BP ENERGY OUTLOOK 2022 – THE INEXORABLE FALL OF OIL DEMAND FROM 2025/2030
bp recently published its Energy Outlook 2022 as a contribution to a wider debate about the factors shaping the energy transition. The Energy Outlook 2022 describes three main scenarios – Accelerated, Net Zero and New Momentum – which explore a wide span of possible outcomes as the world transitions to a lower carbon energy system. In the three scenarios oil demand falls, driven by declining use in road transportation. Oil demand increases to above its preCOVID-19 level in all three scenarios, boosted by the stronger-than-expected rebound in economic growth. Oil consumption peaks in the mid2020s or around the turn of the decade. It is expected to decline sharply reaching 25Mb/d (million barrels per day) by 2050 according to the most optimistic scenario. According to the third scenario (New Momentum) oil demand remains above pre-COVID-19 levels until the mid-2030s before declining gradually, reaching 80Mb/d by 2050. The EIA (US Energy Information Administration) believes that global consumption of liquid fuels are expected to increase from an average of 99.4 million b/d in 2022 to 102.2 million b/d in 2024 (Data released in January 2023)
The role of oil in transport falls in all three scenarios of bp’s Energy Outlook 2022. In road transport, this decline largely reflects a combination of improving vehicle efficiency and increasing electrification. In aviation and marine, the decline in oil is driven by the increasing use of bio- and hydrogen derived fuels. In marine, the main alternative to oil is provided by H-fuels (ammonia, methanol and synthetic diesel.
Oil demand in emerging economies increases over the first part of the outlook, driven by increasing prosperity and rising living standards, including increasing car ownership and growing access to international travel. Oil consumption in emerging economies remains above its preCOVID-19 level during the first 10-years or so of the outlook in all three scenarios.
The shifting pattern of global oil supplies over the outlook is driven by contrasting trends in US tight oil and OPEC production. US tight oil recovers over the first part of the outlook, after which it begins to fall and OPEC’s market share gradually increases
Global gas demand grows initially in all three scenarios, driven by increasing demand in emerging economies. The rate of its decline seems more difficult to predict. In the New Momentum scenario natural gas broadly maintaining its share in global power generation as overall power production increases robustly.
The declining role for fossil fuels is offset by the rapid expansion of renewable energy (wind and solar power, bioenergy, and geothermal power). The share of renewable energy in global primary energy increases from around 10% in 2019 to between 35% and 65% by 2050 in the three scenarios. In all three scenarios, the pace at which renewable energy penetrates the global energy system is quicker than any form of fuel in history.
The widespread use of low-carbon (blue and green) hydrogen emerges in the 2030s and 2040s and helps to decarbonize parts of industry and transport.
(Source and image: bp)