IEA: Global demand for fossil fuels will peak in 2030

The World Energy Outlook (WEO) 2023 report first predicted that fossil fuel demand would peak under a scenario based on current policies. According to the report, global demand for coal, oil and gas will peak before 2030.

The International Energy Agency (IEA) published the World Energy Outlook (WEO) 2023 report, which is considered the most authoritative source for analysis and projections for the global energy sector.

According to the report based on current government policies, increased support for clean energy technologies and structural economic changes around the world will have significant impacts on fossil fuels.

EXPECTED DECREASE IN THE SHARE OF FOSSIL FUELS

Global demand for coal, oil and gas will peak before 2030. In a scenario based on current policies in a WEO report for the first time, demand for fossil fuels is predicted to peak, while the share of fossil fuels in the global energy supply, which has remained at 80 percent for decades, will decline to 73 percent in 2030. Carbon emissions from the global energy sector will also peak in 2025.

Even if it declines after the peak, demand for fossil fuels will still be too high to limit global temperature rise to 1.5 degrees. Despite the rapid growth of clean energy, global emissions could remain high, leading to a temperature rise of 2.4 degrees Celsius by the end of the century.

GROWTH IN CLEAN ENERGY

Clean energy technologies will play a larger role in the global energy system in 2030 than today. While the number of electric vehicles on the roads will increase 10-fold, the share of renewable energy in global electricity production will approach 50 percent from 30 percent today.

Three times more will be invested in new offshore wind energy projects than in new coal and gas power plants. Progress on clean energy could be much faster if countries act in line with their current climate policies and goals.

According to the report, renewable energy sources will provide 80 percent of new electricity generation capacity by 2030. Solar energy alone will account for half of this growth. This growth will still be below the potential of solar energy.

While the global production capacity of solar panels will reach 1,200 gigawatts in 2030, the installed capacity of solar power plants will be 500 gigawatts by then.

If 800 gigawatts of new solar capacity were created by 2030, coal-fired electricity generation in China could decline by 20 percent and coal- and gas-fired electricity generation in Latin America, Africa, Southeast Asia and Middle East could decline by 25 percent.

In this context, WEO 2023 aims to triple global renewable energy capacity and double the rate of energy efficiency improvement, reduce methane emissions from fossil fuel operations by 75 percent, and triple investments in renewable energy in developing economies so that the world can get on a path compatible with 2030 climate goals. It offers a five-pronged global strategy that includes establishing large-scale financing mechanisms and taking measures to ensure a continued reduction of the consumption of fossil fuels.

TENSION IN THE MIDDLE EAST INCREASES UNCERTAINTIES

According to the report, energy security is becoming increasingly difficult in this period when the ongoing conflicts between Israel and Palestine have refocused attention on energy security concerns and many countries are struggling with the effects of the energy crisis that began last year.

Fifty years after the oil crisis that led to the establishment of the IEA, the “alarming situation” in the Middle East is creating further uncertainty for an unstable global economy plagued by persistent inflation and high borrowing costs.

TOWARDS THE END OF THE ‘GOLDEN AGE’ OF NATURAL GAS

Pressures are expected to ease in gas markets within a few years, where energy security concerns and price shocks were experienced after Russia largely cut off the flow of gas to Europe following the war in Ukraine.

New liquefied natural gas (LNG) projects coming online after 2025 around the world are expected to create an additional annual capacity of 250 billion cubic meters by 2030, and this figure corresponds to 45 percent of total capacity. of current LNG supply.

While the sharp increase in capacity alleviates supply concerns by reducing pressure on prices, this increase in capacity also carries the risk of creating an oversupply, as global gas demand growth slows. slows down and the “golden age” of gas is approaching its end.

Due to slowing gas demand growth, Russia is expected to have limited opportunities to expand its customer base.

Russia’s share of international gas trade, which is 30 percent in 2021, is estimated to fall below 15 percent in 2030.

CALL TO STOP COOPERATION

In his assessment of the report, IEA President Fatih Birol stated that the clean energy transformation is global and at an unstoppable level and said: “The energy transformation is not a question of ‘if’, it is only a question of ‘how soon’ and the sooner the transformation occurs, the better for all of us.” Governments, businesses and investors must support the transition to clean energy rather than hinder it. “There are huge benefits here that will create new jobs and opportunities, greater energy security, clean air, energy access and a safer climate for all.” he said.

Drawing attention to the current tensions and fluctuations in traditional energy markets, Birol said:

“Given this, the case for oil or gas as reliable options for the world’s energy and climate future is weaker than ever. Each country must find its own path, but international cooperation is vital to accelerate the transition to clean energy. In particular, the rate of emissions reductions is highly dependent on sustainable solutions to meet the growing energy demand in the world’s fast-growing economies. “All of this points to the importance of redoubling cooperation, not taking a step back.” (AA)