BAKU, Azerbaijan, May 23. Oil demand will continue to rise in the medium term, according to a study by Rystad Energy, an independent energy research and business intelligence company from Norway, Trend reports.
Low-carbon alternatives are not yet developed or cost-effective enough to meet the growing demand for transportation and industrial services, the research says.
At the same time, passenger road transportation accounts for about a quarter of global oil demand. While electric vehicles (EVs) have grown since 2018, reaching 19 percent of global sales in 2022, issues such as limited availability outside China, poor charging infrastructure, and subsidy withdrawals have slowed adoption.
Rystad Energy predicts a resurgence in EV adoption in the latter half of this decade. The maritime industry, needing high energy density fuels, continues to rely on oil, with alternatives like ammonia and methanol not yet competitive. The aging global fleet further slows the shift to greener options.
Meanwhile, sustainable Aviation Fuel (SAF) will not significantly impact aviation in the next five years, despite industry commitments. SAF's share will be less than 5 percent of jet fuel demand by the decade's end, equating to under 0.4 percent of global oil demand.
Electrification in buses and rail transportation, especially in China, India, and Europe, will progress due to government policies, Rystad Energy expects. However, even full electrification by 2030 would only reduce oil demand by 0.5-0.8 million barrels per day.
Stationary sectors, including petrochemical, industry, and agriculture, account for 42.3% of global oil demand. The petrochemical sector's demand for plastics will surge, requiring more oil and natural gas liquids. Increasing recycling rates is crucial but requires significant investment and development, with current global plastic recycling at just 8 percent.
In the building sector, oil remains vital for heating in regions without natural gas grids. Heat-pumps are less effective in very cold climates, and in areas relying on biomass for cooking, such as sub-Saharan Africa, LPG could increase oil consumption by 1.5 million barrels per day.
High energy density is crucial for industries like steelmaking and cement production. Hydrogen, a potential low-carbon alternative, is not expected to compete strongly in the next five years due to high costs and supply chain issues.
Overall, oil demand remains strong, requiring significant time and resources for a transition. However, reducing global emissions is still possible if other energy sectors rapidly deploy clean technologies and renewables, as seen with the growth of solar PV in power generation.