The International Energy Agency has predicted for the first time that global oil demand will peak this decade as electric vehicles become more popular and China’s economy cools.
The agency also expects coal and natural gas to reach expected peaks, but that doesn’t mean fossil fuel consumption is about to fall rapidly. The IEA said it was likely to be followed by a “multi-year plateau” with emissions remaining too high to limit global warming to 1.5 degrees Celsius.
Under the Stated Policies Scenario’s base case, world oil consumption will reach 102 million barrels per day by the end of the 2020s, falling to 97 million barrels per day by mid-century. On Tuesday, the International Energy Agency released its annual World Energy Outlook.
“The transition to clean energy is happening globally and is unstoppable,” Fatih Birol, executive director of the International Energy Agency, said in a statement. “Claims that oil and gas represent the security or safety of the world’s energy and climate future The argument for guaranteed choice looks weaker than ever.”
The IEA said that oil demand from the petrochemical, aviation and shipping industries will continue to grow until 2050, but will not be enough to offset the impact of falling demand for road transport due to “amazing growth in electric vehicle sales”. The report said that China, which has driven the growth of global crude oil consumption for many years, will see its demand weaken in the next few years, and total consumption will decline in the long term.
Global oil consumption will follow the same path as demand for other hydrocarbons. “We expect to see a peak for all fossil fuels by 2030,” the IEA said. For the first time, all scenarios drawn up by the Paris-based global energy markets agency showed a near-term decline in hydrocarbon consumption.
The IEA’s base picture reflects the energy policies currently being pursued by governments around the world and the ongoing impact of last year’s energy crisis. The IEA’s second scenario, which assumes all governments meet their energy and climate commitments on time and in full, predicts global oil demand will peak at 93 million barrels per day in 2030 and fall to 55 million barrels per day in 2050. In a net-zero emissions scenario with global warming limited to 1.5 degrees Celsius, global demand would plummet to 77 million barrels per day in 2030 and to 25 million barrels per day in 2050.
OPEC’s control
The process of decarbonizing the global economy “will be a long one, and fossil fuel producers will remain influential for years to come,” the report said.
In the base case, Russia and OPEC will keep their combined share of the oil market at 45% to 48% until the end of the decade. By mid-century, that number will rise to more than 50% as production increases from Saudi Arabia, OPEC’s de facto leader.
Russia, on the other hand, will lose about 3.5 million barrels per day, or about a third of its oil production, by 2050, the IEA said, “as it struggles to maintain output from existing fields or develop large new fields.”
The International Energy Agency also believes that Iran and Venezuela will be able to increase production in the coming years due to the gradual easing of international sanctions.
However, the agency warned that the market power of major oil producers will decline over time.
“In exercising this influence, they have reduced their influence as consumers have increasingly sophisticated clean energy options that become more attractive,” the report said.
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