In a groundbreaking announcement, the head of the International Energy Agency (IEA) stated on Tuesday that the demand for all three major fossil fuels—oil, coal, and natural gas—will reach its peak this decade. This signifies a pivotal moment in the global transition towards renewable energy and marks a historic turning point in the energy landscape.
While the IEA has previously predicted that demand for fossil fuels was nearing its zenith, this is the first time the agency has forecasted a peak in demand for all three fossil fuel sources.
This prediction, based on data from an upcoming annual IEA report, suggests that existing climate policies designed to shift away from fossil fuels will be sufficient to reach peak demand for all fossil fuels before 2030. This implies that more robust actions on climate change could accelerate the decline in fossil fuel demand.
Fatih Birol, the IEA’s executive director, commented, “Fossil fuels will be with us for many years to come—but looking at our numbers, we may be witnessing the beginning of the end of the fossil fuel era. This isn’t driven by any shortage of fossil fuel resource but by the spectacular rise of clean energy technologies.”
Last year, the IEA had estimated that total fossil fuel demand might peak around 2030, with some fossil fuels experiencing rising demand due to rapid growth in Asia. The latest forecast advances this timeline due to the swift adoption of renewable energy, partly facilitated by energy crises.
Simultaneously, the efforts of major oil producers such as Saudi Arabia and Russia to limit global oil production and boost prices may also contribute to this shift. Higher oil prices can make renewable energy more competitive, especially in the transportation sector.
Birol emphasized, “Higher oil prices only make the alternatives—such as electric vehicles—more competitive and accelerate the transition to clean energy, especially in the transport sector.”
The recent increase in Brent crude prices to their highest levels since November 2022, largely driven by Saudi Arabia’s oil production cuts, is indicative of oil market tightness. This tightening of the oil market, coupled with higher prices, can further incentivize the adoption of renewable energy.
Despite the IEA’s earlier-than-expected timeframe for peak fossil fuel demand, Birol cautioned that the pace of decline would not be sufficient to meet global climate targets, such as limiting global warming to 1.5 degrees Celsius above pre-industrial levels. Stronger and more immediate action would be necessary to achieve these goals.
The IEA and Birol have faced criticism from fossil fuel producers in the past for making bold claims about the energy transition. Many oil producers believe that an overly swift transition away from fossil fuels could contribute to future energy-supply challenges.
In an opinion piece published in the Financial Times, Birol wrote, “The world is on the cusp of a historic turning point. The age of seemingly relentless growth [in fossil fuel demand] is set to come to an end this decade, bringing with it significant implications for the global energy sector and the fight against climate change.”