BP’s crystal ball sees oil demand plateau and electric cars on the rise

Annual Energy Outlook report released

BP has released its annual Energy Outlook report, which suggests a significant increase in the use of electric vehicles, oil demand peaking before plateauing, coal demand decreasing, and carbon emissions still increasing 10% by 2040.

The report looks at global energy predictions up to 2040, although BP emphasises that this is a set of “what if” scenarios rather than forecasts. Most of the report is based on what it calls the “evolving transition” (ET) scenario, which assumes that policies and technologies will change at a similar rate to the recent past. Alternative scenarios are also considered, namely the “faster transition” (FT) and the “even faster transition” (EFT) which have a faster decline in emissions.

Global energy demands will increase by a third, mainly due to rapid growth of developing economies and increased urbanisation

Global energy demands will increase by a third, mainly due to rapid growth of developing economies and increased urbanisation, however this rate of growth is slower than in the past 25 years. China and India account for half of the growth in global energy demands. India will overtake China in the early 2030s as the fastest-growing market for energy, and after 2035 Africa will contribute more to the global demand than China. Oil, gas, coal, and non-fossil fuels (nuclear, hydro, and renewable) will each meet a quarter of the world’s energy needs by 2040.

Oil

The demand for oil will continue to grow but will peak in the 2030s before plateauing. After 2030, growth will come mainly from non-combusted uses, such as feedstocks for petrochemicals. However, this growth could slow, due to increasing measures to reduce the amount of single-use plastics and packaging.

Natural gas

The demand for natural gas will grow steadily and will overtake coal to become the second largest energy source. This is due to continued switching from coal to gas and increasing availability of low cost supplies. The report also considers an alternative “less gas switching” scenario where gas growth is weaker if less switching from coal to gas occurs. The demand for gas could also weaken in a “renewables push” scenario, where renewables are favoured more than gas. Gas demand is further decreased in both the FT and EFT scenarios.