Global oil prices could drop to around 40 a barrel by 2030 if governments push to reduce fuel consumption in step with U.N.backed plans to limit global warming, a leading energy consultancy said on Thursday.

In a report outlining a scenario where the world acts decisively to tackle greenhouse gas emissions by electrifying transport and industry, Edinburghbased Wood Mackenzie said oil consumption would begin a steep drop as early as in 2023.

The decline in demand would accelerate to a rate of 2 million barrels of oil per day bpd to reach 35 million bpd by 2050, accounting for a 60 drop in carbon emissions from oil use from todays levels.

Oil consumption hit a record of around 100 million bpd in 2019 and is expected to recover strongly this year after cratering last year due to the coronavirus epidemic.

As a result, oil prices would begin to slip later this decade, WoodMac said in its report. Under its Accelerated Energy Transition scenario, it expects Brent crude prices to average 40 per barrel by 2030, compared with current prices of around 65 a barrel.

By 2050, Brent may slide to 10 to 18 a barrel.

If we move to keep global warming to the 2 degrees Celsius limit set by the U.N.backed Paris Agreement, the energy matrix will change and change profoundly, said WoodMacs AnnLouise Hittle.

The worlds current policies are nevertheless far from aligned with the Paris agreement, with temperatures currently on course to rise by 3 degrees Celsius from preindustrial levels…