IEA: 'Age electricity' will follow the looming peak of fossil fuels
International Energy Agency (IEA) said that the world is at the cusp of a new era of electricity, with the demand for fossil fuels set to peak before the end of this decade. This could lead to an increase in investment in green energy due the surplus of oil and gas, it added.
It also highlighted a high degree of uncertainty, as conflict engulfs the Middle East and Russia that produce oil and gas and when countries representing half of the global energy demand hold elections in 2024.
In a press release accompanying its annual report, IEA Director Fatih Birol stated that "in the second half this decade, we could see more abundant - or even excess - supplies in oil and gas depending on the evolution of geopolitical tensions."
Birol stated that the surplus fossil fuel supply would lead to lower prices, and countries could devote more resources to clean energies. This would bring about a "age of electric power" for the world.
There is also a possibility that oil supplies could be reduced in the short term if the Middle East conflict disrupts oil flow.
According to the IEA, such conflicts highlight the strains on the energy system. They also emphasize the need to invest in "cleaner and safer technologies" to accelerate the transition.
The IEA reported that a record amount of clean energy was generated globally in the past year. This included more than 560 gigawatts of renewable power. In 2024, around $2 trillion will be invested in clean power. This is almost twice as much as was invested in fossil fuels.
According to the scenario, which is based on government policies currently in place, global oil consumption peaks at less than 102 millions barrels/day before 2030, and then drops back down to 99 mb/d levels by 2035. This is largely due lower demand for transport as electric vehicles use increases.
The report also discusses the impact of stricter environmental policies being implemented worldwide to combat climate changes on future oil prices.
According to the IEA, if current policies continue, oil prices will drop from $82 per barrel in 2023 to $75 in 2050.
If the government's actions are in line with its goal to reduce energy sector emissions to zero by 2050, that would be $25 per barrel.
The report predicted that the demand for LNG would increase by 145 billion cubic meters (bcm) from 2023 to 2030. However, the increase in exports capacity was expected to be around 270 bcm during the same time period.
The report stated that "the overhang of LNG capacity is likely to create a highly competitive market, at least until it is cleared. Prices in the key importing regions will average $6.5-8 per million British Thermal Units (mmBtu), by 2035."
Asian LNG prices are around $13 per mmBtu, which is considered an international benchmark.
(source: Reuters)
