According to the International Energy Agency (IEA), the world stands at the threshold of the fossil fuel era’s decline, marking the “beginning of the end.” This significant development represents a departure from earlier predictions, as the IEA now anticipates that oil, natural gas and coal demand will all reach their peak before 2030.
Recent projections from the Paris-based agency indicate that the consumption of fossil fuels will start its descent within this decade. This shift is attributed to the rapid expansion of renewable energy sources and the increasing prevalence of electric vehicles.
IEA Executive Director Fatih Birol emphasised the importance of preparing for this transition, stating, “we are observing the initiation of the fossil fuel era’s conclusion and must ready ourselves for the forthcoming epoch.” He cautioned that substantial investments in new fossil fuel projects carry considerable climate and financial risks, potentially becoming stranded assets. However, he acknowledged the need for some investment in oil and gas to compensate for declines in existing fields.
This global shift in renewable energy affordability points to the inevitable changeover that the world is currently seeing. As many countries have set net zero targets for the next decade, the phasing out of fossil fuels and implementation of renewables means that all businesses and professionals need to fully understand how to utilise these alternative energy sources.
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Birol also highlighted that oil and gas companies may be underestimating both public sentiment and market dynamics. He noted that although total oil demand will continue to grow until 2028, the rate of growth will gradually taper off, leading to an anticipated peak in demand thereafter.
Birol underscored the accelerating transition to a clean energy economy, with the expectation of reaching a peak in global oil demand by the end of this decade. Factors contributing to this shift include the adoption of electric vehicles, advancements in energy efficiency and the proliferation of innovative technologies.
In contrast to earlier predictions, the IEA now signals the impending end of an era characterised by seemingly incessant growth and with it, significant implications for the global energy landscape and the ongoing battle against climate change. Less than three months ago, the IEA had projected that global oil demand would reach its peak before the decade’s end, driven by the energy crisis expediting the transition away from crude oil and oil-based fuels by nations and industries.