Recent trends indicate that the energy transition may be slowing down. Despite global efforts, electric vehicle (EV) sales are decelerating, and the growth in wind and solar capacities is lagging behind targets, resulting in rising electricity costs rather than the anticipated decreases.
According to BP’s latest energy outlook, despite the global push to move away from fossil fuels, oil and gas are poised to remain key energy sources for the foreseeable future. BP predicts that oil demand will peak next year, a forecast they have made previously. Contrary to earlier predictions following the pandemic’s peak, when demand unexpectedly surged to record highs, BP now sees a gradual decline in oil demand. However, this decline will be less significant than previously thought; by 2035, the world is still expected to consume 97.8 million barrels per day, only slightly down from the current consumption rate of approximately 100 million barrels daily.
BP’s report suggests that humanity’s reliance on hydrocarbons will not easily be curtailed merely by adopting alternative energy sources. Global primary energy demand continues to increase, with hydrocarbons set to meet much of this demand until a potential future point when global energy requirements may decrease.
The transition to alternative energy sources faces challenges in energy density and storage costs, which are crucial for their wider adoption. If substantial financial and regulatory support were mobilized, BP’s Net Zero scenario envisions energy demand peaking next year. However, under the more likely Current Trajectory scenario, energy demand is expected to continue rising until the mid-2030s before stabilizing.
This outlook illustrates a growing divide between the developed world, which has pioneered and aggressively pursued the energy transition, and the developing world, where access to energy remains a luxury. As these economies grow, increased energy access is expected, driving up overall energy consumption until it reaches a peak.
The increase in oil and gas demand in the developing world, contrasted with a slight decline in the developed world—partly due to deindustrialization—underscores a major contradiction in the transition narrative. It challenges the claim that the transition will provide abundant and affordable energy for all, suggesting instead that energy abundance currently depends on traditional energy sources.
BP’s outlook predicts that oil and gas will maintain their dominance in the global energy mix, primarily due to enhancements in energy efficiency. Notably, even with significant increases in wind and solar deployments anticipated by 2050, these sources, together with geothermal and biogas, are expected to account for only about 25% of total primary energy.
This scenario highlights the considerable gap between the lofty goals of net-zero plans and the actual pace of current energy policies. The International Energy Agency has frequently highlighted the urgent need to accelerate the transition efforts.
In this dynamic, the developed world faces financial strains from investing heavily in the transition, while the developing world enjoys economic gains from increased hydrocarbon use. This dichotomy underscores why oil and gas will continue to play a critical role in the global energy landscape, particularly within the expanding economies of the developing world.
