Rising global demand for oil, gas and coal are set to peak by 2030 as the world moves towards clean energy sources, the International Energy Agency said Tuesday, urging investors to get behind renewables and ditch fossil fuels.’
The IEA said fossil fuel demand should peak this decade.
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Key Takeaways
- Global demand for fossil fuels will peak this decade if governments around the world stick to current policies, the IEA said in its annual World Energy Outlook report for the first time.
- Going by current policies, global oil use is expected to peak at around 102 million barrels a day towards the end of the decade, the IEA predicts, falling slightly to 97 million barrels a day by 2050 as the shift to electric vehicles offsets increased oil use in other sectors like aviation.
- The IEA said there will be around 10 times as many electric cars on the roads by 2030 than there are today, citing an “impressive” uptake for the technology that has seen the proportion of electric cars sold rapidly climb from 1 in 25 to 1 in 5 over the past three years.
- Renewable energy sources like solar, hydro and wind power will also account for nearly half of the world’s energy supply by 2030, the IEA forecast, up from around 30% today.
- If countries follow through on their climate pledges “on time and in full,” the clean energy transition will move along even faster, the IEA said, warning that even this would not be enough to limit global warming to 1.5 degrees Celsius, the key threshold under the 2015 Paris climate agreement.
- IEA executive director Fatih Birol said “governments, companies and investors need to get behind clean energy transitions rather than hindering them” and urged stakeholders to ramp up investments in clean energy systems instead of putting even more money in fossil fuels.
Crucial Quote
“The transition to clean energy is happening worldwide and it’s unstoppable,” Birol said. “It’s not a question of ‘if’, it’s just a matter of ‘how soon’ – and the sooner the better for all of us.”
What To Watch For
In its report, the IEA acknowledged fossil fuels will continue to play an important role in global energy supplies and said “continued investment in fossil fuels is essential” in all of the scenarios it considered, even its most ambitious. This is to both meet the increases in demand expected through the end of the decade and to “avoid a precipitous decline in supply that would far outstrip even the rapid declines in demand seen” in its most ambitious scenarios, the IEA said. However, the agency said the “end of the growth era for fossil fuels” serves to “undercut” arguments for any increased spending in the sector. “Claims that oil and gas represent safe or secure choices for the world’s energy and climate future look weaker than ever,” Birol said.
Contra
Figures from the fossil fuel industry, which has historically denied its products are responsible for fuelling climate change, have bristled at the IEA’s suggestion that investors shift away from the sector in favor of cleaner energy. Chevron’s chief executive, Mike Wirth, told the Financial Times he didn’t think the IEA’s forecasts of demand peaking by 2030 were “remotely right,” saying that they can build models, “but we live in the real world.”
Wirth predicted that the company’s products—Chevron specialized in oil and natural gas—will still be in high demand for decades to come (the IEA has not predicted there will be no, or even low, demand for fossil fuels). Wirth’s sentiment is echoed by others in the sector. In early October, the head of the Organization of the Petroleum Exporting Countries—a group of the world’s major oil producers—warned it would be “dangerous” to slash investments in the oil industry and that doing so would invite market chaos and could send prices soaring.
This article was first published on forbes.com and all figures are in USD.
