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Demand for oil may never fully recover from the dramatic fall triggered by the coronavirus crisis, a report by energy giant BP has concluded.
The prediction that peak oil demand may already have passed is made in the latest edition of the closely-watched Energy Report Outlook by BP.
This considers three scenarios for how the global energy system may evolve in the period to 2050 amid efforts to cut carbon emissions to slow the pace of climate change.
In two scenarios new policies help ensure that oil demand will remain below the levels seen before the coronavirus.
In the third scenario, which assumes policies and behaviours continue to evolve as they have been doing, demand plateaus in the early 2020s.
BP cautioned that this business as usual approach would not do much to slow climate change. Under this scenario carbon emissions from energy use would peak in the mid-2020s but not decline significantly. Emissions in 2050 would be less than 10 per cent below 2018 levels.
BP chief executive Bernard Looney said: “Even as the pandemic has dramatically reduced global carbon emissions, the world remains on an unsustainable path.
“However, the analysis in the Outlook shows that, with decisive policy measures and more low carbon choices from both companies and consumers, the energy transition still can be delivered.”
The report found the biggest impact could be achieved in terms of slowing global warming if appropriate policy measures are accompanied by significant shifts in societal and consumer behaviour and preferences.
The measures required would include a significant increase in carbon prices.
Heavy investment would need to be made in developing clean energy systems to help meet global demand for energy.
This is likely to continue increasing for another ten years at least, driven by increasing prosperity and living standards in the emerging world.
Mr Looney has said BP will become a net zero business by 2050 in terms of emissions. This will involve a big increase in its investment in renewable energy.
The company, which has a big North Sea business, will provide more details this week of how it expects to achieve that aim.
The Energy Outlook report suggested global temperature rises could be limited to 1.5 degrees Celsius by 2100 if appropriate policy measures are reinforced by wider social changes, such as greater adoption of circular and sharing economies and switching to low carbon energy sources.
This would result in carbon emissions associated with energy use being reduced by over 95% by 2050.
It may be possible to limit temperature rises to two degrees Celsius if policy measures are able to secure a 70% fall in carbon emissions associated with energy use.
Oil and gas are expected to remain part of the mix in the long term.
However, demand for oil falls in all three scenarios over the next 30 years as a result of the increasing efficiency and electrification of road transportation.
Gas could provide a substitute for coal and help meet demand for power as renewable energy sources are developed.
BP chief economist Spencer Dale said all the scenarios would be wrong. They were designed to help better understand the range of uncertainty we face as the energy system transitions to a lower-carbon world.
The central aim of the Paris agreement struck by nations in 2015 is to limit the global temperature rise this century to well below two degrees above pre-industrial levels.
