BP Energy Outlook: Despite growth of EVs, oil will remain king by 2040

The 2018 edition of BP’s Energy Outlook was published yesterday and considers the forces shaping the global energy transition out to 2040 and the key uncertainties surrounding that transition.

The Outlook considers several scenarios and explores the energy transition from three different viewpoints such as fuels, sectors and regions.

Transport energy demand grows by only 25% despite total demand for transportation more than doubling, reflecting accelerating gains in vehicle efficiency. The transport sector continues to be dominated by oil (around 85% in 2040), despite increasing penetration of alternative fuels – particularly natural gas and electricity.

“BP’s strategy has to be resilient and adaptable to significant changes in the energy industry,” says Bob Dudley, Group Chief Executive.

This year’s Outlook argues that the penetration of electricity in the transport sector is best measured by considering both the number of electric vehicles (EVs) and how intensively each vehicle is used. In the evolving transition scenario, the share of EVs in the global car park reaches around 15% by 2040 – more than 300 million cars in a car park of almost 2 billion.

“The suggestion that rapid growth in electric cars will cause oil demand to collapse just isn’t supported by the basic numbers – even with really rapid growth,” explains Spencer Dale, Group Chief Economist at BP. “Even in the scenario where we see an ICE ban and very high efficiency standards, oil demand is still higher in 2040 than it is today.”

All the growth in energy consumption is in fast-growing developing economies: China and India account for half of the growth in global energy demand to 2040. Through the period, China’s energy growth slows as it transitions to a more sustainable pattern of economic growth. Africa will also play an important role in the growth of fuel demand.