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Watch: How will oil be affected by the energy transition?

While a future beyond oil remains hard to picture, investors and consumers around the world are demanding more focus on sustainability.

Oil companies are responding by writing off long-cycle investments and moving into alternatives. Governments are continuing to tighten regulations on a range of transport fuels, pushing refiners towards lower sulfur products and biofuels blending, while sectors such as marine and aviation face a challenge to decarbonize.

For more insight, read our special report: Sustainability shift: Oil's future in the energy transition

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Energy markets are awakening to climate risks.

The debate around the energy transition has shifted from whether one will occur to when it will happen and what it will look like.

Governments, investors and consumers around the world are demanding more focus on sustainability. This pressure is being felt in the oil industry, and some companies show they are listening.

And yet a future beyond oil remains very hard to picture, given current demand projections.

Even as oil remains central to the energy mix in the near and medium term, supply and demand shifts are already happening.

Many governments are tightening fuel regulations to cut greenhouse gas emissions in the transportation sector.

In the US, refiners faced a hard deadline in January to meet EPA's Tier 3 regulations limiting sulfur content in gasoline. Biofuel blending is on the rise across Europe, as countries gradually introduce legislation to comply with EU directives. China and India are rolling out stricter fuel standards as they try to clean up polluted skylines.

Change is also occurring in the marine and aviation sectors.

With a global sulfur cap in place for shippers, a more protracted battle begins over finding cleaner fuels to cut the sector's emissions in half by 2050. No clear replacement has yet emerged, with options like LNG, methanol, hydrogen and ammonia all facing challenges.

Aviation will be one of the toughest sectors to decarbonize, as weight, distance and safety concerns limit the alternative fuel options available to other transportation sectors.

While drop-in biofuels are advancing, the ultimate solution to reducing jet fuel emissions might rely on continued aircraft efficiency gains, together with policies limiting short-haul flights and curbing freight.

Biofuels will play a key role in many countries' efforts to reduce their carbon emissions.

Global biofuels policies are evolving – with governments adopting carbon-intensity targets and shifting away from volume-based blending goals to address questions of land use and life-cycle emissions. Non-crop feedstocks stand to benefit from this shift, while traditional crop-based biofuels are expected to stick around.

More than half of growth in gasoline demand is expected to be absorbed by ethanol between 2019 and 2025.

Will the refining sector be able to keep pace with a relatively rapid energy transition?

Refiners face slowing demand for gasoline and diesel while demand from the aviation and petrochemical sectors continues rising. The refining sector has shown agility in the past to adapt to changing crude supplies and demand shifts.

Investors, too, are becoming more concerned with climate and sustainability risks.

Companies are responding with measures such as tying executive pay to carbon reductions, writing off long-cycle assets, and setting targets for reaching carbon neutrality.

It all adds up to a major change – a sustainability shift that will have widespread effects on supply, demand and trade flows for decades to come.