Oct 27, 2022
The International Energy Agency projected for the first time Thursday that global demand for every kind of fossil fuel will "peak or plateau" in the near future, a prediction stemming from the organization's view that Russia's invasion of Ukraine is accelerating the worldwide transition to renewable energy.
The IEA's annual World Energy Outlook (WEO) examines several scenarios to chart its expectations for the future of oil, gas, and coal, including the Stated Policies Scenario (STEPS) defined by nations' current energy policies--which include reliance on fossil fuels--and an alternative trajectory that assumes countries take action to meet their emissions-reduction targets. The report also details a Net Zero Emissions by 2050 scenario that implies a more rapid move to green energy.
"Governments must ensure a rapid phase-out of fossil fuels begins immediately, coupled with surging investment into a clean energy economy."
"For the first time, a WEO scenario based on prevailing policy settings has global demand for each of the fossil fuels exhibiting a peak or plateau," the agency's report states. "In the STEPS, coal use falls back within the next few years, natural gas demand reaches a plateau by the end of the decade, and rising sales of electric vehicles (EVs) mean that oil demand levels off in the mid-2030s before ebbing slightly to mid-century."
"Total demand for fossil fuels declines steadily from the mid-2020s by around two exajoules per year on average to 2050, an annual reduction roughly equivalent to the lifetime output of a large oil field," the report continues.
The 524-page analysis was published amid ongoing energy market chaos spurred by Russia's assault on Ukraine, which has led European Union members to begin curbing their dependence on Russian fossil fuels and scaling up renewable energy investments. In the meantime, market turmoil has pushed up gas prices for consumers, and a recent decision by the Saudi-led OPEC oil cartel to slash production is likely to drive prices even higher with winter approaching.
The IEA said Thursday that the current crisis "has highlighted the fragility and unsustainability of many aspects of our current energy system and the wider risks that this poses for our economies and well-being." But the agency expressed hope that Russia's invasion and energy-related policy responses from major polluters could help bring about "profound and long-lasting changes that have the potential to hasten the transition to a more sustainable and secure energy system."
As examples of potentially transformative policy shifts, the report points specifically to the United States' Inflation Reduction Act, the European Union's Fit for 55 package and REPowerEU, the Green Transformation program in Japan, clean energy targets outlined by India and China, and South Korea's plans to ramp up renewable energy use. The analysis rejects claims that "climate policies and net zero commitments" have contributed to higher energy prices across the globe.
"In the most affected regions, higher shares of renewables were correlated with lower electricity prices, and more efficient homes and electrified heat have provided an important buffer for some--but far from enough--consumers," the report observes.
\u201c@IEA First, the energy crisis *is* a fossil fuels crisis. Fossil fuel dependence dug the hole we're in for us, and investing in a surge of new oil and gas won't help dig us out. \n\nCountries with more renewable electricity generation have not suffered such high energy prices as others.\u201d— David Tong (@David Tong) 1666844685
Fatih Birol, IEA's executive director, said Thursday that "energy markets and policies have changed as a result of Russia's invasion of Ukraine, not just for the time being, but for decades to come."
"Even with today's policy settings, the energy world is shifting dramatically before our eyes," Birol continued. "Government responses around the world promise to make this a historic and definitive turning point towards a cleaner, more affordable, and more secure energy system."
The IEA's outlook is not unwaveringly positive, however. The new report notes that "oil and gas demand has risen and additional oil and gas (and coal) projects have received final investment decisions" since last year as fossil fuel giants push for massive, climate-wrecking extraction efforts around the world.
The agency also takes a swipe at efforts to build out new fossil fuel infrastructure in response to Russia's war on Ukraine. The Biden administration, for instance, is ramping up gas exports to Europe, a push it has said will require new pipelines and other infrastructure that climate campaigners say would lock in a disastrous emissions surge.
"No one should imagine that Russia's invasion can justify a wave of new oil and gas infrastructure in a world that wants to reach net zero emissions by 2050," the IEA said, dismissing the notion--peddled by the fossil fuel industry--that gas can serve as a "transition fuel" as nations move toward renewable energy.
"Momentum behind natural gas growth in developing economies has slowed, notably in South and Southeast Asia, putting a dent in the credentials of gas as a transition fuel," the agency points out. "Most of the downward revision to gas demand to 2030 in this year's STEPS is due to a faster switch to clean energy, although around one-quarter is because gas loses out to coal and oil."
Kelly Trout, research co-director at Oil Change International, said in a statement Thursday that "this year's WEO finally bursts the oil and gas industry's bubble on the myth of gas as a 'transition fuel.'"
"New gas infrastructure is risky, expensive, and unnecessary, on top of being a bridge to climate disaster," Trout added.
While welcoming the IEA's prediction that fossil fuel demand will soon peter out, Trout stressed that "peaks and plateaus aren't enough" to keep warming below the imperiled 1.5degC target set out by the Paris climate accord.
"Governments must ensure a rapid phase-out of fossil fuels begins immediately, coupled with surging investment into a clean energy economy that leaves nobody behind," said Trout. "To protect communities and provide the greatest chance of keeping 1.5degC in reach, governments and investors should be planning for a faster phase-out of fossil fuels than the Net Zero Emissions scenario achieves, given it still relies on a massive scale-up of carbon capture technology that may not materialize and will harm people on the frontlines of fossil fuel pollution."
Rebecca Newsom, head of politics at Greenpeace U.K., added that "the biggest energy challenge that we face right now is the threat of catastrophic climate change."
"The fastest and best way to address the interlocking cost of living, energy security, and climate crises we face the world over but particularly in impacted countries is to invest in energy efficiency to reduce the demand of fossil fuels, and massively accelerate the global roll-out of renewable energy," Newsom said.
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