Fossil fuel demand to peak this decade: IEA chief in FT
World demand for oil, gas and coal is forecast to peak this decade for the first time as the use of cleaner energy and electric cars accelerates, the International Energy Agency’s chief wrote Tuesday in the Financial Times.
The IEA’s annual World Energy Outlook, due out next month, will show that “the world is on the cusp of a historic turning point,” executive director Fatih Birol wrote in an FT column.
The shift will have implications for the battle against climate change as it will bring forward the peak in greenhouse gas emissions, Birol said.
Based on government policies worldwide, demand for the three fossil fuels is “set to hit a peak in the coming years”, said Birol, whose Paris-based organization advises developed nations.
“This is the first time that a peak in demand is visible for each fuel this decade,” he wrote, adding that this was happening sooner than many had anticipated.
Birol said the change is mostly driven by the “spectacular growth” of clean energy technologies and electric vehicles, along with structural changes in the Chinese economy and the fallout from the energy crisis.
The IEA already predicted in a report in June that a peak global oil demand was “in sight” before the end of the decade, but it is the first time that it makes such an assessment for coal and gas.
Energy transition ‘firmly advancing’
The growth of electric vehicles is having an effect on oil demand, Birol said.
Gas demand will drop later this decade in advanced economies as heat pumps and renewable energy are increasingly used while Europe is shifting away from Russian supplies following the war in Ukraine.
Coal demand will peak in “the next few years”, he added, pointing to falling investments in the fossil fuel and the growth of renewable energy and nuclear power in top consumer China.
Simone Tagliapietra, a climate expert and senior fellow at the Bruegel think tank in Brussels, said that the IEA’s new projections “illustrate that while still to slow, the global energy transition is firmly advancing”.
“As technologies like wind and solar are now cost competitive, the transition moves from being policy-driven to being technology-driven,” he said.
“This is a key feature, as it protects the process from political headwinds.”
Analysts at Royal Bank of Canada said in a note that the IEA’s new projections highlight the “success in pro-renewables legislation”.
“Despite this, there is still scope for policymakers to do more to accelerate the energy transition and the phase-out of fossil fuels, with debates continuing across major economies in areas such as renewable returns and affordability,” the RBC analysts said.
Fossil fuel demand to peak this decade: IEA chief in FT (2023, September 12)