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Demand for Fossil Fuels to Peak This Decade, Says IEA

The world’s demand for oil, natural gas, and coal is forecast for the first time to peak this decade. And that is a perfect thing for the battle against climate change, according to the head of the International Energy Agency.

This year’s annual World Energy Outlook, due next month, will show that the world is “on the cusp of a historic turning point,” IEA Executive Director Fatih Birol wrote in the Financial Times on Tuesday. “The world is poised to turn away from fossil fuels toward cleaner and more efficient energy,” he said. “We are seeing a rapid uptake of electric vehicles, renewables, nuclear power, efficiency improvements, and carbon pricing. The result is that global energy-related emissions will reach their peak in the next few years.”

Historically, IEA projections have tended to be more bullish than other respected studies. But the new IEA report aligns with a growing consensus that the shift to clean energy will be much faster than expected. That shift will be good for the planet but likely have unforeseen side effects that could make achieving climate targets more difficult.

The IEA report’s scenario expects that demand for every fossil fuel will peak this decade. That is a significant shift, as it is the first time the agency has projected a peak for oil, coal, or natural gas under its “Stated Policies Scenario.” The IEA also says that if all nations fulfill their commitments in the Paris Agreement to limit warming to 1.5 degrees Celsius, they will have reached their peak in energy-related emissions in 2021.

While some analysts will say that the IEA is biased toward the need to push renewables, other experts agree with the agency’s conclusion. The Harvard Kennedy School’s Jassim M. Jaidah Family Director of the Environmental and Natural Resource Program and a senior lecturer in public policy says that he isn’t surprised by the peak in oil demand predicted in this year’s IEA report because the rise of EVs, clean energy, biofuels, and improved fuel economy will put pressure on petroleum use.

Birol said that a looming oil demand peak is good news for the planet because it will bring the peak in greenhouse gas emissions. This will give the world more time to make the necessary investments to prevent dangerous levels of warming.

However, the upcoming peak in demand for fossil fuels won’t remove the need to invest in developing more renewables and efficiency technologies. He argues that considerable new fossil fuel projects risk becoming so-called stranded assets.

The IEA’s report will be released at a live-streamed press conference on February 11. It is vital to the IEA’s annual effort to provide objective data and dispassionate analysis of the world’s energy supply and demand situation.

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