Peak Fossil-Fuel Demand Is Possible in a Few Years, IEA Says

Based on such a scenario, the IEA said additional coal demand prompted by the energy crisis would be temporary, while natural-gas demand would plateau by the end of this decade. As a result of the increased use of electric vehicles, the IEA said, oil demand would peak sometime in the middle of the next decade, plateauing until about 2050, and then falling.

“Energy markets and policies have changed as a result of Russia’s invasion of Ukraine, not just for the time being, but for decades to come,” said

Fatih Birol,

executive director of the IEA, which is funded by oil-consuming nations including the U.S. “The energy world is shifting dramatically before our eyes. Government responses around the world promise to make this a historic and definitive turning point.”

While the IEA previously said it expects near-plateauing oil demand starting in the mid-2030s, a report from the agency Thursday marks the first time it has set out a possible timeline for declining or plateauing demand across all fossil fuels.

Other groups, including the Organization of the Petroleum Exporting Countries, have set the timeline much further out. OPEC has said that demand for oil should peak in wealthier nations starting in the mid-2020s, but that demand in poorer countries will continue to grow at least until 2045.

The IEA is among a handful of groups that provide long-term, energy-trend forecasts. It has attracted criticism recently from the oil-and-gas industry and from fossil-fuel producers including OPEC of what they have described as the IEA’s unrealistic call to cut investment in oil-and-gas development to meet governments’ net-zero emissions targets.

The IEA timeline isn’t meant to measure global progress on greenhouse-gas emissions, which scientists blame for global warming. The IEA says global emissions are set to rise to an extent that most scientists agree could heat the Earth to levels that threaten severe impacts. Countries are set to gather next month for another round of United Nations-backed talks on cutting emissions to levels scientists believe will help avoid those severe impacts.

The IEA’s scenario doesn’t forecast a rapid deterioration in the world’s thirst for oil, gas and coal. Instead, it provides a timeline for a near-term peak in demand. As a share of global energy supplies, fossil fuels have held steady at 80% for decades. The IEA said the shift presaged by the current energy crisis will reduce that to below 75% by 2030 and to 60% by 2050.

The IEA’s timetable is partly in response to soaring fossil-fuel prices and the sudden loss of Russian energy supplies, triggered by the war, the agency said in its annual World Energy Outlook, released early Thursday. Governments have rushed to secure alternative energy supplies. At the same time, they have accelerated pledges to boost renewable energy, with commitments totaling $2 trillion by 2030, 50% more than current levels, the agency said.

The IEA’s scenario for the near-term peak demand for fossil fuels is based on governments following through with those commitments—representing a big variable. The agency cited the U.S. package of climate, healthcare and tax legislation, which commits billions of dollars to renewable-energy technology, and various measures enacted by the European Union to shift toward cleaner energy. The IEA also cited plans unveiled by Japan and South Korea to add more nuclear and renewable power to their energy mixes.

The IEA has also figured into its scenario ambitious clean-energy targets in China and India.

Despite the IEA timeline, many energy economists warn that nations’ plans for reducing fossil-fuel use and increasing clean-energy sources are facing big hurdles on the ground, especially during the current period of turbulent markets and power shortages.

Coal consumption has risen in Europe as the war in Ukraine and subsequent restrictions in natural-gas supply push countries from Germany to Italy to keep coal-fired power plants online longer than planned, increase generation or bring the plants back from retirement. European governments are scrambling to find alternative gas supplies—studying measures that include long-term contracts and expensive import facilities that environmentalists say could prolong the use of the fuel.

The uncertain global energy markets and power shortages during the past year have prompted China, the world’s biggest greenhouse-gas emitter, to consider approving the construction of many more power plants that run off domestic coal, an energy source considered relatively secure.

Meanwhile, the rollout of renewable energy such as wind and solar has been stalled in countries including the U.S. and India by factors ranging from policy and trade barriers to shipping bottlenecks and slow permitting.

The IEA said that Russia’s falling output is a significant factor in the agency’s timeline and that the reduction is likely to be permanent. Europe’s pivot to renewables will make it an unlikely future market for Russian energy. While Russia has sought to redirect its gas-and-oil supplies to Asian economies such as China and India, it faces challenges there too. The EU aims to levy new sanctions on shipping Russian crude worldwide. Meanwhile, a lack of gas pipelines in Russia’s eastern regions will make sending its gas supplies to China difficult, the IEA said.

At the same time, several Western governments have laid out plans to accelerate the rollout of renewable energy. In the U.S., the Biden administration’s package of climate, healthcare and tax legislation, known as the Inflation Reduction Act, has allocated roughly $369 billion for climate and energy programs, including help for consumers in buying electric vehicles and investments in renewable and nuclear energy.

The EU has outlined plans to spend the equivalent of $317 billion in the next five years on overhauling its energy supplies and ending its dependence on Russian energy, while other major economies including India, Japan and South Korea have outlined similar proposals.

China, meanwhile, is hitting records in wind and solar installation.

“There are now really ambitious targets to ramp up renewables,” said Jasbir Basi, senior energy associate at the London-based consulting firm Global Counsel. “The crisis has been an amplifier and a wake-up call for the energy transition. It has the potential to be a real catalyst.”

—Phred Dvorak contributed to this article.

