IEA says global demand for oil to ebb only after 2040
While consumption will slow down, global use is not expected to peak for decades
London — Growth in global oil demand is expected to slow from 2025 as fuel efficiency improves and the use of electric vehicles increases, but consumption is unlikely to peak in the next two decades, the International Energy Agency (IEA) said on Wednesday.
The Paris-based IEA, which advises Western governments on energy policy, said in its annual World Energy Outlook for the period to 2040 that demand growth would continue to increase even though there would be a marked slowdown in the 2030s.
The agency’s central scenario — which incorporates existing energy policies and announced targets — is for demand for oil to rise by about 1-million barrels a day (bpd) on average every year to 2025, from 97-million bpd in 2018.
Demand is then expected to increase by 0.1-million bpd a year on average during the 2030s, to reach 106-million bpd in 2040.
“There is a material slowdown after 2025, but this does not lead to a definitive peak in oil use,” the IEA said, citing increased demand from trucks and the shipping, aviation and petrochemical sectors.
The IEA has been criticised by groups concerned about climate change who say the outlook underplays the speed at which the world could switch to renewable energy and undermines efforts to keep increases in global temperatures within 1.5°C-2°C.
This year, the IEA renamed its main scenario “Stated Policies” instead of “New Policies”, to clarify that it reflects existing policies. It is one of three scenarios that are used to show how energy demand could evolve over the next two decades.
This change is an improvement, said Joeri Rogelj of the Grantham Institute at Imperial College London. However, the IEA’s most ambitious scenario “remains inconsistent with 1.5°C and several aspects of the Paris Agreement and doesn’t present a scientifically consistent narrative”, he added.
The IEA outlook sees primary energy demand growing by a quarter by 2040, with renewable energy accounting for half of the rise and gas for 35%.
The IEA’s central scenario also does not see energy-related carbon dioxide emissions peaking by 2040 due to economic growth and population increases.
“Though emissions are rising, some governments are pushing major policy changes,” IEA executive director Fatih Birol told journalists in Paris.
An expected rise of just over 100-million tons a year between 2018 and 2040, though lower than the average rate of increase since 2010 of 350-million tons a year, would not be enough of a reduction to curb global temperature rises.
The IEA expects there will be 330-million electric cars on the road by 2040, up from an estimate of 300-million in last year’s outlook. That would displace about 4-million bpd of oil use, it said, compared with the 3.3-million bpd forecast previously.
The largest increases in oil production are expected to come from the US, the world’s biggest producer, as well as Iraq and Brazil. US crude oil production is seen rising to 11-million bpd in 2035 from 6-million bpd in 2018.
The share of oil production by members of Opec plus Russia is seen falling to 47% for much of the next decade, a level not seen since the 1980s. “The oil price required to balance supply and demand in this scenario edges higher to nearly $90 a barrel in 2030 and $103 a barrel in 2040,” the report said of the IEA’s central scenario.