Global oil and gas demand is expected to continue growing until 2050, as stated by the International Energy Agency (IEA) on Wednesday. This forecast diverges from previous assumptions of a rapid shift towards cleaner energy sources, which had been influenced by U.S. criticism regarding the IEA’s climate priorities.
The IEA’s annual outlook, based in Paris, also anticipates that the world is unlikely to achieve its target of limiting the temperature increase to 1.5 degrees Celsius above pre-industrial levels to mitigate the severe impacts of climate change. The agency had faced pressure from the U.S. to emphasize clean energy policies, particularly during the Trump administration, which advocated for increased oil and gas production.
Contrary to earlier projections made under the Biden administration, the IEA now forecasts that global oil demand will not peak this decade. The agency had previously recommended halting investments in new oil, gas, and coal projects to achieve net zero emissions by 2050. However, the IEA’s latest scenario, focusing on existing government policies rather than ambitious climate goals, suggests a different trajectory.
OPEC, the Organization of the Petroleum Exporting Countries, has contested predictions of peak oil demand, expressing hope that the notion of ‘peak oil’ has passed. The IEA, in its latest report, has abandoned the pledges scenario due to insufficient commitments from countries, instead presenting scenarios based on current policies and proposed measures.
Renewable energy and energy efficiency have made significant progress globally, but according to Rachel Cleetus of the Union of Concerned Scientists, the transition away from fossil fuels must accelerate to meet climate objectives. On the other hand, Wilmar Suarez from Ember believes that the IEA underestimates the growth of renewable energy, particularly in developing nations, driven by decreasing technology costs.
The IEA report also highlights a surge in investments in liquefied natural gas (LNG) projects, with a substantial increase in global LNG capacity expected by 2030. This growth is primarily driven by rising demand in the power sector due to data center and artificial intelligence (AI) expansion.
As global investment in data centers is projected to rise, surpassing spending on oil supply, the IEA’s report offers various scenarios, including a pathway to achieve net zero global energy emissions by 2050. Despite international pledges to limit global warming, the report indicates that the world is on track to exceed the 1.5-degree Celsius target in all scenarios.