Global fossil fuel demand is likely to peak this decade as the clean energy economy grows, IEA says
- Global fossil fuel demand is expected to peak this decade as the clean energy economy booms, the IEA said.
- Past peak demand in the late 2020s, global use of oil could fall into an "undulating plateau" for a while.
The golden age of fossil fuels is coming to its close, and that close is coming soon.
"In all scenarios, the momentum behind the clean energy economy is enough to produce a peak in demand for coal, oil and natural gas this decade, although the rates of post-peak decline vary widely," the International Energy Agency said in a report Tuesday.
Oil demand could reach a maximum level of 102 million barrels of oil per day in the late 2020s before declining slightly to 97 million in 2050. Past that peak, demand for oil could fall into an "undulating plateau lasting for many years."
Global natural gas demand, which had been increasing by roughly 2% every year since 2011, is expected to slow to a 0.4% annual pace from now until 2030. Global coal demand is also expected to weaken as its biggest consumers, iron and steel producers, wean off coal.
The IEA report added that geopolitical turmoil, stubborn inflation, and elevated debt levels have heightened volatility in commodities like oil, and largely disrupted global energy markets.
It comes a month after IEA Executive Director Fatih Birol previewed its findings in a column published in the Financial Times, saying that "the age of seemingly relentless growth" for fossil fuel demand is at the beginning of the end.
"This is the first time that a peak in demand is visible for each fuel this decade — earlier than many people anticipated," he wrote.
In contrast with its view on fossil fuels, the IEA report Tuesday noted that "clean energy is the most dynamic aspect of global energy investment."
The Inflation Reduction Act passed last year has also funneled hundreds of billions of dollars into clean energy projects, ramping up the path towards decarbonization.
But renewable energy stocks have been reeling amid cost inflation, supply-chain bottlenecks and higher borrowing costs, as Fed rate hikes particularly capital-intensive buffet industries.
The S&P Global Clean Energy Index is down 33.51% since January. Companies like SolarEdge and Enphase Energy are down 70% and 62% respectively, year-to-date.