The dual energy push—nations seeking domestic fossil fuel security versus the need for global decarbonization—is resulting in a stalled energy transition, according to BP’s latest annual outlook. The energy major has raised its long-term oil and gas demand forecasts, confirming the world is unlikely to meet the 2050 net-zero target.
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.
BP’s chief economist highlights that geopolitical tensions, including the war in Ukraine and rising trade tariffs, intensify the focus on national energy security. While this pressure may spur some countries toward low-carbon ‘electrostates,’ the report warns of the counter-risk: an increased preference for domestically produced fossil fuels, creating a structural drag on the speed of global decarbonization.
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 extended delay significantly increases 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.