Projections of peak oil, gas, and coal demand before 2030 deemed ‘extremely risky and impractical’
OPEC, a permanent intergovernmental organisation of 13 oil-exporting developing nations that coordinates and unifies the petroleum policies of its members, is convinced that the recent assertions about the fossil fuels – coal, oil, and gas – demand peaking before 2030 are not supported by “consistent and data-based forecasts.”
Recently, Fatih Birol, Executive Director at the International Energy Agency (IEA), outlined in an article for Financial Times that the world was on the brink of “a historic turning point,” with the demand for fossil fuels set to peak before 2030, although, the decline in oil, gas and coal would not be “steep enough” to meet the requirements of the Paris Agreement and limit global warming to 1.5 C.
“Despite recurring talk of peak oil and peak coal over the years, both fuels are hitting all-time highs, making it easier to push back against any assertions that they could soon be on the wane. But according to new projections from the International Energy Agency, this age of seemingly relentless growth is set to come to an end this decade, bringing with it significant implications for the global energy sector and the fight against climate change,” explained Birol in its article.
According to the IEA’s Executive Director, this year’s World Energy Outlook, which is slated to be published next month, points out that the demand for each of these fossil fuels is on the road to hitting a peak this decade. As this comes earlier than anticipated, Birol elaborates that these shifts will also bring forward the peak in global greenhouse gas emissions, driven by the ramp-up of clean energy technologies.
“The ‘Golden Age of Gas,’ which we called in 2011, is nearing an end, with demand in advanced economies set to fall away later this decade. This is the result of renewables increasingly outmatching gas for producing electricity, the rise of heat pumps and Europe’s accelerated shift away from gas following Russia’s invasion of Ukraine,” highlighted Birol.
While the IEA’s Executive Director describes peaks for coal, oil and gas demand as “a welcome sight,” he also warns that the projected declines in demand based on current policy settings are “nowhere near steep enough” to bring to life the Paris Agreement goals. In addition, demand for coal, oil, and gas will vary considerably among regions and spikes, dips and plateaus are still possible on the way down.
“Even as demand for fossil fuels falls, energy security challenges will remain as suppliers adjust to the changes. The peaks in demand we see based on today’s policy settings don’t remove the need for investment in oil and gas supply, as the natural declines from existing fields can be very steep. At the same time, they undercut the calls from some quarters to increase spending and underline the economic and financial risks of major new oil and gas projects — on top of their glaring risks for the climate,” underlined Birol.
In response to the IEA’s assertions on peak fossil fuels demand, OPEC claims that this type of thinking is ideologically driven, rather than fact-based, as it does not take into account the technological progress the industry continues to make to help reduce emissions. Additionally, the organisation is adamant that such assertions do not acknowledge the large slice of the global energy mix that fossil fuels continue to hold, as they make up over 80 per cent of this mix, the same as 30 years ago.
Haitham Al Ghais, OPEC Secretary General, commented: “Such narratives only set the global energy system up to fail spectacularly. It would lead to energy chaos on a potentially unprecedented scale, with dire consequences for economies and billions of people across the world.”
As OPEC believes that the energy security coal, oil, and gas provide is “vital,” it perceived the attempts to dismiss fossil fuels or suggest they are at the beginning of their end as “an extremely risky and impractical narrative.” The organisation justifies its views by elaborating that there were often calls for peak supply over the past decades, and in more recent ones, peak demand, however, neither has materialised so far.
Regarding the energy transition requirements, Al Ghais recently emphasised: “A challenge of this scope and scale means there is no ‘one-size-fits-all’ pathway to achieve our reduced emissions future. It requires an ‘all-peoples, all-fuels and all-technologies’ approach.”
The only difference that OPEC sees in the more recent assertions about peak fossil fuels demand is that they are often accompanied by calls to stop investing in new oil and gas projects, which the organisation sees as a “dangerous” endeavour. OPEC says that technological innovation is its key focus area, which is why its members are investing in hydrogen projects, carbon capture utilisation and storage (CCUS) facilities, the circular carbon economy, and renewables.
With this at the forefront, the organisation of 13 oil-exporting countries said: “While some may suggest that a number of these oil-focused technologies are still immature, they ignore the fact that many technologies referenced in net-zero scenarios are at an immature, experimental or even theoretical stage. In recent years, we have seen energy issues climb back to the top of the agenda for populations as many glimpse how experimental net-zero policies and targets impact their lives. They have legitimate concerns. How much will they cost in their current form?
“What benefits will they bring? Will they work as hyped? Are there other options to help reduce emissions? And what will happen if these forecasts, policies and targets do not materialise? Thankfully, there has been a reawakening across many societies of the need for energy security and economic development to go hand-in-hand with reducing emissions. In turn, this has led to a reevaluation by some policymakers on their approach to energy transition pathways.”
OPEC plans to continue cooperating with all relevant stakeholders to foster dialogue in the interests of contributing to future overall global energy stability and ensuring inclusive and effective energy transitions moving forward.
“Cognisant of the challenge facing the world to eliminate energy poverty, meet rising energy demand and ensure affordable energy while reducing emissions, OPEC does not dismiss any energy sources or technologies and believes that all stakeholders should do the same and recognise short- and long-term energy realities,” underscored Al Ghais.