Demand for oil may have peaked last year, the energy giant BP said in its annual Energy Outlook report, which was published on Monday.
The message of the outlook, according to media reports, is that oil consumption may never recover to pre-coronavirus pandemic levels, and not just because of the pandemic itself but because of factors that have been at play long before the coronavirus.
In the new report, the company lays out three scenarios for energy demand, all of which forecast a decline in demand for oil over the next 30 years. The scale and pace of the decline will be driven by the increasing efficiency and electrification of road transportation, the BP said.
The most optimistic one, from the oil industry’s perspective, is the business-as-usual scenario, which sees demand recover from the pandemic’s effects but then plateaus around 2025 and starts to decline after 2030.
In two other scenarios, in which governments take more aggressive steps to decrease carbon emissions and there are significant shifts in societal behavior, demand for oil never fully recovers from the decline caused by the pandemic. That would mean that oil demand peaked in 2019.
A second wave of coronavirus, which is causing some governments to tighten restrictions once again, also increases the likelihood that behavioral changes become permanent. For example, BP thinks that increased working from home may persist, weakening demand for travel.
Renewable energy like wind and solar would gain at the expense of fossil fuels, increasing by more than tenfold, according to the report. At the same time, the share of electricity used in activities like driving and heating and lighting buildings would more than double, to about 45% by 2050.
The new report is a major change from last year, when BP expected growth in oil demand to continue into the 2030s.
The Organization of the Petroleum Exporting Countries (OPEC) also said on Monday that world oil demand is expected to grow at a slower pace in 2021 than it thought a month ago. It also forecast an even steeper contraction in demand this year than previously predicted.