The International Energy Agency (IEA) has forecasted that global fossil fuel demand will reach its peak by 2030, driven by the increasing adoption of electric vehicles and China's economic transition to cleaner energy sources, accompanied by a slower growth rate.
The International Energy Agency (IEA) has projected that global demand for fossil fuels will reach its peak by 2030. This is due to the increasing adoption of electric vehicles and a slower, cleaner energy-focused growth in China. This outlook challenges the basis for any expansion in investment.
In contrast, the IEA's report contradicts the perspective of the Organization of the Petroleum Exporting Countries (OPEC), an oil-producing consortium, which anticipates continued growth in oil demand well beyond 2030 and calls for trillions of dollars in new investments in the oil sector.
In the annual World Energy Outlook published on Tuesday, the IEA noted that under its scenario aligned with current government policies, peaks in demand for oil, natural gas, and coal are anticipated within this decade. This marks the first time such a occurrence has been projected.
"The global shift toward clean energy is underway and inevitable. It's not a matter of 'if,' but rather 'how soon' – and the sooner, the better for all of us," remarked IEA Executive Director Fatih Birol.
The IEA emphasizes the necessity for governments, corporations, and investors to support clean energy transitions rather than impeding them.
However, the IEA also points out that, under current circumstances, the demand for fossil fuels is expected to remain significantly excessive, making it challenging to achieve the Paris Agreement objective of limiting the global temperature increase to 1.5 degrees Celsius.
The agency warned that this endangers both worsening climate impacts and the reliability of an energy system designed for milder weather.
The IEA predicts nearly ten times as many electric cars on the road by 2030, citing supportive clean energy policies in key markets as a factor reducing future fossil fuel demand.
In the U.S., the IEA now expects electric cars to account for 50% of new car registrations in 2030, up from the previous estimate of 12%, largely due to the U.S. Inflation Reduction Act.
China's role in energy demand is changing, with a slowdown in economic growth and a growing reputation as a "clean energy powerhouse." China also dominated global electric vehicle sales in 2022.
The IEA underscores that a smooth transition requires increased investment in all aspects of a clean energy system rather than fossil fuels.
While the era of fossil fuel growth is concluding, the IEA report clarifies that it doesn't signify the cessation of fossil fuel investment but rather weakens the justification for any expansion in expenditure.
A recent OPEC report, released earlier this month, described the calls to halt investments in new oil projects as "misguided" and warned that such actions "could result in energy and economic turmoil."
