Have we passed peak oil?

BP thinks so.

From World Economic Forum 

The world has already passed “peak oil” demand, according to Carbon Brief analysis of the latest energy outlook from oil major BP.

The 2020 edition of the annual outlook reveals – albeit indirectly – that global oil demand will not regain the levels seen last year. It adds that demand could soon fall rapidly in the face of stronger climate action – by at least 10% this decade and by as much as 50% over the next 20 years.

The latest outlook was delayed by six months so that it could reflect the unprecedented impact of the coronavirus pandemic. The delay also reflects BP’s plans, set out over the course of this year, to reach net-zero emissions by 2050 – as an “integrated energy company”, rather than an oil major.

This means that alongside its conservative “business-as-usual” scenario – in which demand for gas continues to rise indefinitely – BP has also looked at the effect of stronger climate action. In its “rapid” and “net-zero” scenarios, coal and oil see fast declines, while gas peaks by 2025 or 2035.

Although the net-zero focus is new, Carbon Brief analysis shows the outlook continues the trend of previous editions, by cutting the prospects for fossil fuels while raising the bar for renewables.

Global oil demand has doubled over the past 50 years, reaching around 100m barrels per day in 2019, equivalent to an annual energy consumption of 192 exajoules (EJ).

In earlier editions of the BP outlook, global oil demand was expected to continue rising steadily. Indeed, successive editions had raised the outlook for oil, shown in blue lines in the chart below.

By 2018, BP’s outlook started to foresee an end to the upwards march for oil, with demand peaking by the mid-2030s. But the downwards revision in this year’s edition is much more dramatic (red lines), showing demand having already peaked in 2019, with large potential downside risks.

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Notice that even the 'business as usual' scenario shows a peak in oil demand.  And this is the best outlook for oil.  Yet the steady decline in the cost of lithium-ion batteries and EVs point to a much larger decline in oil demand.  EVs will likely match the cost of ICEVs by 2025 at the latest.  At that point, sales of new ICEVs will plunge, as will demand for oil.  

I've already commented that we have reached peak coal.  A combination of peak oil and peak coal means that CO2 emissions have probably peaked,  That doesn't mean global temperatures will stop rising.  The natural processes which remove CO2 from the atmosphere are slow, and as long as we continue to emit CO2, its level in the atmosphere will continue to rise, and with it, average global temperatures will keep on rising too.  But falling emissions while global economic growth continues will show policymakers and the public that zero-carbonisation is possible.   And as temperatures continue to rise and the cost of renewables continues to fall, the policy parameters will get tighter and tighter, driving ever faster reductions in emissions.