The BP oil refinery in Whiting, Indiana across the street from Marktown Park on Jan. 8, 2019. Scott Olson / Getty Images
We may have already passed peak demand for oil.
This suggestion comes from an unlikely source: fossil-fuel giant BP. The company released its annual Energy Outlook report Monday, and found that oil demand may have already peaked in 2019, as the rise in renewable energy intersects with the impact of the coronavirus pandemic, The Guardian reported.
“(The energy transition) would be an unprecedented event,” BP chief economist Spencer Dale told journalists, as Reuters reported. “Never in modern history has the demand for any traded fuel declined in absolute terms.”
The report outlines three possible energy scenarios for the next 30 years.
- The Rapid Transition Scenario (Rapid): This envisions a scenario in which energy-based greenhouse-gas emissions decline 70 percent by 2050, in line with limiting global warming to well below two degrees Celsius above pre-industrial levels by 2100.
- The Net-Zero Scenario (Net Zero): This scenario imagines the policies adapted in the Rapid scenario are augmented by widespread lifestyle changes, and energy emissions decline by more than 95 percent by 2050, limiting warming to 1.5 degrees Celsius above pre-industrial levels.
- The Business-as-Usual Scenario (BAU): This imagines that climate policies continue at a pace consistent with the past several years, and emissions only decline to less than 10 percent of 2018 levels by 2050.
In the first two scenarios, BP concluded oil demand would already have peaked in 2019, according to The Guardian. In the third, it would plateau after 2019 and peak sometime in the mid-2020s, according to BP.
However, all three scenarios show oil and gas on the wane and renewable energy on the rise, Reuters reported. They show fossil fuels falling from 85 percent of energy demand in 2018 to 20 to 65 percent by 2050. Meanwhile, they show renewable technologies like wind and solar expanding from five percent of energy demand in 2018 to 20 to 60 percent by 2050, according to Reuters and The Guardian.
“In all three of these scenarios the share of renewable energy grows more quickly than any energy fuel ever seen in history,” Dale told The Guardian.
The coronavirus is expected to speed the decline in oil demand in part because it is slowing economic growth in developing countries, which tend to drive energy demand. At the same time, many developed countries are upping their climate ambitions and carbon taxes.
The report comes the same year that BP announced plans to be an entirely carbon-neutral energy company by 2050. Monday’s report seemingly supports Chief Executive Bernard Looney’s plan to “reinvent” the company, Reuters pointed out. It was released as the company begins a three-day event outlining its plans to transition its energy sources.