The Economy

OPEC Sees Minimal EV Impact on Oil Demand

Even if one in four passenger vehicles is electric by 2040, global oil demand would not drop “meaningfully” over the next 23 years.
Matthew HellerNovember 8, 2017
OPEC Sees Minimal EV Impact on Oil Demand

Even if one in four passenger vehicles is electric by 2040, up from less than 0.2% last year, OPEC does not expect global oil demand will drop “meaningfully” over the next 23 years.

In its 2017 World Oil Outlook, OPEC predicts consumption will rise from 95.4 million barrels per day in 2016 to 111.1m bpd by 2040. That forecast assumes the number of electric vehicles will reach 235 million in 2040 , representing 12% of the expected global passenger car fleet.

“Driven by generous public subsidies and improved technological development, in just a few years EVs have gone from being completely unaffordable, impractical and not particularly nice, to representing a valid option for a niche pool of customers,” OPEC noted.

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The Outlook also presents the scenario that annual EV sales will reach 80 million by 2040, or three out of every five cars sold. That would mean 516 million EVs, or a quarter of all vehicles, on the road.

Even under that scenario, OPEC said, oil demand in 2040 would be reduced by only 2.5 million bpd to 108.6 million bpd. “Moreover, global oil demand is estimated to plateau around this level in the second half of the 2030s,” it added.

Over the shorter term, consumption is estimated to rise to 102.3 million bpd in 2022, with the growth rate decelerating from nearly 1.5m bpd in 2017 to 810,000 bpd in 2022 and 300,000 bpd by 2040.

But OPEC still expects oil and gas to provide more than half of the world’s energy needs in 2040 even though those fuels are projected to grow at rates of 0.6% and 0.4% per annum, respectively, compared to an average annual growth rate of 6.8% for renewables including wind, photovoltaic, solar and geothermal energy.

While renewables are still expected to account for less than 5.5% of the global energy demand mix by 2040, “fossil fuels will retain a dominant role in the global energy mix, although with a declining overall share,” OPEC said.

The share of fossil fuels, which stood at 81% in 2015, is set to decline to below 80% by 2020 and then drop to 74% by 2040.