The world’s energy watchdog has signalled a new energy era in which countries have access to more oil, gas and coal than needed to fuel their economic growth, leading to lower prices for households and businesses.
Fatih Birol, the executive director of the IEA, said the report confirms its prediction that the world’s fossil fuel consumption will peak before 2030 and fall into permanent decline as climate policies take effect. But continuing investment in fossil fuel projects will spell falling market prices for oil and gas, the IEA added.
“I can’t say whether or not we will see [oil prices of] $100 a barrel again, but what I can say is that despite the ongoing conflict in the Middle East we are still seeing oil prices in the $70s,” he said.
The IEA estimates that the world’s LNG capacity will grow by almost 50% by 2030, greater than the world’s forecast demand in all three of the agency’s modelled scenarios.
The world’s rising production of crude oil from new oil projects in the US, Canada and South America could mean that future supplies will outstrip global oil demand growth because China, the world’s biggest oil importer, is “wrong-footing” major oil producers by shifting rapidly towards electric vehicles, the IEA said.
“China has been the engine of oil market growth in recent decades, but that engine is now switching over to electricity,” the IEA said.
Electric vehicles currently have a share of about 20% of all new car sales worldwide, which could rise to 50% by 2030 under the IEA’s central forecast scenario, a level already achieved in China this year. This would erode the world’s demand for oil by about 6m barrels of oil a day, according to the IEA.
The “new world” for energy consumers will be more comfortable economically, Birol said, but he warned that the shift will require green alternatives, such as electric vehicles and heat pumps, to become cheaper too if they hope to compete against more affordable fossil fuels.