The current slow pace of the energy transition is driving the world toward a future of “costlier” climate change mitigation, according to BP’s latest annual outlook. The energy major has raised its long-term oil and gas demand forecasts, a revision that solidifies the view that the 2050 net-zero goal is unlikely to be met.
BP’s revised figures indicate a sustained appetite for 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 driver of 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 energy trajectory risks exceeding the 2∘C carbon budget limit by the early 2040s. The company stresses that this extended period of delay will significantly increase the economic and social cost of remaining within the climate budget. To hit the net-zero goal, oil demand must fall aggressively to about 35 million b/d by 2050, illustrating the massive gap between necessity and reality.
Despite the necessary and rapid growth 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, highlighting the stubborn inertia in the global energy system.