For the first time in all future scenarios, the IEA expects a drop in oil demand

The International Energy Agency (IEA) sees a decline in oil demand by the middle of the century under any scenario of the development of the world economy, and it cites data in its annual World Energy Outlook report.

“For the first time, each of the scenarios considered in the World Energy Outlook eventually shows a decline in global oil demand, although the timing and sharpness of the drop vary greatly,” the report says.

The IEA considered three possible scenarios in it: the first takes into account existing climate policies, even if they are still in development (the Stated Policies Scenario, STEPS); the second assumes that will fulfill all the commitments announced by governments on time (the Announced Pledges Scenario, APS); the third proceeds from achieving carbon neutrality in the energy sector by 2050 (the Net Zero Emissions by 2050 Scenario, NZE).

In the STEPS scenario, it will reach the peak of production in the mid-2030s at 104 million barrels per day, in APS the maximum demand will be 97 million barrels per day after 2025, and in NZE, the peak has already, and by 2030 demand will fall to 72 million barrels per day.

If we talk about coal, then in the STEPS scenario, demand grows slightly until 2025 and then gradually decreases. In APS, the need for coal drops sharply after 2030, especially in China, and in 2050 the expected demand will be half of the market for 2020. Finally, in the NZE, by the middle of the century, the need for coal will fall by 90%.

In the report, the IEA also repeated the idea that investments in new oil or gas fields are not needed to achieve carbon neutrality by 2050. “If companies and investors misinterpret trends in demand amid uncertainty about the future, there is a risk of either a market contraction or an overabundance of investment, which will lead to d inefficient assets,” the report says.