China’s oil demand is expected to reach its peak in the near future as the country embraces electric vehicles (EVs) and shifts towards a more sustainable energy mix. According to Zhou Xinhuai, CEO of Cnooc, China’s domestic oil demand may reach its peak as early as this year. While the International Energy Agency (IEA) predicts a later plateau in oil demand, analysts agree that China is approaching a turning point that will have significant implications for the global oil industry.
China’s rapid uptake of EVs, with electric vehicles accounting for 37% of all new car sales in the country, is driving this shift in energy demand. As EVs become more prevalent in the market, China’s reliance on imported crude oil is decreasing, leading to a change in its energy mix. Oil currently accounts for only 19% of China’s energy supply, while coal makes up 56% and renewables make up the remainder.
The reduction in oil demand and increased reliance on domestically sourced coal and renewables aligns with China’s climate targets. The country aims to peak its emissions before 2030 and achieve carbon neutrality by 2060. These targets, though ambitious, are necessary for China to balance its resource-intensive growth programs with carbon reduction initiatives.
While China’s transition to a greener energy system is driven by environmental concerns, energy security also plays a role. High energy prices and supply shortages have led to a relaxation in the use of coal and fossil fuels, which could potentially slow down China’s progress towards its climate goals. Nevertheless, the country remains committed to reducing its carbon footprint.
As oil demand approaches its peak, the oil market in China is being driven increasingly by the demand for petrochemical products. Petrochemicals are expected to account for 85% of incremental global oil demand growth before 2030. This shift in demand is prompting oil refiners in China and around the world to invest in reworking their capacity to cater to the production of petrochemicals.
China, already the world’s largest producer of petrochemicals, is set to extend its lead in this sector. With significant capacity additions planned in the coming years, China is positioning itself as a global leader in petrochemical production.
Overall, China’s oil demand nearing its peak is a significant development in the global energy landscape. As the country continues to invest in renewable energy and electric vehicle adoption, the shift away from oil will have profound implications for the oil industry and global energy markets.
Sources:
– [China’s oil demand nears peak as it turns to EVs](https://www.ft.com/content/d64c61c8-28cf-43fd-a775-c5e1c6efd573) (Financial Times)
– International Energy Agency (IEA)
– BP Statistical Review of World Energy