For more than a century, the world’s appetite for fossil fuels has continued to grow as people burn larger amounts of coal, oil and natural gas almost every year to power homes, cars and factories.
But a remarkable turnaround could soon be coming. The world’s leading energy agency now predicts that global demand for oil, natural gas and coal will peak by 2030, partly due to measures countries have already taken to promote cleaner forms of energy and transport.
A peak in fossil fuel consumption will not be enough to stop global warming, the International Energy Agency said in its World Energy Outlook, a 354-page report on global energy trends released on Tuesday. To achieve this, emissions from coal, oil and natural gas would have to fall to almost zero. But a profound change is currently underway in the global energy landscape.
By 2030, there could be ten times as many electric vehicles on the road as there are today, the report says. Renewable energy sources such as solar, wind and hydropower could provide 50 percent of the world’s electricity, today it is 30 percent. Heat pumps and other electric heating systems may sell better than gas and oil furnaces. Global investment in offshore wind farms could exceed that in coal and gas power plants.
If all of this came to pass, oil and gas demand would most likely remain slightly above current levels over the next three decades, growing in developing countries and contracting in advanced economies. Demand for coal, the dirtiest of all fossil fuels, would decline, although it could fluctuate from year to year if coal-fired power plants were required to run more frequently during heatwaves or droughts, for example.
“The transition to clean energy is happening worldwide and is unstoppable,” said Fatih Birol, executive director of the International Energy Agency. “It’s not a question of ‘if’, just a question of ‘how soon’ – and the sooner the better for all of us.”
The agency’s forecast that demand for fossil fuels will peak by 2030 has sparked controversy. After Mr. Birol first hinted at this possibility in September, the OPEC oil cartel warned that such forecasts were extremely uncertain and could lead to countries and companies underinvesting in oil and gas drilling. If demand for fossil fuels does not fall as expected, the lack of supply could lead to “energy chaos,” the cartel said.
OPEC released its own outlook last year in which it predicted that global demand for oil and natural gas would continue to rise through 2045.
“I have some gentle advice for oil executives: They only talk to each other,” Mr. Birol said in an interview. “You should talk to car manufacturers, the heat pump industry, the renewable energy industry and investors – and see how they all see the future of energy.”
In the United States, major oil companies have been snapping up smaller rivals in recent weeks, a sign of confidence that fossil fuels are likely to play a major role in the coming years. On Monday, Chevron announced plans to buy Hess for $53 billion, two weeks after Exxon Mobil said it would buy Pioneer Natural Resources for $59.5 billion. In both deals, the oil giants acquired large shale reserves in places like Texas and North Dakota, where production could be ramped up and down relatively quickly – a potential advantage in a world where the outlook for demand is uncertain, analysts say.
Predicting global energy trends is notoriously difficult, and the International Energy Agency has been wrong before. In 2016, the agency suggested that China’s demand for coal had peaked, but coal consumption later rose to new levels. On the other hand, the agency has so far underestimated the rapid growth of cleaner technologies such as solar energy.
This year’s report says China will play an outsized role in determining the world’s energy future. The country accounts for half of global coal consumption and has driven two-thirds of the growth in global oil demand over the past decade. But China’s appetite for steel and cement could weaken, the report said, leading to a curb in demand for fossil fuels.
The agency’s forecasts could change as countries change their energy policies. For example, electric cars are currently expected to account for 50 percent of new sales in the United States by 2030, thanks to tax breaks in the Inflation Reduction Act. But several Republican presidential candidates, including former President Donald J. Trump, want to end these incentives.
Recent high oil and natural gas prices caused by Russia’s invasion of Ukraine and renewed conflict in the Middle East could also prompt countries to use less fossil fuels. During previous oil crises, such as the 1970s, people had few alternatives and suffered from price spikes, said Amy Myers Jaffe, an energy expert at the New York University School of Professional Studies. But today it’s different.
“When prices are high, we can see a faster decline in demand today than in the 1970s,” Ms. Jaffe said. “We don’t really use petroleum for electricity anymore, alternatives like electric cars are widespread, and working from home means at least some people have to commute less. It’s a whole different world.”
A plateau in global oil and gas demand could cause energy prices to become more volatile in the near term, said Jason Bordoff, founding director of the Center on Global Energy Policy at Columbia University.
“The oil industry has of course experienced booms and busts in the past, but it was always clear that demand would continue to increase in the long term,” Bordoff said. “Now there’s a lot more uncertainty about what’s going to happen.”
Even if demand for fossil fuels peaks this decade, the world will still need much stricter climate policies to prevent global warming from exceeding 1.5 degrees Celsius, or 2.7 degrees Fahrenheit – a goal that Many world leaders have advocated to reduce the risk of climate disruption.
In a report last month, the International Energy Agency outlined some options, including bans on gasoline-powered cars and further investment in power grids and technologies such as nuclear power or clean hydrogen.
“A peak in fossil fuel demand would be significant, but achieving our climate goals would require a sharp decline at a scale and pace we have not yet seen,” Bordoff said.