IEA’s World Energy Outlook 2023 Predicts Peak Fossil Fuel Demand

The International Energy Agency (IEA) just released its World Energy Outlook 2023 report. The full report may be found here.

Perhaps the most noteworthy prediction from the report is of peak demand for fossil fuels within this decade. However, it is important to note that coal is the only fossil fuel projected to decline over the next decade under the IEA’s Stated Policies Scenario. Global coal consumption is projected to decline by 13.5% by 2030, but natural gas and oil consumption are both projected to rise.

The EIA’s projections are based on a prediction of major growth in renewables and electric vehicles by 2030 under current government policies. Even though global energy demand is set to grow by 7% to 2030 under the Stated Policies Scenario, demand will shift towards renewables and nuclear. However, fossil fuels will still account for over 70% of supply (down from ~82% in 2022).

Renewables like solar and wind will continue to expand rapidly, becoming the number one source of new power generation by 2025. But growth still falls short of achieving net zero emissions by 2050.

Electricity emerges as the “fuel” of the future, with its share of final consumption rising from 20% in 2020 to 28% in 2030. Transportation electrification also progresses quickly.

Oil demand flattens out in the 2030s but still remains around 100 million barrels/day through 2050 without major policy changes. Natural gas demand grows 40% by 2050, while coal use declines.

Under the more ambitious Net Zero Emissions scenario, renewables soar to over 60% of generation by 2050. Under this scenario, no new oil and gas fields are required beyond those already approved.

But the Net Zero path requires unprecedented clean energy deployment, rapid infrastructure overhaul, massive emissions cuts, and substantial behavioral changes worldwide.

The report concludes that stronger policies are urgently needed to reach net zero, curb emissions in the short term, ensure secure energy supplies, and provide electricity access for all. Timely action this decade is crucial to achieve climate and development goals.

In summary, the outlook forecasts growing energy demand with renewables expanding but still heavily relying on fossil fuels absent further policy action. A net zero path is possible but requires an unprecedented transition across the energy system.

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