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Oil drilling ship Tungsten Explorer off the coast of Lebanon on Feb. 25, 2020. Photo: Joseph Eid/AFP via Getty Images

Global oil consumption is slated to plateau early this decade even without vastly stronger measures to combat climate change, BP said in a new analysis.

Why it matters: BP now sees this moment arriving a decade sooner than last year's version of their long-term outlook for oil-and-gas, coal, renewables, cars and more.

  • The new projection signals how the COVID-19 pandemic is reshaping analysts' views of the energy future.
  • The timing of peak oil demand, and the slope of its decline, will affect carbon emissions, corporate strategies and the finances of oil-producing nations.

Driving the news: BP projects demand for liquid fuels (a rough oil proxy) entering a long plateau in the early 2020s in their "business as usual" (BAU) scenario.

  • It assumes "government policies, technologies and social preferences continue to evolve in a manner and speed seen over the recent past."
  • Oil demand plateaus at roughly 100 million barrels per day — where it was before the pandemic drove it downward — for almost 20 years, and then declines slightly through 2050.

The intrigue: In other BP scenarios, oil demand never reaches pre-pandemic levels again and declines steeply by 2050, the end of its outlook period.

  • BP's "rapid transition" case assumes policies strong enough to slash energy-related CO2 emissions by 70% by 2050. It shows oil demand falling to roughly half of pre-COVID levels by 2050.
  • Under its "net zero" scenario — which explores policies and behaviors aligned with holding temperature rise to 1.5°C above pre-industrial levels — demand falls to about one-third of pre-pandemic levels.
  • When it comes to transportation, the largest source of oil demand, all three scenarios see increasing efficiency, while the "rapid transition" and "net zero" cases both see much greater increases in electric cars and hydrogen fuels than BAU.

Where it stands: The report comes as BP is planning to diversify away from its dominant fossil fuel business in coming decades, including plans to cut aggregate oil-and-gas production by 40% by 2030.

The big picture: Oil demand across the models is "significantly affected" by the pandemic, due in part to its economic effect in emerging economies that are centers of demand growth.

  • "The experience of coronavirus also triggers some lasting changes in behavior, especially increased working from home," the report finds.

Yes, but: "We can’t predict the future; all the scenarios discussed in this year’s Outlook will be wrong," said BP chief economist Spencer Dale. Instead, BP uses these scenarios to "better understand the range of uncertainty we face as the energy system transitions to a lower-carbon world."

Go deeper

Ben Geman, author of Generate
Nov 25, 2020 - Energy & Environment

Powerful lobbying groups push back on climate suits

Powerful lobbying groups are throwing their support behind oil companies' efforts to keep climate-related lawsuits against the industry out of state courts.

Driving the news: The U.S. Chamber of Commerce and National Association of Manufacturers, among others, filed amicus briefs this week supporting Big Oil companies in a pending jurisdictional case before the Supreme Court.

20 mins ago - World

Iran's nuclear dilemma: Ramp up now or wait for Biden

Illustration: Annelise Capossela/Axios

The world is waiting to see whether Iran will strike back at Israel or the U.S. over the assassination of Mohsen Fakhrizadeh, the architect of Iran's military nuclear program.

Why it matters: Senior Iranian officials have stressed that Iran will take revenge against the perpetrators, but also respond by continuing Fakhrizadeh’s legacy — the nuclear program. The key question is whether Iran will accelerate that work now, or wait to see what President-elect Biden puts on the table.

Updated 1 hour ago - Health

U.K. first nation to clear Pfizer coronavirus vaccine for mass rollout

A health care worker during the phase 3 COVID-19 vaccine trial by Pfizer and BioNTech in Ankara, Turkey, in October. Photo: Dogukan Keskinkilic/Anadolu Agency via Getty Images

The United Kingdom's government announced Wednesday it's approved Pfizer-BioNTech's COVID-19 vaccine, which "will be made available across the U.K. from next week."

Why it matters: The U.K. has beaten the U.S. to become the first Western country to give emergency approval for a vaccine that's found to be 95% effective with no serious side effects against a virus that's killed nearly 1.5 million people globally.

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