Refining in the energy transition through 2040

| Article

While the COVID-19 pandemic and the conflict in Ukraine have triggered extreme volatility and uncertainty in the refining product and fuel markets, the transition to a low-carbon economy continues to bring significant challenges and opportunities to the refining sector. Increasing national and industry climate commitments and technological improvements, as well as changing consumer preferences, will shape the outlook for refining in the next two decades.1

In this article, we explore what the refining industry could look like across a spectrum of potential outcomes for the energy transition. The potential scenarios around the size of the refining industry and its profitability are based on McKinsey Energy Insight’s proprietary market balancing, oil pricing, and refining margin models.

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Global liquids demand is expected to peak in the next decade across energy transition scenarios

Global liquids demand peaks before 2035 across scenarios.

Road transport is the main driver of peaking liquids demand across scenarios

Road transport is the main driver of the peak in liquids demand.

Refining capacity in OECD regions is most at risk across scenarios

Europe and North America face the most capacity at risk.

Wide range in regional refining value pools by 2040

There is a wide range in the global refining value pool by 2040, with similarly diverse regional outcomes.
Global Energy Perspective 2022

Global Energy Perspective 2022

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