Fossil fuels will still dominate global energy demand in 2035, but its share of the market is dropping through growth in energy efficiency, electrified vehicles, and renewable energy.

This is according to oil company BP’s annual Energy Outlook which forecasts that oil, gas, and coal will make up 75 percent of the world’s energy in 2035. That would drop down from 86 percent in 2015.

During that same time period, energy demand is expected to grow 30 percent at an annual growth rate of 1.3 percent. That’s only about a third of the expected annual economic growth rate, or global GDP, which BP projects will be 3.4 percent per year through 2035. Improved energy efficiency is behind all of it, driven by technology improvements and environmental concerns, according to the report.

BP’s outlook sees the global vehicle fleet doubling from 0.9 billion vehicles in 2015 to a projected 1.8 billion in 2035. That will come through economic growth, consumers with rising incomes, and improving road infrastructure. However, liquid fuel consumption is not expected to double.

In 2015, passenger vehicles made up about 19 million barrels per day (Mb/d) of liquid fuel demand. Demand is expected to double through 2035, but improvements in fuel efficiency is expected to significantly drop that growth rate – by 17 Mb/d over that time period.

This assumption is premised on average passenger vehicle fuel economy coming in under 30 mpg in 2015 to almost 50 mpg in 2035. It also assumes that strict government mandates will stay in place over fuel efficiency and emissions.

Some of that fuel consumption reduction will come from growth in plug-in electrified vehicles, though at a smaller rate than fuel efficiency. The number of PEVs is assumed to increase from about 1.2 million in 2015 to around 100 million in 2035, which will make up about 6 percent of the global passenger vehicle fleet, according to the study. Of that 100 million, a quarter are expected to by plug-in hybrids and about 75 percent would be battery electric vehicles.

PEVs will help reduce oil demand by about 1.2 Mb/d. The study assumes it will only make up about a tenth of the impact from gains in fuel efficiency.

This level of growth in PEVs through 2035 is expected to be influenced by a few factors: the extent that fuel economy standards are tightened; falling costs of battery packs; availability of subsidies and other government policies supporting PEV ownership; the speed of conventional vehicle fuel efficiency improvements; and consumer preferences for PEVs.

SEE ALSO:  Does America Still Need Green Cars Now That It’s Swimming in Oil?

The study acknowledges that an unknown factor in the future of oil consumption will be impact of PEVs in the market, along with the future of automation and mobility services.

“The impact of electric cars, together with other aspects of the mobility revolution, such as self-driving cars, car sharing and ride pooling, is one of the key uncertainties surrounding the long-term outlook for oil,” said Spencer Dale, BP’s group chief economist.

Another force that BP sees affecting oil demand will be non-combusted use of oil. The study expects petrochemicals, used plastics and fabrics, will be the main source of growth in oil demand by the early 2030s. Demand growth for all of the oil will come from emerging markets, with China making up half of it.

Renewables are expected to be the fastest-growing fuel source through 2035. The study predicts an average annual growth rate of 7.6 percent per year, quadrupling by 2035. Competitiveness in both the solar and wind energy sectors are behind the growth factor.

As it is for PEV sales, China will be the largest source of growth for renewables. Over the next 20 years, China is expected to add more renewable power than European Union nations and the U.S. combined.