Energy shift predicted as oil demand dries up

Company report sees major growth for renewables as pandemic effects hit

Global petroleum giant BP says the era of oil is coming to an end and the future of the world's energy is likely to lie in greener alternatives, with the COVID-19 pandemic having brought about significant and permanent change.

The company's annual report suggests demand for oil reached a peak in 2019. Global lifestyle changes this year have caused a sudden decline in demand, best summed up by April's collapse of oil prices in the United States to negative amounts, something energy analyst Stewart Glickman told the BBC was "off-the-charts wacky… the demand shock was so massive that it's overwhelmed anything that people could have expected".

The report went on to say that the industry should now prepare itself for an inevitable decline, as, to borrow a phrase from the United Kingdom government, countries look to "build back greener" as part of their recovery from the pandemic, increasingly turning to renewable energy sources.

BP played out three scenarios for the future of global energy use, factoring in contemporary concerns and demands, and only one, which was based on climate change not becoming a growing concern, resulted in anything other than rapid reduced demand. Even that potential outcome could only see years of oil consumption staying on a plateau, before tailing off.

"In all three of these scenarios the share of renewable energy grows more quickly than any energy fuel ever seen in history," said BP's Chief Economist Spencer Dale.

The report went on to say that the role played by renewable energy could grow from its current level of around 5 percent to anywhere between 20 and 60 percent by 2050.

Reduced air travel and plastics production are expected to play a part, as is the development of electric vehicles, and China features prominently in the report.

On the one hand, its power stations and booming heavy industry keep demand for oil and coal high. However, China is also one of the countries at the forefront of electric vehicle technology.

The fossil fuel brand is also proving increasingly unattractive. Earlier this year, the UK's biggest pension fund, the government-backed National Employment Savings Trust, began divesting from fossil fuel companies.

"No-one wants to save throughout their life to retire into a world devastated by climate change," said the fund's chief investment officer, Mark Fawcett. "As the world's economy slowly recovers from coronavirus, we want to ensure this recovery is a green one." A number of high-profile arts organizations have also ended partnerships with fossil fuel companies.

Earlier this year, BP's Chief Executive Bernard Looney warned the novel coronavirus might have a decisive impact on oil demand, and said he was more convinced than ever that the company's future should be low carbon.

The report's findings, he said, would help BP "better understand the changing energy landscape" and help shape its plans to become a net-zero company by 2050. That is one of the goals that will be set out to investors at a three-day event taking place this week.