Oil demand set to plateau by 2030 as electric car usage gains traction
Shale oil is set to play a much bigger role in world's energy mix over the next six years, IEA's World Energy Outlook says
Overall demand for energy is set to increase by 1 per cent per every year until 2040, but demand for oil will plateau ten years earlier, due to a pick-up in the use of the electric vehicles across the globe, according to the International Energy Agency.
Shale output from the US, now the biggest global oil producer, is likely to stay higher for longer than previously projected, with the country accounting for 85 per cent of the increase in global oil production by 2030, and for 30 per cent of the increase in gas, the Paris-based organisation said in its latest World Energy Outlook report.
“The shale revolution highlights that rapid change in the energy system is possible when an initial push to develop new technologies is complemented by strong market incentives and large-scale investment,” said the IEA's executive director, Fatih Birol. “The effects have been striking, with US shale now acting as a strong counterweight to efforts to manage oil markets.”
The report by IEA, a group of 30 member nations of major energy users, sets out three scenarios for energy use and carbon emissions. One scenario, based on current energy policies, suggests energy demand will continue to grow 1.3 per cent per year until 2040, which is a reduction on the current 2.3 per cent annual growth, but would result "in a relentless upward march in energy-related emissions", as well as put strains on energy security.
The second, "Stated Policies" scenario, takes current government pledges to into account, but would still see energy demand growth of 1 per cent a year as efforts to cut carbon emissions are outpaced by a growing population and an enlarged economy. Under this scenario, demand for oil will continue to grow at about 1 million barrels per day per year until 2025, but will then taper off as its use in passenger cars drops with higher use of electric cars. Demand growth is forecast at just 0.1 million barrels per day in the late 2020s and early 2030s.
Only under the third, "Sustainable Development" scenario, where all nations comply with the Paris Agreement signed at a UN conference in the French capital in 2015, would emissions actually fall.
However, this would require "rapid and widespread changes across all parts of the energy system", the IEA's report said, including a 50 per cent decline in the amount of oil used in advanced economies between 2018 and 2040, and a 10 per cent decline in developing economies.
However, there is "no single or simple solution to transforming global energy systems”, Mr Birol said. “Many technologies and fuels have a part to play across all sectors of the economy. For this to happen, we need strong leadership from policy makers, as governments hold the clearest responsibility to act and have the greatest scope to shape the future.”
Last week, Opec published its own World Oil Outlook, which forecast a 7 per cent decline in oil production by its 14 member states to 32.8 million barrels by 2024, compared to 35 million bpd this year.
It predicted global oil demand would increase by 12 million bpd to 110.6 million bpd by 2040.
Updated: November 13, 2019 04:45 PM