The world is at “the beginning of the end” of the fossil fuel era, according to the leading global energy watchdog, which, for the first time, has forecast that demand for oil, natural gas and coal will all peak before 2030.
The International Energy Agency (IEA) projected the consumption of the three major fossil fuels will start to decline this decade because of the rapid growth of renewable energy and the growth in popularity of electric vehicles.
“We are witnessing the beginning of the end of the fossil fuel era and we have to prepare ourselves for the next era,” IEA head, Fatih Birol, said of the projections, due to be published next month in the body’s World Energy Outlook. “It shows that climate policies do work.”
Mr Birol hailed a “historic turning point” but called on policymakers to do more to speed up the energy transition and reduce emissions, despite political obstacles to decarbonisation.
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Governments across the world have increased investments in renewables in response to climate change and the energy crisis, stoked by Russia’s full-scale invasion of Ukraine, but many have faced a backlash over the expense during a cost of living crisis.
The IEA, which is primarily funded by the Organisation for Economic Co-operation and Development, said last year that fossil fuel demand in aggregate could peak around 2030. It has since brought forward its projections, however, because the roll-out of renewable technologies has accelerated in the past 12 months.
Mr Birol also emphasised “structural shifts” in China’s economy as it moves from heavy industry to less energy-intensive industries and services.
“In the last 10 years, China accounted for about one-third of the growth in natural gas demand globally and two-thirds of the growth in oil demand,” Mr Birol said. “Solar, wind and nuclear power will be eating up the potential growth of coal in China.”
The IEA chief said policymakers had to be “nimble” to adapt to the energy transition and argued it could be accelerated through “stronger climate policies”, despite concerns in western capitals about voters’ tolerance for rapid change.
The United States and European Union have launched ambitious programmes to support the growth of renewable energy but have faced criticism from political opponents over costs.
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Roberta Metsola, the head of the European Parliament, warned this month that Brussels’ climate policies risked driving voters towards populist parties, while in the UK, the government has backed new oil and gas drilling and criticised the expansion of London’s ultra low emission zone.
Mr Birol said large new fossil fuel projects ran the risk of becoming so-called stranded assets, while acknowledging that some investment in oil and gas supplies would be needed to account for declines at existing fields.
Both he and the IEA have faced attacks from large fossil fuel producers who warn that underinvestment in oil and gas supplies risks future energy crises if forecasts for a peak in consumption prove too optimistic.
The Organisation of the Petroleum Exporting Countries, the oil producers’ cartel, accused the IEA in April of stoking “volatility” in markets through its calls to stop investing in new oil developments.
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Mr Birol said: “Oil and gas companies may not only be misjudging public opinion, they may well be misjudging the market if they expect further growth of oil and gas demand across this decade.
“New large scale fossil fuel projects carry not only major climate risks but major financial risks.”
Mr Birol called on policymakers not to become complacent, warning that emissions needed to fall rapidly after a peak in the mid-2020s to have any chance of limiting global warming to 1.5C.
“We expect mid this decade global emissions will peak but it is still far from reaching our climate goals, even with additional policies,” said Mr Birol. “We can speed this up if we put the right new policies in place. It is in our hands.” – The Financial Times
