French giant Total has joined fellow supermajor BP in anticipating a potential peak for oil in the coming decade, but said gas “remains key” for the energy transition.
Energy demand increased in both the scenarios considered in Total’s Energy Outlook published during the company’s Investor’s Day event this week, however, most of the gains are expected to be met by low-carbon power.
Electricity will comprise 30% to 40% of final energy demand in 2050, up from 20% today, Total’s president of strategy & innovation Helle Kristoffersen said.
Oil demand could plateau by 2030 or sooner, Total said, depending on the speed of the energy transition.
According to the company, oil consumption will flatline around the end of this decade and then decline under its 'Momentum' scenario, which it defined as “in line with best practices, but not enough to meet the well-below 2C targets globally”.
In its 'Rupture' scenario, which is consistent with meeting the climate goals set under the Paris Agreement, oil demand peaks before 2030 and coal “almost disappears” by 2050.
Gas in the energy transition
Nevertheless, Total's outlook is better for gas, which is expected to play a key role in energy markets for decades to come as a less carbon-intensive bridge fuel.
Under both scenarios, Total expects gas to continue to play an important role in power systems, heating and transport, but emphasised the need for it to become greener, with biomethane and low-carbon hydrogen in the mix.
It said gas demand is expected to be led by Asia, with around 40% of worldwide growth, with volumes more than doubling in China and India. The peak for gas is not expected before 2040.
In addition, for both scenarios Total — one of the most active oil and gas companies in the new energies sector — said it expects renewables to take “the lion’s share”, as renewables and natural gas play “key complementary roles”.
The company said “low-carbon hydrogen is emerging as a promising contributor to net zero” but added that costs have to come down in order to support hydrogen adaptation and industrial scale up.
“Blue hydrogen [is] likely to scale before green hydrogen but both are required,” it said, adding that carbon capture and storage “is mandatory, not an option”.
'Significant' investments needed
Meanwhile, the supermajor also said on the energy supply side that “significant investments in new oil and gas projects [are] needed to offset natural decline, and in renewables to support low-carbon electrification”.
Total's outlook follows BP’s released earlier this month, in which the UK supermajor said oil demand has already peaked in two of its three main scenarios.
Total will present its updated business strategy later on Wednesday.