IEA cuts 2050 oil demand projection by 2.4 million b/d

The International Energy Agency on Oct. 24 lowered its 2050 oil demand projection by 2.4 million b/d to 54.8 million b/d along with a 0.5 million b/d reduction for 2030 under its central scenario in the World Energy Outlook.

The annual outlook cited a faster pace of adoption of electric vehicles as the main reason for the change in its Announced Pledges scenario, which assumes fulfilment of current government commitments, but no move to more ambitious climate pledges.

The scenario envisages 2030 oil demand of 92.5 million b/d, down from 93 million b/d in last year's report and actual consumption of 96.5 million b/d in 2022.

Within oil production, OPEC accounts for 45% of 2050 oil supply in the Announced Pledges scenario in the latest report, up from 42% in last year's report.

The report acknowledges Russian production has been "more resilient than initially anticipated" in the face of US and EU-led sanctions. However, under its least ambitious scenario for cutting global emissions, Russia still "struggles to maintain output from existing fields or to develop large new ones," with its output dropping by 3.5 million b/d by 2050, it says.

Recent crises have undercut the idea oil and gas represent a more reliable form of energy than low-carbon sources, IEA Executive Director Fatih Birol said, introducing the report.

"Taking into account the ongoing strains and volatility in traditional energy markets today, claims that oil and gas represent safe or secure choices for the world's energy and climate future look weaker than ever," he said.

The IEA maintained its insistence that demand for gas, oil and coal will peak by 2030, saying road transport would no longer be a source of oil demand growth by the end of the decade. The forecast puts it at odds with a number of other organizations after OPEC's latest long-term scenario document ducked any forecast of peak oil consumption before 2045.

"A legacy of the global energy crisis may be to usher in the beginning of the end of the fossil fuel era: the momentum behind clean energy transitions is now sufficient for global demand for coal, oil and natural gas to all reach a high point before 2030," the IEA said, referring to its least ambitious energy transition scenario, called the Stated Policies Scenario.

Under investment myth

The latest reference case from S&P Global Commodity Insights sees oil demand rising by about 7 million b/d to 109.3 million b/d in 2030, before a gentle decline in the latter half of the 2030s, with oil falling to 100.8 million b/d in 2050.

The IEA dismissed industry fears of under investment in oil and gas resources. "The fears expressed by some large resource holders and certain oil and gas companies that the world is underinvesting in oil and gas supply are no longer based on the latest technology and market trends," it said. "At the same time, they underline the economic and financial risks of major new oil and gas projects, on top of their risks for climate change."