A dispute with the U.S. government is prompting a potential overhaul of forecasting methods at the International Energy Agency (IEA), as revealed in the organization’s latest outlook. New analysis suggests global demand for oil and gas will likely persist for decades, driven by growing energy needs despite the expansion of renewable sources. The shift comes after the U.S. Energy Secretary threatened too withdraw funding unless the IEA revised its projections,signaling a important divergence in perspectives on the pace of the energy transition. This report details those revised forecasts and their implications for global emissions targets.
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Global demand for oil and gas is expected to continue growing for decades, with forecasts pointing to a more moderate pace of energy transition.
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The U.S. has criticized forecasts from the International Energy Agency (IEA) regarding a rapid move away from fossil fuels.
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Coal consumption is projected to peak this decade, but emissions are expected to remain high through 2050.
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The aforementioned IEA forecasts recently faced sharp criticism from the U.S. administration.
U.S. Critical of IEA Forecasts
“We’re going to do one of two things: reform the way the IEA operates or we’re going to get out,” U.S. Energy Secretary Chris Wright stated earlier this year, threatening the U.S.’s potential withdrawal from the energy agency. This stance appears to have prompted the IEA to revise its projections. Optimism surrounding a rapid energy transition has diminished, giving way to more moderate scenarios that anticipate oil and gas remaining fundamental energy sources worldwide for decades to come. This doesn’t suggest developed economies will abandon renewable energy sources – quite the contrary – solar and wind power will continue to expand globally, including in China, but growing energy demands, driven by electrification of transportation and advancements in artificial intelligence, will likely extend the lifespan of traditional power plants.
The International Energy Agency (IEA) has reverted to analyzing a slower trajectory for global energy transition. For the first time since 2019, the World Energy Outlook report includes a Current Policies Scenario (CPS), which assumes existing regulations are simply extended, and the pace of development and implementation of low-emission technologies remains moderate, according to the Polish Economic Institute. The Stated Policies Scenario (STEPS), based on more optimistic decarbonization strategies, also remains a factor. However, even this scenario proves unreliable and prone to forecasting errors.
Oil and Gas to Continue Fueling Global Economy
The Polish Economic Institute estimates that global gas consumption could increase by 32% by 2050, according to the IEA’s Current Policies Scenario. Furthermore, global coal consumption is expected to peak this decade, even under a conservative trajectory. The share of electric vehicles in global sales is not projected to exceed 40% by 2050, suggesting that forecasts of a significant decline in oil extraction can be put on hold.
Global oil demand is projected to rise from current levels of 100 million barrels per day (2024) to 113 million barrels per day in 2050. Demand from the energy and heating sectors is expected to decline, but will increase in industry and air transport.
Annual cold gas consumption is expected to increase by approximately 32% by 2050. In the U.S., this will be driven by the development of large-scale data centers, while in Asia, it will be fueled by industrial and economic growth, as well as the partial replacement of coal, according to the Polish Economic Institute.
Coal Consumption to Peak This Decade
Global coal consumption is expected to peak this decade, with a subsequent decline being slow, falling to approximately 5.6 billion tons in 2035 and still over 4.7 billion tons in 2050. “The gradual decarbonization of power generation in China and developed countries is partially offset by growth in India and other Asian countries,” the Polish Economic Institute analyzes.
Notably, both the Current Policies Scenario and the Stated Policies Scenario diverge from the widely discussed goal of achieving net-zero emissions by 2050.
The Polish Economic Institute points out that forecasts regarding the electrification of transport can be inaccurate. Surprising increases in electric vehicle sales in Asia and South America serve as examples.
