London — Plastics and other petrochemical goods are set to overtake the transport sector as the largest driver of global oil demand in the coming years, the International Energy Agency said Friday, flagging a growing "blind spot" for energy policymakers in coming years.
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While surging sales of electric vehicles and continued fuel efficiency gains will continue to curb oil demand for most road vehicles, production of key thermoplastics will more than double between 2010 and 2050, the IEA believes.
As a result, demand for plastics means petrochemicals will account for more than a third of global oil demand growth by 2030 and nearly half of demand growth by 2050, adding nearly 7 million b/d by the middle of the century, the IEA said in a new report published Friday.
The report finds that demand for plastics, the key driver for petrochemicals in terms of energy demand, has nearly doubled since 2000, outpacing all other bulk materials including steel, aluminum, or cement.
Global oil demand for chemical feedstocks accounted for about 12 million b/d last year, but this will rise to almost 18 million b/d in 2050, the IEA estimates.
The petrochemical sector will also play a significant role in the total growth in natural gas demand, where it is set to consume an additional 56 Bcm of gas by 2030, and 83 Bcm by 2050, the IEA said.
"Our economies are heavily dependent on petrochemicals, but the sector receives far less attention than it deserves," IEA Executive Director Fatih Birol said in a statement. "Petrochemicals are one of the key blind spots in the global energy debate, especially given the influence they will exert on future energy trends."
Oil demand for chemical feedstocks is set to grow mostly in the Middle East, the IEA said, where oil producers are increasingly moving into the refining and petrochemical businesses. Chinese demand for petrochemicals will also be a major growth area as state-owned oil companies add new capacity to feed China's shift to a consumer-driven economy.
The IEA has already flagged the growing oil market implications of booming plastics demand in its latest global long-term energy forecasts.
In November last year, the IEA's World Energy Outlook predicted that the global oil demand impact from ballooning sales of electric cars would still be swamped by fast-rising petrochemicals growth and consumption from trucks.
As a result, the IEA expects global oil demand to continue rising over the coming decades to 105 million b/d by 2040, up from 93.9 million b/d in 2016.
Despite a growing trend of plastic recycling and bans on the use of single-use plastics in some countries, the IEA said it believes any demand impact will be swamped by surging plastics use for other needs such as electric cars.
"Although substantial increases in recycling and efforts to curb single-use plastics take place, especially led by Europe, Japan and [South] Korea, these efforts will be far outweighed by the sharp increase in developing economies of plastic consumption," the IEA said.
The IEA said also predicts that the rising share of the chemical sector in global oil demand will have demand consequences for a range of oil products.
It expects the combined demand growth in lighter oil products such as naphtha, ethane and LPG will total 8 million b/d between 2018 and 2050.
Meanwhile, demand for middle distillates will remain "robust" on the back of strong road freight and aviation demand while demand for gasoline and high-sulfur fuel oil is set to decline.
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