BP has predicted that global oil demand will peak next year and end rising global carbon emissions by the mid-2020s due to the rise of wind and solar power.
The energy company’s influential outlook report found that oil consumption will rise by around 2 million barrels per day, peaking at around 102 million in 2025 across both of its forecasts.
The first forecast scenario shows the current trajectory of the world’s energy transition, and the second shows the path to meeting the global net zero goals by 2050.
BP predicts in both scenarios that carbon emissions will peak in the middle of the decade amid a rapid expansion of wind and solar power as technology costs continue to fall.
However, the report sets very different paths for future demand for gas, which has emerged as a key growth area for energy companies including BP in recent years.
Under the report’s net-zero scenario, gas consumption would peak around the middle of this decade before halving by 2050 compared to 2022 levels. However, the current trajectory suggests that gas demand will continue to grow over the forecast period and by 2050 will expand by roughly a fifth.
In the scenarios, demand for liquefied natural gas, which is refrigerated for shipping by ship, climbs 40% and 30% above 2022 levels.
The report also suggests higher-than-expected oil consumption in 2030 compared to previous BP forecasts, which would pose a serious threat to the world’s climate goals.
The oil company said its predictions for the current global trajectory, which included climate policies already in place, showed the world would breach carbon budgets and prevent global temperatures from rising above 2°C above pre-industrial levels.
On the current trajectory, oil demand is expected to fall to 97.8 million bpd in 2035, up 5% from last year’s BP forecast. The net zero model predicts demand will remain at 80.2 million barrels in 2035, up 10% from last year’s outlook.
BP said oil will continue to “play a significant role in the global energy system over the next 10-15 years”.
The company drew the ire of environmental activists after it watered down a pledge to cut oil and gas output by 40% by 2030 compared to 2019 levels to a 25% drop after Russia’s invasion of Ukraine fueled a sharp rise in global energy prices.
The outlook’s findings are likely to fuel concerns that the global shift away from fossil fuels to clean energy may be slowing, in part due to rising energy demand in developing economies.
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Spencer Dale, BP’s chief economist, said the world is in a “phase of energy addition”, during which consumption of both low-carbon energy such as renewables and fossil fuels is growing.
To keep a cap on rising emissions, low-carbon sources would have to be deployed at a pace that matches the rise in global energy demand, Spencer added.
BP’s outlook predicts that wind and solar power capacity will increase eight-fold by 2050 under current global climate policies and 14-fold under a net-zero scenario compared to 2022 levels.
Renewable energy project expansion is expected to be concentrated in China and developed economies over the next decade, accounting for about 30-45% of the increase in new capacity across BP’s two scenarios.
The rapid expansion of wind and solar power will allow technology and energy costs to fall further, which in turn will encourage more renewable projects, the company said.