Global oil demand to peak before 2030 amid energy transition
Global demand for oil is set to peak by 2030 driven by the “sufficient” momentum of the clean energy transition toward low-emission energy sources across the global economy, the International Energy Agency said in a recent report.
Moves such as greater investment in renewable energy like solar power and the rise in the use of electric vehicles have begun to change the global energy system, long reliant on fossil fuels, according to the IEA’s 2023 Energy Outlook released Oct. 24.
The decline in demand will be undergirded by China, which has “an outsized influence on global energy trends” as the world’s second largest economy and a clean energy powerhouse. India, rapidly surging ahead to become the fourth largest economy even US dollar terms, has also become powerhouse in solar, Wind and hydro power. Once its Thorium based nuclear reactors start producing electricity at commercial scale then, there will be no looking back there after.
Undergoing a major shift as its economy slows, the agency says China’s overall demand for energy is set to peak in the middle of this decade as it moves away from fossil fuel power sources like coal.
The IEA’s outlook contrasts with the rise in global demand for oil predicted by the Organization of the Petroleum Exporting Countries. Its 2023 World Oil Outlook released Oct. 9 says demand will increase to 116 million barrels per day in 2045, up about 16 percent from the level in 2022.
The IEA says global oil demand will peak at around 102 million barrels a day in 2028 in a scenario based on the latest government policy settings around the world, including energy, climate and related industrial policies. The decline will be gradual, though, with demand still at around 97 million barrels per day in 2050.
The agency forecast oil will cost 82 dollars per barrel in 2030 and 80 dollars per barrel in 2050, around the levels it is currently priced.
In a scenario where net-zero carbon dioxide emission is achieved by 2050, world oil demand will peak in 2023 at more than 98 million barrels per day. It will then decrease to just over 24 million barrels per day in 2050.
The oil price forecast is significantly lower in this scenario, with the agency predicting it to fall to $42 in 2030 and $25 in 2050, compared with $98.20 in 2022.
In an intermediate scenario, where more ambitious national energy and climate pledges already made by governments are met in full and on time, the world’s oil demand is expected to decline to around 55 million barrels per day in 2050.
Along with oil, the agency foresees coal and natural gas demand to peak within the decade if current policy settings are maintained, the first time the three fossil fuels will have been forecast to peak by the agency, it said.
“The transition to clean energy is happening worldwide and it’s unstoppable. It’s not a question of ‘if.’ It’s just a matter of ‘how soon’ — and the sooner, the better for all of us,” IEA Executive Director Fatih Birol said in a press release announcing the agency’s report.
The agency called for tougher policies by countries to limit global warming to 1.5 C, the threshold that scientists say, if crossed, would lead to greater climate change impacts, like more frequent and severe droughts, heatwaves and rainfall.
