The world is at the outset of the conclusion of the fossil fuel era. For the first time, the International Energy Agency (IEA) has predicted that the demand for oil, natural gas, and coal will all reach their peak before the year 2030. The IEA forecasts that the consumption of these three major fossil fuels will start to decline in this decade due to the rapid expansion of renewable energy and the proliferation of electric vehicles.
Fatih Birol, the head of the IEA, described these projections as the “beginning of the end of the fossil fuel era” and emphasized the effectiveness of climate policies. He also called for more decisive action from policymakers to accelerate the energy transition and reduce emissions, despite political hurdles to decarbonization.
Governments around the world have increased investments in renewables in response to climate change and energy crises, such as Russia’s invasion of Ukraine. However, these efforts have faced criticism over their costs during a period of rising living expenses.
The IEA initially suggested that fossil fuel demand might peak around 2030 last year, but they have now advanced their projections due to the accelerated adoption of renewable technologies in the past year. Birol also emphasized the need for policymakers to be adaptable and argued that stronger climate policies could hasten the energy transition, despite concerns in Western capitals about public acceptance of rapid change.
While the US and EU have launched ambitious programmes to support renewable energy growth, they have faced criticism from political opponents over associated costs. Some European leaders have warned that climate policies could drive voters towards populist parties.
The head of IEA cautioned that major new fossil fuel projects could become stranded assets, although he acknowledged the necessity of some investment in oil and gas supplies to compensate for declines in existing fields. In the beginning of the year, the IEA faced criticism from major fossil fuel producers who caution against underinvestment in oil and gas supplies, warning of future energy crises if consumption peak forecasts prove overly optimistic. OPEC, the oil producers’ cartel, accused the IEA of contributing to market volatility by advocating against investing in new oil developments.
IEA contended that oil and gas companies might be underestimating public opinion and market dynamics if they expect continued growth in oil and gas demand throughout this decade. New large-scale fossil fuel projects entail substantial climate and financial risks.
IEA urged policymakers not to become complacent, emphasizing the need for emissions to rapidly decline after a mid-2020s peak to have any chance of limiting global warming to 1.5°C, as 2023 summer was the hottest recorded in history.