Global oil demand is still on track to peak by 2030: International Energy Agency
The organisation’s executive director Fatih Birol told CNA’s Roland Lim the reasons for these projections on the sidelines of the Singapore International Energy Week.
by Jalelah Abu Baker · CNA · JoinSINGAPORE: Global oil demand is on track to peak by 2030 due to China’s economic slowdown and the rising adoption of electric vehicles, among other factors, said the International Energy Energy’s executive director on Tuesday (Oct 22).
China was responsible for more than 60 per cent of global oil demand growth over the last decade, to cater to its rapidly expanding economy, Fatih Birol noted. That has since changed.
“The transportation sector is a key sector (driving oil demand). It is going to be electrified. It has already started,” he added.
Oil prices not skyrocketing despite geopolitical issues in the Middle East - the centre of oil production and transportation - is another indication that demand for oil is weakening, he added.
“I believe the oil demand in 2050 will be significantly less than today,” he told CNA’s Roland Lim on the sidelines of the Singapore International Energy Week.
His comments came a day after Amin Nasser, CEO of oil giant Saudi Aramco, said that oil consumption is likely to increase until 2050 due to demand from developing economies.
Oil will however continue to be part of the global energy mix, said Birol.
NUCLEAR ENERGY SET TO BE “INTEGRAL”
Growing electricity demand will be met by renewable sources of energy, including nuclear power, Birol added.
He said that even though the Fukushima disaster in 2011 - which released large amounts of radioactive material into the environment - slowed down the development of nuclear energy, it is making a “big, strong comeback” around the world in nations like Japan, South Korea, and China.
“It is happening in two ways: One, building new large scale nuclear power plants, and two, pushing the small modular reactors which could feed the data centres,” he told CNA.
He added that nuclear energy, which is currently the second largest source of low-carbon electricity production globally after hydropower, could be integral in the world’s energy mix in the years to come.
He also spoke about the 3 per cent on-year increase in demand for coal last year, which he attributed to China.
“In the rest of the world, we see (that) global coal demand is declining, but in China, (as) we saw last year, coal demand increased mainly … as a result of China’s hydropower (issues),” he said.
“Electricity generation was very poor because it was a very dry year.”
However, this would be short-lived and China’s coal demand will flatten, he added.
THE NEED FOR CLIMATE FINANCING
Birol also spoke about the disproportionate allocation of resources for investment in renewable energy.
He said US$3 trillion is being budgeted for the energy sector globally, US$2 trillion of which is going towards clean energy.
But only 15 per cent of this US$2 trillion sum will be used for emerging economies, where two-thirds of the global population live.
“So we have to fix this. We have to make sure that the emerging and developing world also has access to clean energy investment.”
“If we go with two tracks, the advanced economies and China, and the rest of the world, we will never reach our climate goals,” he added.
At the United Nations’ annual climate talks COP28 last year, nearly 200 countries agreed to work towards an ambitious set of global energy objectives, pledging to achieve net-zero emissions from the global energy sector by 2050.
They also committed to transition away from fossil fuels, triple renewable energy capacity and double the rate of energy efficiency improvements by 2030, as well as accelerate the deployment of other low-emissions technologies.
Birol said the upcoming COP29 from Nov 11 to 22 in Azerbaijan will be an important test case for the countries on whether or not they want to move away from two-track energy investment to have a more homogeneous view.
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