A recent slowing of energy efficiency improvements around the world could lead to an additional 6mn b/d of oil demand by 2035 if the trend persists through to the end of this decade, according to BP's latest Energy Outlook report.
Like last year, the 2025 edition of the Energy Outlook features two scenarios. But instead of including a Net Zero scenario, BP's report now has a Below 2° scenario that explores how different elements of the energy system might change in a pathway in which the world achieves much more substantial falls in emissions. It has retained its Current Trajectory scenario that places emphasis on climate and energy policies now in place, along with recent trends and shifts in those policies.
Oil continues to play a major role in 2050 under both scenarios. In Below 2°, oil demand falls to just above 85mn b/d by 2035 and then rapidly declines to below 35mn b/d by mid-century. Under Current Trajectory it remains above 100mn b/d in 2035 and falls to just below 85mn b/d by 2050.
BP said the pace of energy efficiency gains over the past five years has slowed to an average of 1.5pc/yr, compared with an average gain of 1.9pc/yr during the previous 10-year period.
If these energy efficiency gains remain weak, then in 2023-35 some 6mn b/d of additional oil production would be needed to make up for what will have been lost, BP estimates. Demand for natural gas would increase by an additional 1,000bn m³/yr by 2035. If the rate of energy efficiency progress heads back towards 2pc/yr before the end of the decade, then BP estimates oil production would remain roughly flat over 2023-35 and that gas demand would increase by less than 700bn m³/yr during the same period.
"The sustained weakness in efficiency gains over the past five years was one of the most important factors shaping global energy over this period," said BP chief economist Spencer Dale. "In particular, it underpinned the continued steady growth in fossil fuels despite the rapid growth in low-carbon energy and by solar and wind."
BP said the causes of sluggish efficiency gains are not well understood but noted that the IEA attributes a combination of factors. These include the increased importance of manufacturing-intensive industries in driving the post-pandemic economic recovery in some emerging economies, the increasing intensity of extreme weather events and their impact on energy use, and a more-recent slowing in investment in projects that would improve energy efficiency.
