Oil de­mand set to reach a peak by 2030 as elec­tric cars hit the roads

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Over­all de­mand for en­ergy is set to in­crease by 1 per cent per ev­ery year un­til 2040, but de­mand for oil will plateau 10 years ear­lier ow­ing to a pickup in the use of the elec­tric ve­hi­cles across the globe, ac­cord­ing to the In­ter­na­tional En­ergy Agency.

Shale out­put from the US, now the big­gest global oil pro­ducer, is likely to stay higher for longer than pre­vi­ously pro­jected. The coun­try will ac­count for 85 per cent of the in­crease in global oil pro­duc­tion by 2030, and for 30 per cent of the in­crease in gas, the Paris-based or­gan­i­sa­tion said in its lat­est World En­ergy Out­look re­port.

“The shale rev­o­lu­tion high­lights that rapid change in the en­ergy sys­tem is pos­si­ble when an ini­tial push to de­velop new tech­nolo­gies is com­ple­mented by strong mar­ket in­cen­tives and large-scale in­vest­ment,” said the IEA’s ex­ec­u­tive direc­tor, Fatih Birol. “The ef­fects have been strik­ing, with US shale now act­ing as a strong coun­ter­weight to ef­forts to man­age oil mar­kets.”

The re­port by the IEA, a group of 30 mem­ber na­tions of ma­jor en­ergy users, sets out three sce­nar­ios for en­ergy use and car­bon emis­sions. One sce­nario, based on cur­rent en­ergy poli­cies, sug­gests en­ergy de­mand will con­tinue to grow 1.3 per cent per year un­til 2040.

This is a re­duc­tion on the cur­rent 2.3 per cent an­nual growth, but it would re­sult “in a re­lent­less up­ward march in en­ergy-re­lated emis­sions”, as well as put strains on en­ergy se­cu­rity.

The sec­ond “stated Poli­cies” sce­nario, takes cur­rent gov­ern­ment pledges to into ac­count, but would still in­volve en­ergy de­mand growth of 1 per cent a year as ef­forts to cut car­bon emis­sions are out­paced by a grow­ing pop­u­la­tion and an en­larged econ­omy.

Un­der this sce­nario, de­mand for oil will con­tinue to grow at about 1 mil­lion bar­rels per day per year un­til 2025, but will then taper off as its use in pas­sen­ger cars drops with higher use of elec­tric cars. De­mand growth is fore­cast at just 0.1 mil­lion bpd in the late 2020s and early 2030s.

Only un­der the third “sus­tain­able de­vel­op­ment” sce­nario, where all na­tions com­ply with the Paris Agree­ment signed at a UN con­fer­ence in the French cap­i­tal in 2015, would emis­sions ac­tu­ally fall.

How­ever, this would re­quire “rapid and wide­spread changes across all parts of the en­ergy sys­tem”, the IEA’s re­port said. This in­cludes a 50 per cent de­cline in the amount of oil used in ad­vanced economies be­tween 2018 and 2040, and a 10 per cent de­cline in de­vel­op­ing economies’ use.

How­ever, there is “no sin­gle or sim­ple so­lu­tion to trans­form­ing global en­ergy sys­tems”, Mr Birol said. “Many tech­nolo­gies and fu­els have a part to play across all sec­tors of the econ­omy.

“For this to hap­pen, we need strong lead­er­ship from pol­icy mak­ers, as gov­ern­ments hold the clear­est re­spon­si­bil­ity to act and have the great­est scope to shape the fu­ture.”

Last week, Opec pub­lished its own World Oil Out­look, which fore­cast a 7 per cent de­cline in oil pro­duc­tion by its 14 mem­ber states to 32.8 mil­lion bar­rels by 2024, com­pared to 35 mil­lion bpd this year.

It pre­dicted global oil de­mand would in­crease by 12 mil­lion bpd to 110.6 mil­lion bpd by 2040.

We need strong lead­er­ship. Gov­ern­ments hold re­spon­si­bil­ity to act and have the great­est scope to shape the fu­ture FATIH BIROL iEA ex­ec­u­tive direc­tor

AFP

A ser­vice cen­tre for Tesla cars in Am­s­ter­dam. Growth in elec­tric car use is likely to dampen de­mand for oil

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