Fossil fuel demand expected to peak soon
Source: Asia Insurance Review | Dec 2022
The World Energy Outlook 2022 released by the International Energy Agency (IEA) reveals that Russia president Vladimir Putin’s invasion of Ukraine has accelerated the world’s transition to cleaner energy sources.
The 524-page document released in October 2022 says the demand for fossil fuels is expected to peak within 15 years. It says even if efforts to phase out fossil fuels are not stepped up, demand for coal will start declining within a few years and oil demand will level off by 2035. The outlook says even the demand for gas is forecast to plateau from the end of this decade.
This is the first time that IEA analysts have said that the demand for fossil fuels is set to peak or plateau under all their future scenarios, even with only current policies in place.
IEA says it also spells good news for the climate: global emissions from the energy sector are now forecast to peak by 2025 as a result of slowing demand. The agency found that Russia’s invasion of Ukraine has triggered turmoil in global energy markets.
IEA, however, says that over the longer term, the conflict will speed the world’s transition to lower carbon energy sources as countries seek to boost growth and bolster their energy security in response to the crisis.
Under all the IEA’s scenarios, demand for fossil fuels levels off as people drive more electric cars and nations rely on renewables, nuclear and other low carbon technologies for heat and power. Under current policies, the share of fossil fuels in the global energy mix is set to fall from around 80% today to just above 60% by mid-century.
This pace of change, however, isn’t fast enough to avert dangerous climate change. The IEA predicts that under current policies, the world is on course for about 2.5°C of warming by the end of the century. However, the pace of this transition could accelerate if countries do more to cut emissions. A