Explosive renewable energy growth means the fossil fuel era is over in the global electricity sector, but the Organization of Petroleum Exporting Countries (OPEC) still projects that overall fuel demand will rise by 2.2% in 2024, with oil consumption climbing by 2.25 million barrels per day.
OPEC foresees Asia, especially India and China, driving the expansion in fuel use, reports Reuters, citing the global cartel’s latest monthly report. But OPEC’s demand growth forecast for 2024 is double that of another closely-watched forecaster, the International Energy Agency (IEA).
OPEC’s projections show that overall demand for demand will be heightened by deep production cuts from its member states and their wider alliances, which will help add stability to the market, and “based on which the solid oil market fundamentals seen this year are expected to extend into 2024.”
In a separate, longer-term view, OPEC projects that oil demand will rise to 110 million barrels per day by 2045.
The IEA sees demand increasing, as well, but at only half the rate that OPEC anticipates. The Paris-based agency has repeatedly clashed with OPEC in recent years, writes Reuters, with OPEC criticizing the IEA “for what it sees as irresponsible predictions and subsequent data revisions.”
The IEA says China may drive global demand, but oil demand in Europe and other industrialized regions “is languishing amid a grinding slowdown in industrial activity,” while high retail fuel prices bring down demand in African countries. The agency still expects global oil demand to rise by 1.6 million barrels per day between the second and third quarters of this year, to average 102.1 million barrels per day for the year.
Unlike the OPEC analysis, the IEA’s longer-term projections show demand for oil-based fuels rising until 2028, then losing ground to lower-emissions sources. It also has higher expectations than OPEC that renewable technologies and electric vehicles will undermine fossil fuel demand—as RMI predicts for the electricity sector.
“The forecasts see solar and wind supplying over a third of all power by 2030 (up from around 12% currently), while the major cost declines over the past 10 years are expected to continue with solar and wind roughly halving in price again by 2030,” says RMI in a report prepared in partnership with the Bezos Earth Fund. The exponential growth of renewables “has put the electricity system at a global tipping point—where the transition away from fossil fuels has become hard to reverse, suggesting fossil fuel demand has peaked in the electricity sector and will be in freefall by the end of the decade.”
The writers add that “the fossil fuel era is over,” with demand in the electricity sector plateauing for a few years before falling between 16% and 30% by 2030.
“Fossil-fuel demand in the electricity system, specifically, has clearly peaked in 2022,” said RMI senior principal Kingsmill Bond. For the years ahead, it’s “very hard, actually, for fossil fuel demand to grow from these levels simply because of the speed at which these alternative technologies grow.”
But RMI also cautions that its report is “a call to action, not a moment to sit back,” noting that effective policy measures are needed to bring about this change.
“The call to triple renewable electricity investment and capacity by 2030 is deliverable,” former UN climate secretary Christiana Figueres said in a statement. “But only by removing barriers to faster renewable deployment, from streamlining permitting to redirecting subsidies for polluting energy.”
Otherwise, “the exponential growth we are seeing and the benefits that come with it could be derailed unnecessarily.”
