The energy transition’s extended delay acts as an economic wake-up call, guaranteeing significantly higher future costs for climate change mitigation, according to BP’s sobering annual outlook. The energy major has raised its long-term oil and gas demand forecasts, solidifying the view that the 2050 net-zero goal is unlikely.
BP’s revised figures indicate a persistent reliance on hydrocarbons. Oil consumption in 2050 is now projected to hit 83 million barrels per day (b/d), an 8% increase from the previous 77 million b/d estimate. Natural gas demand is similarly forecast to remain elevated at 4,806 billion cubic meters annually in 2050. Furthermore, BP has delayed the expected date of peak oil demand by five years, now projecting 103 million b/d in 2030.
The primary reason for this slow transition is the overriding focus on national energy security, amplified by geopolitical factors. BP’s chief economist attributes the trend to the war in Ukraine, Middle East conflicts, and rising trade tariffs. This drive for self-sufficiency risks encouraging reliance on domestically produced fossil fuels, even as it creates an incentive for some countries to accelerate towards low-carbon ‘electrostates.’
The report warns that the current slow pace has severe climate implications. BP’s modeling shows that the world is on a trajectory to breach the cumulative 2∘C carbon budget limit by the early 2040s. The company cautions that this early breach will significantly increase the economic and social costs required for future climate mitigation. To meet the 2050 net-zero goal, oil demand must drop aggressively to about 35 million b/d by that date.
Despite the rapid expansion of renewables—projected to meet over 80% of new electricity demand by 2035—oil will remain the largest single source of primary global energy supply, holding a 30% share in 2035. Renewables are set to rise from 10% to 15% of the primary energy supply by 2035 but are not expected to surpass oil’s market share until the late 2040s.