acknowledges the substantial, though slow, growth of renewables. While oil is projected to maintain its position as the largest single energy source, holding a 30% share in 2035, renewables are set to rise from a 10% share in 2023 to 15% by 2035. BP’s modeling suggests that renewables will only surpass oil’s market share towards the end of the 2040s, highlighting the decades-long lag in the fundamental energy system shift, even as the company itself performs a “fundamental reset” of its own strategy to focus on current oil and gas production amidst investor pressure.