Write to Will Horner at [email protected]

Based on such a scenario, the IEA said additional coal demand prompted by the energy crisis would be temporary, while natural-gas demand would plateau by the end of this decade. As a result of the increased use of electric vehicles, the IEA said, oil demand would peak sometime in the middle of the next decade, plateauing until about 2050, and then falling.

“Energy markets and policies have changed as a result of Russia’s invasion of Ukraine, not just for the time being, but for decades to come,” said

Fatih Birol,

executive director of the IEA, which is funded by oil-consuming nations including the U.S. “The energy world is shifting dramatically before our eyes. Government responses around the world promise to make this a historic and definitive turning point.”

While the IEA previously said it expects near-plateauing oil demand starting in the mid-2030s, a report from the agency Thursday marks the first time it has set out a possible timeline for declining or plateauing demand across all fossil fuels.

Other groups, including the Organization of the Petroleum Exporting Countries, have set the timeline much further out. OPEC has said that demand for oil should peak in wealthier nations starting in the mid-2020s, but that demand in poorer countries will continue to grow at least until 2045.

The IEA is among a handful of groups that provide long-term, energy-trend forecasts. It has attracted criticism recently from the oil-and-gas industry and from fossil-fuel producers including OPEC of what they have described as the IEA’s unrealistic call to cut investment in oil-and-gas development to meet governments’ net-zero emissions targets.

The IEA timeline isn’t meant to measure global progress on greenhouse-gas emissions, which scientists blame for global warming. The IEA says global emissions are set to rise to an extent that most scientists agree could heat the Earth to levels that threaten severe impacts. Countries are set to gather next month for another round of United Nations-backed talks on cutting emissions to levels scientists believe will help avoid those severe impacts.

The IEA’s scenario doesn’t forecast a rapid deterioration in the world’s thirst for oil, gas and coal. Instead, it provides a timeline for a near-term peak in demand. As a share of global energy supplies, fossil fuels have held steady at 80% for decades. The IEA said the shift presaged by the current energy crisis will reduce that to below 75% by 2030 and to 60% by 2050.

The IEA’s timetable is partly in response to soaring fossil-fuel prices and the sudden loss of Russian energy supplies, triggered by the war, the agency said in its annual World Energy Outlook, released early Thursday. Governments have rushed to secure alternative energy supplies. At the same time, they have accelerated pledges to boost renewable energy, with commitments totaling $2 trillion by 2030, 50% more than current levels, the agency said.

The IEA’s scenario for the near-term peak demand for fossil fuels is based on governments following through with those commitments—representing a big variable. The agency cited the U.S. package of climate, healthcare and tax legislation, which commits billions of dollars to renewable-energy technology, and various measures enacted by the European Union to shift toward cleaner energy. The IEA also cited plans unveiled by Japan and South Korea to add more nuclear and renewable power to their energy mixes.

The IEA has also figured into its scenario ambitious clean-energy targets in China and India.

Despite the IEA timeline, many energy economists warn that nations’ plans for reducing fossil-fuel use and increasing clean-energy sources are facing big hurdles on the ground, especially during the current period of turbulent markets and power shortages.

Coal consumption has risen in Europe as the war in Ukraine and subsequent restrictions in natural-gas supply push countries from Germany to Italy to keep coal-fired power plants online longer than planned, increase generation or bring the plants back from retirement. European governments are scrambling to find alternative gas supplies—studying measures that include long-term contracts and expensive import facilities that environmentalists say could prolong the use of the fuel.

The uncertain global energy markets and power shortages during the past year have prompted China, the world’s biggest greenhouse-gas emitter, to consider approving the construction of many more power plants that run off domestic coal, an energy source considered relatively secure.

Meanwhile, the rollout of renewable energy such as wind and solar has been stalled in countries including the U.S. and India by factors ranging from policy and trade barriers to shipping bottlenecks and slow permitting.

The IEA said that Russia’s falling output is a significant factor in the agency’s timeline and that the reduction is likely to be permanent. Europe’s pivot to renewables will make it an unlikely future market for Russian energy. While Russia has sought to redirect its gas-and-oil supplies to Asian economies such as China and India, it faces challenges there too. The EU aims to levy new sanctions on shipping Russian crude worldwide. Meanwhile, a lack of gas pipelines in Russia’s eastern regions will make sending its gas supplies to China difficult, the IEA said.

At the same time, several Western governments have laid out plans to accelerate the rollout of renewable energy. In the U.S., the Biden administration’s package of climate, healthcare and tax legislation, known as the Inflation Reduction Act, has allocated roughly $369 billion for climate and energy programs, including help for consumers in buying electric vehicles and investments in renewable and nuclear energy.

The EU has outlined plans to spend the equivalent of $317 billion in the next five years on overhauling its energy supplies and ending its dependence on Russian energy, while other major economies including India, Japan and South Korea have outlined similar proposals.

China, meanwhile, is hitting records in wind and solar installation.

“There are now really ambitious targets to ramp up renewables,” said Jasbir Basi, senior energy associate at the London-based consulting firm Global Counsel. “The crisis has been an amplifier and a wake-up call for the energy transition. It has the potential to be a real catalyst.”

—Phred Dvorak contributed to this article.

Write to Will Horner at [email protected]