Fossil fuel consumption is expected to peak or plateau within this decade, accelerated by the policy and trade flow shifts following the Russian invasion of Ukraine, the International Energy Agency (IEA) said on Thursday.
For the first time ever, a World Energy Outlook scenario from the IEA based on the current government policies and settings has global demand for every fossil fuel showing a peak or plateau, the agency said in its World Energy Outlook 2022 published today.
Even natural gas, which was previously expected to continue rising, could now join coal and oil in peaking around 2030, according to the IEA’s latest estimates.
“For the first time ever, a WEO scenario based on today’s prevailing policy settings – in this case, the Stated Policies Scenario – has global demand for every fossil fuel exhibiting a peak or plateau,” the international agency said.
In the Stated Policies Scenario (STEPS) scenario, coal use is set to fall back within the next few years, natural gas demand will reach a plateau by the end of the decade, and rising sales of electric vehicles (EVs) mean that oil demand will level off in the mid-2030s before ebbing slightly to mid-century.
“One of the effects of the current crisis is that the era of rapid growth in global gas demand draws to a close,” the IEA’s Executive Director Fatih Birol said.
“In Europe, climate policies accelerate the shift away from gas. New supply brings prices down by the mid-2020s, and LNG becomes even more important to gas security,” Birol added.
The recent rise in coal is small and only temporary, the IEA’s latest analysis shows. At the same time, renewables are expected to continue surging and eating into the share of coal and gas of the power mix.
The IEA’s World Energy Outlook 2022 also predicts that “Russian fossil fuel exports never return – in any of our scenarios – to their 2021 levels,” Birol said. “Within 10 years, Russia’s share of internationally traded oil & gas is set to fall by half.”
By Tsvetana Paraskova for Oilprice.com
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There can never be a peak oil demand through the 21st century and probably far beyond. A world population projected to rise from 7.9 billion currently to 9.7 billion by 2050 and a global economy expected to grow from $91 trillion currently to $245 trillion by 2050 will ensure that demand for oil will continue to rise albeit at a slightly slower rate because of the expansion of EVs.
Demand for gas will continue to rise unabated well into the future because without it there can never be even a partial energy transition.
Moreover, the IEA’s prediction that Russian fossil fuel exports are set to fall by half within the next 10 years is flawed and ludicrous since Russia has enough proven reserves of gas and oil in the Arctic to last 1-2 centuries and also 767 years of coal left at current consumption and export levels. Furthermore, the Russian Arctic will be one of three regions in the world that will be supplying the very last three barrels of oil. The other two are the Arab Gulf region and Venezuela’s Orinoco Belt.
The IEA is wrong to claim that the recent rise in coal demand is small. Actually coal demand rose by 41% in the first eight months of this year.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert