Hydrogen will play a significant role in the world's energy markets over the next few decades, displacing a significant portion of oil demand, according to the head of global topics research at Bank of America.

  In an interview with CNBC's "Squawk Box Europe" on Friday morning, Haim Israel said that while oil and gas are still needed, demand is close to peak.

  Israel listed a number of factors that could affect the development of oil and gas, including cheaper renewable energy, regulation and vehicle electrification.

  "We believe that by 2050, hydrogen will account for 25 per cent of total oil demand," he continued. He added that oil "is facing headwinds on both the left and the right." Yes, we will still need the oil, and yes, there will still be oil, but the market share of oil will decline dramatically."

  The DOE added that hydrogen "can transfer or store significant amounts of energy" and "can be used to generate electricity in fuel cells, or to generate electricity and heat."

  In recent years, governments and companies around the world have announced goals to reduce their environmental impact and use of fossil fuels. The UK and the European Union, for example, both aim to achieve net zero greenhouse gas emissions by 2050.

  If these goals are to be met, the world's energy mix will need to shift to renewable and low-carbon sources of energy, which is a huge undertaking.

  "We strongly believe that Big Oil needs to think differently," he said. From now on, they need to stop thinking about big oil projects and think about big energy projects to get more into renewables to diversify their energy sources.

  In September, BP announced it had agreed to buy a 50 per cent stake in Empire Wind and Beacon Wind from Norway's Equinor. The $1.1 billion deal is set to close in early 2021.

Empire Wind and Beacon Wind will be located in waters off the East Coast of the United States and, when fully up and running, will each be able to power more than one million homes, Equinor said.