The IEA's case against peak oil demand
- Ben Geman, author of Axios Generate
The International Energy Agency's newly released World Energy Outlook finds that oil demand for passenger vehicles is slated to peak in the mid-2020s due to more efficiency, biofuels, and electric vehicles. That's according to their "new policies" scenario, which models not only existing policies but also countries' announced plans and emissions targets.
But, but, but: That projected mid-2020s peak doesn't mean that overall global demand for crude oil is reaching an inflection point anytime soon. That's because other uses — petrochemicals, heavy freight, shipping and planes — remain robust.
- Add it all up and the report sees global crude oil demand rising slightly to reach 106 million barrels per day in 2040 (it's roughly 100 mbd right now).
Why it matters: The findings underscore that despite heavy and justified attention to electric cars, passenger transport is just one part of the wider equation when it comes to oil.
By the numbers: As the Financial Times flagged here, the report projects that while the numbers of cars in the global fleet would soar 80% by 2040, oil demand for passenger cars, which is over 21 mbd right now, would be around 23 mbd in the late 2020s. But, elsewhere...
- "Oil demand for trucks grows by 4 mb/d over the period to 2040, even though vehicle and logistical efficiencies avoid nearly 5.5 mb/d additional demand growth in 2040. Oil use in petrochemicals sees the largest growth (5 mb/d) of any sector," the IEA states.
Yes, but: The annual report also models a "sustainable development" scenario — a wholly upended global energy system where policy and investment trends are bent to be consistent with the goals of the Paris climate agreement. On the oil side, that means overall demand peaks in almost all nations by 2030. Per an IEA summary...
- "By 2040, cars that rely solely on gasoline and diesel are 40% more efficient than today; there are 930 million electric cars on the road (50% of the global car fleet); a quarter of buses are electric; and nearly 20% of fuels used by trucks are low or zero carbon."
- "There are also major changes in most other sectors and as a result, total oil demand in 2040 in this scenario is 25 mb/d lower than today."
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