According to the IEA’s latest World Energy Outlook 2017, it’s far too early “to write the obituary of oil.” In its report presented in London on Tuesday, the agency says global demand for crude continues to grow in the next two and a half decades, although at a steadily increasing pace.
It argues that fuel efficiency and rising electrification will bring a peak in oil used for passenger vehicles, even with a doubling of the car fleet to 2 billion vehicles by 2040.
But other sectors including petrochemicals, trucks, aviation and shipping “will drive up oil demand to 105 million barrels a day by 2040.”
The IEA states that the shale oil revolution in the US continues thanks to the “remarkable ability of producers to unlock new resources in a cost-effective way.” By the mid-2020s, the United States is projected to become a net oil exporter.”
“This is having a major impact on oil markets, challenging incumbent suppliers and provoking a major reorientation of global trade flows.”
Coal on its way out
Having said that, the IEA points out that over the next 25 years, the world’s growing energy needs will be met first by renewables and natural gas “as fast-declining costs turn solar power into the cheapest source of new energy electricity generation.”
Global demand is forecast to be 30 percent higher by 2040, but still half as much as it would be without efficiency improvements.
The agency is very clear about the future of coal. It says the boom years for coal are over, “particularly in the absence of large-scale carbon capture, utilization and storage (CCUS)” facilities.