The world is moving toward more affordable energy solutions as clean technologies evolve to meet the rising demand for electricity, leading to an excess supply of oil and gas, according to a recent report from the International Energy Agency (IEA).
In its primary scenario, the IEA, which promotes green technologies, anticipates that clean energy will account for “virtually all” of the increase in energy demand from 2023 to 2035, resulting in a peak in the consumption of all three fossil fuels before 2030. This shift implies that oil import prices could reach approximately $79 per barrel by 2030, which is higher than current market levels. However, in a scenario where the world achieves net-zero emissions by mid-century, limiting global warming, the IEA projects oil prices could plummet to $25 per barrel by 2050. “Clean electricity is the future, and one of the striking findings of this Outlook is how quickly electricity demand is set to rise,” the report stated.
Electricity consumption has expanded at twice the rate of overall energy demand over the past decade, primarily driven by China, as highlighted in the IEA’s annual World Energy Outlook report.
The research underscores how the increasing adoption of electric vehicles (EVs), especially in China, is disrupting traditional oil markets. “EVs currently represent about 20% of new car sales globally, with projections suggesting this figure will rise to nearly 50% by 2030, resulting in a displacement of approximately 6 million barrels per day of oil demand,” the report notes.
Additionally, the IEA points to a significant influx of liquefied natural gas (LNG) projects expected to come online, which will lead to a surplus of supply until 2040. “An easing of price levels promises some welcome relief, particularly for fuel-importing countries,” the report mentions.
However, the IEA cautions that the availability of cheaper natural gas could hinder the transition to green energy by undermining the economic incentives for consumers to shift away from fossil fuels.
Related topics:
