LUKOIL has completed working out scenarios for changing global oil demand, which has been prepared as part of its climate strategy development. Vagit Alekperov, the co-owner and president of the company, announced it at a conference call on March 10.
Alekperov presented four of scenarios – “Evolution”, “Equilibrium”, “Transformation”, as well as “2 degrees Celsius”.
The Evolution scenario assumes that countries will fulfill their climate commitments, while the United States will return to the Paris Climate Agreement, which implied reducing carbon emissions and modernizing industry (Donald Trump pulled the United States out of this agreement three years ago, and his successor Joe Biden in February 2021 decided to return to the agreement). According to the scenario described in LUKOIL’s presentation, the peak in oil demand – which is about 105 million barrels per day – falls on 2035, and the air temperature from 2020 to 2050 will increase by 2.6 degrees Celsius. “This scenario looks the most realistic today, but does not allow achieving the goals of the Paris Agreement,” Alekperov noted. At the end of 2020, the demand for oil amounted to about 90 million barrels per day.
The “Equilibrium” scenario is based on the premise of renewable energy sources (RES) accelerated growth as well as the so-called negative greenhouse gas emissions. “We consider this scenario the most likely in the spectrum of scenarios of global temperature rise from 1.5 to 2 degrees Celsius, since it provides a balance between achieving climate goals and energy availability,” Alekperov said. It will require “active” development of climate regulation around the world. According to the presentation, the demand for oil will peak at 100 million barrels per day will be reached in 2030 with the global temperature rising by 1.8 degrees under this scenario.
Between “Evolution” and “Equilibrium”, there is a “2 degrees Celsius” scenario, which assumes a peak in demand (about 100 million barrels) in 2030 and its reduction to 90 million barrels in 2050. The Evolution scenario assumes that by that time demand will remain at 100 million barrels, while Equilibrium – about 80 million barrels.
“Transformation” is a more radical scenario, which corresponds to an increase in average annual air temperature over 30 years by about 1.5 degrees Celsius and provides for more significant changes in the global energy and industry, as well as accelerated growth in energy efficiency. If it comes into reality, the peak demand for oil will also be about 100 million barrels by 2025, and then it will drop by half by 2050, to 50 million tons per day. In the case of “Transformation” and “Equilibrium” scenarios the share of electric vehicles in the sales of new passenger cars will grow from 2% in 2019 to 92% in 2050 (in “Evolution” it will grow up to 61% and up to 83% in “2 degrees Celsius” scenario).
“All scenarios assume a significant increase in the share of renewable energy sources and recycled plastic, as well as accelerated electrification of transport,” Alekperov noted. Over the past five years, an average of 150 GW of generating capacities from renewable energy sources have been commissioned in the world. By 2050, this figure should grow at least twice in the scenario “2 degrees Celsius” and fourfold in the implementation of “Transformation”, he added.
All the scenarios that have been worked out pose a difficult challenge for the world community, implying a significant increase in the share of renewable energy sources, recycled plastic and accelerated electrification of transport. However, none of these scenarios involve a complete phase-out of fossil fuels.