The world’s appetite for oil could peak within five years, according to one of Europe’s biggest oil and gas firms – much earlier than most rival oil companies expect.
Luis Cabra at Repsol, which last month became the first major oil company to declare a target of reducing carbon emissions to net zero by 2050, said peak demand could arrive soon as countries begin to act on climate change.
Global oil demand is expected to inch up by around one per cent this year, reaching just over 100 million barrels per day, according to the International Energy Agency. Most oil companies expect that demand won’t peak until the mid-2030s.
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However, Cabra says that “the demand of oil will peak maybe five to ten years’ time from now, and then oil demand will be reduced, and accordingly we will adapt to this situation”. Such a timeline is closer to the aggressive ones .
Still, Cabra says people shouldn’t expect the Spanish oil giant to move out of hydrocarbons by the end of the decade. “We have a view that oil will still be needed in the future.”
Today, Repsol spends about 17 per cent of its annual capital expenditure on low-carbon operations, a figure it hopes will rise to 25 per cent by 2025.
Like other big oil firms moving into green energy, Repsol is targeting wind and solar power, including embryonic technologies, such as a .
The company also has its eye on hydrogen production, which could be used to decarbonise energy and industry. While most hydrogen is currently made from fossil fuels, Repsol plans to start making “green hydrogen” at its refineries later this year, produced using water and electrolysers when renewable electricity supplies are high.
“You may [in the future] have some hours when the electricity can be almost zero price because you have an excess of sun or an excess of wind. At that point in time, having swing producers in the refineries and producing hydrogen, that will be a good fit,” says Cabra. Analysis by BloombergNEF last year as costs fall.
Biomass, carbon capture and energy efficiency gains are the other ways in which the company is looking to cut its emissions. But ultimately, if technologies don’t mature quickly enough, Repsol plans to use offsets to meet its 2050 climate goal. “We would like to rely on offsets as little as possible. We are in the centre of the problem and we would like to be in the centre of the solution,” says Cabra.
Repsol says any stumbles in the political process, such as the weak outcome from the UN COP25 talks in Madrid last month, will not derail its climate plans. “The steps we have already given do not depend on the pace of political consensus and agreement,” says Cabra.
