Global demand for fossil fuels could peak by 2025 if the world's current climate pledges are fully met, but oil demand would still remain at three-quarters of current levels by 2050, missing climate targets by a wide margin, the International Energy Agency said Oct. 13.
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Under a new 'Announced Pledges Scenario' (APS), oil demand peaks soon after 2025 at 97 million b/d and then falls by around 1 million b/d per year to 2050, the IEA said in its latest World Energy Outlook. By 2050, however, the world would still be consuming 77 million b/d, down from around 100 million b/d currently.
Although oil use falls by around 4 million b/d in countries with net-zero pledges between 2020 and 2030, the IEA data shows, that is offset by an 8 million b/d increase in the rest of the world.
Natural gas demand increases over the next five years but then peaks and, after decades of growth, coal will rapidly undergo structural decline under net-zero pledges, the IEA estimates.
Published with a view to inform discussions at the COP26 climate talks in November, the closely watched long-term energy outlook includes the IEA's Net Zero Emissions Scenario which it first published in May, as a pathway to limit global warming to 1.5 degrees by 2050. The landmark net-zero scenario -- which assumes a halt to spending on new oil and gas projects -- would require oil demand to plummet to 25 million b/d by 2050 to achieve the climate goals.
Under the IEA's base case 'Stated Policies' (STEPS) scenario, global oil demand exceeds 2019 levels by 2023 then levels off at 104 million b/d in the mid-2030s before declining very gradually to 2050.
Compared to previous IEA reports, oil demand in the STEPS scenario starts to decline in the 2030s for the first time as a result of more muted growth in petrochemicals and a faster switch to renewables energy.
"Lower oil demand in the APS relative to the STEPS reflects reduced oil use in uses such as road passenger transport, petrochemicals, heavy trucks, aviation and shipping, but the reductions in the APS pale by comparison with what is needed in the net-zero scenario." the IEA said.
A year ago the IEA predicted oil demand would flatline above 100 million b/d rather than peak in the coming two decades, forecasting consumption would rise from 97.9 million b/d in 2019 to 104.1 million b/d in 2040.
S&P Global Platts Analytics sees global oil demand peaking near 2040 at around 111 million b/d before slipping to 108 million b/d in 2050 under a "most likely" scenario, some 3 million b/d lower than pre-pandemic forecasts.
Noting a strong rebound in global energy demand in the wake of the coronavirus pandemic that has not been matched by spending on supply, the IEA warned of potential energy price volatility in the coming years if investments do not pick up.
Current climate pledges would result in only a fifth of the emissions reduction by 2030 that is necessary to put the world on a path towards net-zero by 2050, according to the IEA.
But reaching that goal would require investment in clean energy projects and infrastructure to more than triple over the next decade, it said.
While spending on oil and gas is currently in line with a world of stagnant or even falling demand, spending on clean energy is far below what would be required, it said.
"There is a looming risk of more turbulence for global energy markets," IEA Executive Director Fatih Birol said. "We are not investing enough to meet for future energy needs, and the uncertainties are setting the stage for a volatile period ahead."
The IEA estimates that getting the world on track for 1.5 C rise in global temperatures will require a surge in annual investment in clean energy projects and infrastructure to nearly $4 trillion by 2030.