Demand for oil could peak by the late 2020s or early 2030s in a best case scenario, the CEO of Shell told CNBC, offering a faster timeline than other closely followed oil market prognosticators.
To be sure, this does not reflect Shell’s baseline scenario. For oil consumption to start declining in 10 years, policy and technology will have to develop very quickly to expedite the transition to cleaner power, Ben van Beurden, chief executive officer at Royal Dutch Shell, said on Thursday.
“Even in the most aggressive scenario, where policies really work at their best, where technology really makes a lot of strides in the near future, oil isn’t going to peak before the late (2020s) or early 2030s, and when it does peak it’s not going to go out of fashion overnight,” he said.
Still, the view that oil consumption could start falling that fast is remarkable compared to other forecasts.
In its latest annual energy outlook, BP forecast oil consumption may start declining by 2035 in its “fast transition” and “even faster transition” scenarios.
The International Energy Agency doesn’t see oil peaking until after 2040, even assuming nations around the world achieve announced “aims, targets and intentions” to limit carbon emissions and generate more of their energy from renewable sources.
Oil firms have struggled with subdued prices in recent years. At the same time, France and the U.K. have announced plans to end petrol and diesel cars by 2040. However, Van Beurden is not worried with these changes.
“Supply will shrink faster than demand can shrink, and therefore, working on oil and gas projects will remain relevant for many decades to come,” he added.
Van Beurden said he supports the transition to cleaner power sources, saying it is necessary to achieve climate goals adopted by most of the world to limit global warming to 2 degrees Celsius above pre-industrial levels.
“A lot of things are happening when it comes to electric vehicles at this point in time, and that’s all good in my mind,” he said. “If you want get to a 2 degrees C future, you have to electrify the more advanced economies even further. So electric mobility has to happen, has to happen fast.”
Shell reported its second-quarter earnings on Thursday. The largest oil firm in Europe showed a strong rise in cash flows. It also saw net profit, measured in the oil industry on a current cost of supplies basis, rise 245 percent from $1 billion for the second quarter of 2016. The stock was up slightly in early trade.