Global oil demand set to recover to pre-pandemic levels in 2023: IEA
Report by the international agency says Covid-19 would cut global carbon emissions to a decade low this year
Travel bans and lockdowns aimed at mitigating the spread of Covid-19 have contributed to the sharpest drop in global energy demand, some five per cent, since World War II. But at its current pace, global oil demand is set to recover to pre-pandemic levels in 2023, the International Energy Agency (IEA) said on Tuesday.
In its annual report on the long-term future of the energy industry, the IEA said while the pandemic has set the growth of global energy demand back by two-and-a-half years, peak crude oil demand has already been reached in advanced economies such as the US and the European Union, while developing economies such as China and India will drive growing oil demand in the years ahead.
The IEA report said global oil demand would plateau and flatten out during the 2030s, even if the pandemic stings the global economy for longer than expected. The agency expects the global economy in 2040 to be seven per cent smaller than it did last year.
Emerging market oil demand will rise by nine million barrels a day in the years to 2030, offsetting a drop in the developed world, it said, while observing that the outbreak of the Covid-19 pandemic has injected "huge near-term uncertainty" into forecasting the future of energy.
The IEA's forecast is in line with the recent Organisation of the Petroleum Exporting Countries' long-term outlook stating that the world's thirst for oil is unlikely to peak for two more decades.
The Paris-based IEA, an advisory body for the Organization for Economic Cooperation and Development, said the coronavirus pandemic would cut global carbon emissions to a decade low this year, but rising long-term demand for fossil fuels in developing nations means the world is on course to miss landmark climate targets.
IEA executive director Dr Fatih Birol said the rising number of countries and companies committing to net-zero emissions are a profoundly important development. "The massive sums of money they are committing to spur economic recovery are a historic opportunity to significantly accelerate transitions towards a cleaner and more resilient energy future.
"I see solar becoming the new king of the world's electricity markets," said Birol. "Based on today's policy settings, it is on track to set new records for deployment every year after 2022."
Going forward, renewables will take "starring roles," and solar will take centre stage, driven by supportive government policies and declining costs, the IEA said. "The Covid-19 crisis has caused more disruption than any other event in recent history, leaving scars that will last for years to come. Covid-19 unleashed a crisis of exceptional ferocity on countries around the world . The crisis is still unfolding today - and its consequences for the world's energy future remain highly uncertain," said the report.
The report said among fossil fuels, global demand for coal will not exceed its 2014 peak and by 2040, the dirty fuel will comprise less than a fifth of the global energy mix for the first time since the industrial revolution. Declining coal demand in the west has spurred a wave of bankruptcies among companies that mine the fuel in recent years.
The report noted that in the transport industry, the transition for the shipping industry is expected to be slow, with fossil fuels still accounting for more than 97 per cent of energy demand by 2030. Meanwhile, conventional car sales will peak in the middle of this decade, the IEA said.
Road transport may have accounted for 60 per cent of oil-demand growth in the past decade, but petrochemicals will account for 60 per cent of growth in the next decade.
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