Columbia University’s Center on Global Energy Policy and the University of California, Davis Institute of Transportation Studies analyzed four scenarios to understand how COVID-19 and other political, economic, social and technological drivers may impact transportation activity and global oil demand.
Forty-four leading energy and transportation experts developed the scenarios, which featured varying speeds of economic recovery, levels of government intervention in energy markets and endurance of mobility trends that started during pandemic lockdowns.
In three of the four scenarios, global oil demand continued to grow through 2030. Only under the final scenario—named “Forced Revitalization”—in which the pandemic’s disruptive impact to the global economy and mobility combined with strong government intervention to accelerate alternative technologies did oil demand decline after 2025. The greater competitiveness of alternative fuels and the weaker economy in that scenario contribute to lower oil use overall.
Lines represent global oil demand by study scenario. Source: “Will Covid Drive An Early Peak In Transportation Activity And Oil Demand?”
Many climate-related policies were already in place around the world prior to COVID-19, and the pandemic has accelerated the adoption of additional measures, but these interventions may not achieve their goal of reducing oil demand, according to the report.
The study finds that while great uncertainty remains about the speed and strength of the world’s recovery from COVID, the current state of government climate policies and technology innovation are unlikely to reduce global oil demand fast enough to help the world keep within a 1.5°C temperature rise along the net zero carbon trajectory. Both government climate policies and technology innovation would need to move well beyond what was contemplated in this study’s scenarios.—“Will Covid Drive An Early Peak In Transportation Activity And Oil Demand?”
Other findings include:
COVID could drive a structural downshift in oil demand, even if economic growth in the short term brings about a recovery in oil use.
Despite relatively aggressive government policies aimed at reducing oil demand, such as within green stimulus packages enacted in several countries during the pandemic, global oil demand may not peak before 2030. This is primarily due to the time it takes to turn over large transportation fleets, growth in petrochemicals use, and the aspects of COVID that could drive an increase in vehicle miles traveled (VMT), such as greater use of personal vehicles over mass transit, migration outside large cities requiring people to drive more for non-commuting activities, and increasing truck delivery miles for e-commerce.
The scenario analysis highlights the possibility that global light-duty-vehicle passenger oil demand may peak by 2025 or earlier. The combination of alternative vehicles and fuels as well as efficiency improvements tend to offset the increases in VMT.
There are significant differences in trends between mature and developing countries. Across the four scenarios, all of the growth in transportation oil use occurs in China and other developing countries while there are declines in the US and Europe.