Fatih Birol, the head of the International Energy Agency (IEA) research has predicted that global demand for oil, natural gas, and coal is nearing its peak.
Fatih Birol explained that the demand for oil and gas has been growing despite forecasts of peaks. According to him, new projections from the International Energy Agency, this age of seemingly relentless growth is set to come to an end this decade, bringing with it significant implications for the global energy sector and the fight against climate change.
Birol noted that the research to be released in the IEA’s World Energy Outlook in October, suggests that even if governments do nothing more than they are already doing to curb the consumption of hydrocarbons, demand for all three of them will reach a peak within the next few years.
The IEA Head indicated that among the reasons for the forecast demand peaks are the shift towards wind and solar energy, and electric vehicles, the latter seen bringing about peak oil demand before 2030.
The IEA has also forecast a peak demand moment for natural gas. Per Birol, “This is the result of renewables increasingly outmatching gas for producing electricity, the rise of heat pumps, and Europe’s accelerated shift away from gas following Russia’s invasion of Ukraine.”
Wind and solar generation capacity in Europe has indeed grown strongly over the last few years, even before the war in Ukraine began, but they have not yet been able to replace hydrocarbons and, in Germany’s case, nuclear.
Europe’s largest economy closed its last three nuclear power plants last year and was forced to dismantle a wind farm in order to increase local coal production for power generation.
Heat pump adoption in the UK, meanwhile, is running into obstacles, chief among them the often prohibitively high price and what some buyers complain is failure to perform as advertised.
Meanwhile, there’s a taboo in the traditional energy sector against suggesting that demand for the three fossil fuels such as oil, gas and coal, could go into permanent decline. Despite recurring talk of peak oil and peak coal over the years, both fuels are hitting all-time highs, making it easier to push back against any assertions that they could soon be on the wane.
But according to new projections from the International Energy Agency, this age of seemingly relentless growth is set to come to an end this decade, bringing with it significant implications for the global energy sector and the fight against climate change.
Every year, the IEA’s World Energy Outlook maps out potential pathways the global energy system could take in the coming decades to help inform decision-making. This year’s report, although yet to be released, shows the world is on the cusp of a historic turning point.
Global Demand for Coal Remains Stubbornly High
Global demand for coal has remained stubbornly high for the past decade. But it is now set to peak in the next few years, with big investments drying up outside China as solar and wind dominate the expansion of electricity systems. Even in China, the world’s largest coal consumer, the impressive growth of renewables and nuclear power, alongside a slower economy, point to a decrease in coal use soon.
Some experts suggested global oil demand might have peaked after it plunged during the pandemic. The IEA was wary of such premature calls, but it said its latest projections show that the growth of electric vehicles around the world, especially in China, means oil demand is on course to peak before 2030. Electric buses and two- and three-wheelers are also growing strongly, especially in emerging economies, further eating into demand.
“The ‘Golden Age of Gas’, which we called in 2011, is nearing an end, with demand in advanced economies set to fall away later this decade. This is the result of renewables increasingly outmatching gas for producing electricity, the rise of heat pumps and Europe’s accelerated shift away from gas following Russia’s invasion of Ukraine.”
Fatih Birol
Peaks for the three fossil fuels are a welcome sight, showing that the shift to cleaner and more secure energy systems is speeding up and that efforts to avoid the worst effects of climate change are making headway. But there are some important issues to bear in mind.
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