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Global oil demand to peak in 2020 under IEA climate proposal

London — Global oil demand would need to peak within five years under an ambitious set of low-carbon policy measures being proposed by the International Energy Agency to limit greenhouse gas emissions within accepted safe levels.

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The proposal is the result of a major new assessment of the energy sector impact of global climate change pledges that the IEA is presenting ahead of the critical COP 21 Paris climate talks in December.

The IEA's central proposal is a so-called "Bridging Scenario" designed to bring forward the expected peak in global energy-related GHG emissions to 2020.

Under the scenario, global oil demand rises to 95 million b/d by around 2020 and then plateaus while coal use would peak before 2020 before starting to decline, the IEA said.


Although far more optimistic that the IEA's own default energy demand scenario, the Paris-based agency said the climate milestones are possible using proven technologies and policies and without cost to global economic activity.

But it concedes that the targets do require radical progress on decarbonizing the global economy and would mean "over-achievement" even for the countries that have already set long-term emission reduction targets.

Under the IEA's current long-term energy outlook, world oil demand will still be rising past 2040, when consumption hits 103.9 million b/d.

That compares with BP's estimates that demand for crude and other liquids, such as biofuels, will continue rising over the coming decade to reach 111 million b/d by 2035, up 16 million b/d from 2013.

MORE DECOUPLING Overall, the IEA's proposal requires that the energy intensity of the global economy and the carbon intensity of power generation will need to improve by 40% by 2030.

Although low-carbon energy sources are expanding rapidly and signs are growing that the global economy is decoupling from emission levels, much more needs to be done, the IEA said.

China, the world's biggest energy consumer, would need to decouple its economic expansion from emissions growth by around 2020, much earlier than currently expected.

Even in regions where emissions are already falling, such as the US and the EU, improvements in energy efficiency would need to accelerate by almost one third by 2030, the IEA said.

"The technologies and policies reflected in the Bridge Scenario are essential to secure the long-term decarbonization of the energy sector and their near-term adoption can help keep the door to the 2 C goal open," the IEA said referring to the target of keeping the increase in long-term average global temperatures to below 2 degrees Celsius above pre-industrial levels.

OILFIELD METHANE

Among the five key policy measures that are needed for the bridging scenario to succeed are the cutting of methane emissions from oil and gas production and a gradual phasing out of fossil-fuel subsidies to end-users by 2030, the IEA said.

The impact of such measures would likely fall most heavily in the Middle East and Africa, it said.

Minimising methane emissions from upstream oil and gas operations would contribute to 15% of global GHG savings relative to the default scenario in 2030, according to the report.

The remaining measures needed to achieve the scenario are: a widespread boost in energy efficiency in the industry, buildings and transport sectors; a cut in the use of the least-efficient coal-fired power plants; and a boost in spending on renewable energy technologies in the power sector to $400 billion in 2030 from $270 billion in 2014, the IEA said.

Without the bridging scenario, the world's transition away from fossil fuels is much more gradual, with the proposed emissions cuts offered by governments to date unlikely to meet the 2C goal, the IEA said.

The governments of more than 190 nations will gather in Paris from November 30 to December 11 to try to reach a new legally binding and universal pact on tackling global climate change.

Current global commitments on greenhouse gas emissions run out in 2020, and the meeting is expected to set new targets to curb emissions, likely out to 2030.

--Robert Perkins, robert.perkins@platts.com
--Edited by Jeremy Lovell, jeremy.lovell@platts.com