First Time, 2050 Global Refined Products Demand will be Lower than 2019 Levels: Report

For the first time, the IHS Markit base case scenario for refined products expected that the total global demand in 2050 to be lower than 2019 levels.

September 14, 2021. By Manu Tayal

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For the first time, the IHS Markit base case scenario for refined products expected that the total global demand in 2050 to be lower than 2019 levels.

However, other more drastic scenarios for falling demand remain unlikely under present conditions. The findings are part of a new analysis by the Refining and Marketing service at IHS Markit.

The total refined products include all production from refineries such as gasoline, jet fuel, diesel, fuel oils, and include biofuels—but excludes natural gas liquids (NGLs). This is different than total liquids demand, which comprises demand for refined products plus NGLs.

As per the new IHS Markit Inflections base-case scenario, global refined products demand is expected to peak in 2036 from 2021 and will grow by nearly 9 MMbd, then expected to decline by over 5 MMbd to 2050 (to a total of 85.5 MMbd), placing it below 2019 baseline levels.

Excluding biofuels, the demand peak for refined products derived from crude oil processing occurs earlier, in 2032, hastened by an intensification of fuel economy and substitution investments linked to enhanced government and corporate greenhouse gas targets. Biofuels added to refined products is projected to grow over 2 MMbd by 2050, resulting in a near doubling of this lower-carbon fuel source, according to the report findings.

Commenting on the matter, Sandeep Sayal, vice president, oil markets and downstream refining, IHS Markit, said “the energy transition has accelerated during COVID-19, and the combination of changing consumer habits and a heightened sense of urgency around climate change will result in greater political commitment and financial backing for decarbonization of the industry.”

“However, some of the more accelerated scenarios that envision net-zero emissions and dramatically lower oil demand stretch the limits of what is technologically and politically feasible and remain outside of the base case,” Sayal added.

“The new IHS Markit base case scenario is ambitious in terms of acknowledging energy transition goals,” Sayal said. “But it reflects a pragmatic and plausible approach to the implementation and timing of those goals, one that factors in economic recovery and demand growth in the medium term before there is a peak.”

“This shift is already being reflected in supply-side investment,” said Sayal. “Refiners will have more diversified investment portfolios as product suppliers seek low-carbon solutions to meet overall demand.”
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