British oil giant BP expects global coal demand to peak in the next decade and has cut forecasts for long-term oil and gas demand as renewable power takes more market share, energy efficiency slashes demand and the popularity of electric and driverless cars grows.

The forecasts, revealed in BP’s annual energy outlook last week, show BP believes renewables and energy efficiency will be more of a threat to its existing business than it did a year ago.

They also give more insight into BP’s recent move to buy Woolworths’ petrol stations for $1.8 billion as it focuses more on the convenience store side of its fuels and petrol station business, and its decision to stop drilling in the Great Australian Bight.

“Rapid improvements in the competitiveness of renewable energy mean that increases in renewables, together with nuclear and hydro energy, provide around half of the increase in global energy out to 2035,” BP chief executive Bob Dudley said in the outlook.

“Oil demand continues to increase, although the pace of growth is likely to slow as vehicles become more efficient and technological improvements, such as electric vehicles, autonomous driving and car sharing, potentially herald a mobility revolution.”

BP has reduced its expected 2035 coal demand by 5.6 per cent since last year’s estimate and boosted its expected renewable demand by 15 per cent.

Gas demand forecasts are down 2.5 per cent and oil demand is down 1.9 per cent, while total energy use is down 1 per cent.

All forms of energy are expected to continue to grow, with BP seeing natural gas as the world’s fastest growing fuel in the next 18 years, predicting it will overtake coal as the world’s second most-consumed fuel after oil in about 2030. Global coal consumption is forecast to peak and then decline in the late 2020s, in contrast to last year’s forecast that coal growth would continue until at least 2035.

“There is increasing evidence that rebalancing of economic growth within China, together with tightening climate and environmental policies are likely to lead to a plateauing in China’s coal consumption over the outlook,” BP said.

The forecast for a peak in coal demand is similar to one flagged by ExxonMobil last year for the first time in its annual energy outlook. But it is likely to be disputed by the coal industry, which feels it has been unfairly targeted by big gas producers in recent years as they seek to increase their clean energy credentials.

US President Donald Trump’s views on climate change and pledges to support the coal industry could provide some at least near-term support for coal use.

BP said that if less government priority is placed on moving away from coal, gas is likely to be the loser and will not grow as fast.

BP is predicting that the number of electric vehicles will jump from about 1.2 million in 2015 to 100 million by 2035, displacing about 1 million barrels a day of oil demand by 2035. More efficient cars will displace about 16 million barrels.

BP’s focus on a “mobility revolution”, including driverless cars and ride sharing, may have helped underpin its purchase of Woolworths petrol stations — which still need competition authority approval — and its associated plans to put in new convenience store models.

Caltex chief Julian Segal has also said the growing prevalence of electric vehicles and driverless cars have heightened the company’s push to overhaul its convenience offering.

In October, BP abandoned the most anticipated Australian oil exploration well in more than a decade, saying it would focus on exploration opportunities that would create near to medium value.

In its outlook, there was evidence of reduced enthusiasm for uncovering new oil regions. “The abundance of oil resources combined with the prospect of slowing oil demand may prompt a change in global oil supplies,” BP said.

“In particular, low-cost producers (mainly located in large, onshore oil conventional oilfields in the Middle East and Russia and followed by US shale) may use their competitive advantage to increase market share.”

Extracted The Australian.