Global Oil Demand to Peak Next Year, BP Predicts

Oil and gas company BP’s Energy Outlook: 2024 Edition has predicted that peak global oil demand will occur next year, putting a stop to increasing carbon emissions as solar and wind continue to expand.

The report focused on two main forecast scenarios — Current Trajectory and Net Zero — and predicted that oil consumption will peak at approximately 102 million barrels a day in 2025, reported The Guardian. Both scenarios also project that carbon emissions will culminate mid-decade.

“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,” said BP Chief Economist Spencer Dale in the foreword to the report. “The challenge is to move – for the first time in history – to an ‘energy substitution’ phase, in which low carbon energy increases sufficiently quickly to allow the consumption of fossil fuels, and with that carbon emissions, to decline.”

The two scenarios set out in the report show dramatically different tracks for gas demand in the future, The Guardian reported.

Under the net zero pathway, gas demand would peak mid-decade and be cut in half by 2050, in comparison with 2022 levels. The current trajectory, however, has gas use continuing to increase all the way to mid-century.

BP said its current trajectory predictions — which take into account ongoing climate policies — indicated that carbon budgets to keep global temperatures below two degrees Celsius above pre-industrial levels would be breached.

Oil use is projected to decrease to 97.8 million barrels a day by 2035 under the current trajectory — five percent higher than BP forecast last year. Under the net zero scenario, demand is predicted to stay at 80.2 million barrels a day until then, which is 10 percent higher than BP’s 2023 outlook report.

“The two scenarios can also be compared to give a clearer sense of what needs to be done to shift the world from its current unsustainable emissions trajectory to a pathway consistent with the Paris climate goals. Spoiler alert: amongst other things, this suggests a need for greater electrification fuelled by even faster growth in wind and solar power, a significant acceleration in energy efficiency improvements, together with increasing use of a whole range of other low carbon energy sources and technologies, including biofuels, low carbon hydrogen, and carbon capture, use and storage,” Dale said.

BP angered environmentalists when it modified its promise to lower production of oil and gas by 40 percent by the end of the decade to 25 percent following Russia’s Ukraine invasion and the resulting surge in worldwide energy prices, reported The Guardian.

Dale said to keep emissions from rising further, renewable energy sources would need to be implemented at the same pace as increases in global energy demand.

The report predicted that, under current climate policies, solar and wind capacity will be eight times greater by 2050, but would expand by 14 times in the net zero scenario.

In both scenarios, China and developed economies are expected to be the renewable energy epicenters in the next decade, making up roughly 30 to 45 percent of new capacity increases.

BP added that solar and wind’s exponential expansion would further enable the lowering of costs for energy and technology that would further support renewable projects.

“The longer it takes for the world to move to a rapid and sustained energy transition, the greater the risk of a costly and disorderly adjustment pathway in the future,” Dale said.