Despite record renewable energy deployment and surging electric vehicle (EV) adoption, global oil demand is 10 million bpd higher today than it was when countries signed the Paris Agreement a decade ago. With fossil fuels set to remain the backbone of the global economy for many years to come, decarbonising the value chain will be critical to lowering overall emissions.
Decarbonisation requires considerable investment in facilities that must continue to be commercially viable throughout their remaining lifespans. This presents both opportunities and challenges for the downstream sector.
The size of the issue
Oil’s share of global primary energy demand has fallen only slowly in the 21st century, from over 35% at the turn of the millennium to just under 30% today. EV adoption and improving energy efficiency will eventually drive global oil demand into decline. However, it will continue to grow in the medium-term and remain resilient over the coming decades due to sustained petrochemical demand growth.
Global primary energy consumption
In 2024, around 63% of global CO2 emissions came from the power and industrial sectors – both of which use considerable amounts of oil as fuel and feedstock – while transportation accounted for a further 22%, mostly from oil. Renewables and electrification will help lower power and transport sector emissions, but more will need to be done; as an energy intensive part of the oil value chain whose emissions often exceed those from the upstream sector, refining must play its part.
Access the full article on Wood Mackenzie’s site here.
Alan Gelder also wrote for our latest issue of EnviroTech issue which you can read for free at the link here.