The world is on the brink of a new age of electricity with fossil fuel demand set to peak by the end of the decade, meaning surplus oil and gas supplies could drive investment into green energy, the International Energy Agency said on Wednesday.
But in a release accompanying its annual World Energy Outlook report, the agency also flagged a high level of uncertainty as conflicts embroil the oil and gas-producing Middle East and Russia and as countries representing half of global energy demand have elections in 2024. "In the second half of this decade, the prospect of more ample – or even surplus – supplies of oil and natural gas, depending on how geopolitical tensions evolve, would move us into a very different energy world," IEA Executive Director Fatih Birol said in the release.
Surplus fossil fuel supplies would likely lead to lower prices and could enable countries to dedicate more resources to clean energy, moving the world into an "age of electricity," Birol said. In the near term, there is also the possibility of reduced supplies should the Middle East conflict disrupt oil flows. The IEA said such conflicts highlighted the strain on the energy system and the need for investment to speed up the transition to "cleaner and more secure technologies".
A record high level of clean energy came online globally last year, the IEA said, including more than 560 gigawatts (GW) of renewable power capacity. Around $2 trillion is expected to be invested in clean energy in 2024, almost double the amount invested in fossil fuels.
However, growth in clean power generation has not kept pace with rising global electricity demand and this trend is expected to continue from 2023-2030, meaning coal power use will decrease more slowly than previously expected, the IEA said. Taking that into consideration, the share of fossil fuel in the global energy mix is forecast to be 75% in 2030 under the current policy scenario, compared with 80% today. In its scenario based on current government policies, global oil demand peaks before 2030 at just less than 102 million barrels/day (mb/d), and then falls back to 2023 levels of 99 mb/d by 2035, largely because of lower demand from the transport sector as electric vehicle use increases.
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