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What Explains the Growing Divide Between Oil and Gas | Switched On

The BloombergNEF New Energy Outlook (NEO) 2024 examines how the global energy system will evolve amid rising electricity demand, geopolitical tensions, and climate ambitions. It outlines two primary pathways: the Economic Transition Scenario (ETS), which reflects market‑driven outcomes with limited policy intervention, and the Net‑Zero Scenario (NZS), which assumes maximal, yet realistic, effort to meet a 2050 net‑zero target. In the ETS, oil demand is projected to peak around 2029 and then enter a gradual decline, driven primarily by the rapid adoption of electric vehicles. Gas, however, follows a different trajectory: demand grows about 29% through 2050, positioning gas as a bridge fuel that displaces oil and coal in power generation. By contrast, the NZS sees gas demand peak by 2029 and then fall roughly 3% annually, ending 44% below today’s levels, while oil demand falls even more sharply, ending at less than half of ETS levels. Ian Bryman highlights that the NZS incorporates a “maximal effort” definition, grounding assumptions in current supply‑chain constraints and technology readiness. This means technologies such as carbon capture, utilization, and storage (CCUS) or small modular reactors are phased in gradually from the 2030s, rather than appearing instantly. The updated climate modeling also nudges projected warming from 1.75°C to 1.81°C (67% likelihood), reflecting more accurate aerosol and agricultural emission assumptions. These divergent pathways underscore that while market forces alone may reduce oil consumption, achieving net‑zero will require deliberate policy and realistic technology scaling, especially to curb gas use. Stakeholders must recognize gas’s dual role as both a transitional asset and a potential obstacle to deep decarbonization.