The International Energy Agency (IEA) has projected that global demand for oil, coal, and gas will peak by 2030, but that demand for fossil fuels is set to remain “far too high” to keep the Paris Agreement Target of 1.5C within reach.

The IEA now says that the transition to clean energy is happening worldwide and is “unstoppable”, according to its annual World Energy Outlook report, released on Tuesday. It credits the record growth of key clean energy technologies, such as solar PV and electric cars, for this shift.

“It’s not a question of ‘if’, it’s just a matter of ‘how soon’ – and the sooner the better for all of us,” said IEA Executive Director Fatih Birol. “Taking into account the ongoing strains and volatility in traditional energy markets today claims that oil and gas represent safe or secure choices for the world’s energy and climate future look weaker than ever.”

The IEA predicts a surge in renewable technologies will underpin this green transformation of the global economy. By 2030, renewable energies such as solar, wind, and hydropower could provide nearly 50% of the global electricity mix, up from around 30% today. The number of electric cars on roads worldwide is projected to increase 10-fold.

“Peak” does not mean “decline”

For the first time in over 150 years, the global economy is poised to reach peak demand for fossil fuels – but charts in the IEA report show that “peak” does not mean “decline”.

While demand for coal – the dirtiest fossil fuel of which 55% is already sold at below market rates globally – will drop off sharply after 2030, demand for natural gas and oil will remain around 2030 “peak” levels until at least 2050. The IEA projects oil and gas demand will be buoyed by increases in consumption in developing economies which will offset expected decreases in advanced economies. 

The IEA also warns that governments are not doing enough to support the transition to clean energy. It recognized investments in fossil fuels will remain “essential” to keep the global energy mix balanced, but said that investments in fossil fuels are currently too high. Global fossil fuel subsidies surged to a record $7 trillion in 2022. 

“As things stand, demand for fossil fuels is set to remain far too high to keep within reach the Paris Agreement goal of limiting the rise in average global temperatures to 1.5C,” the report said. “This risks not only worsening climate impacts after a year of record-breaking heat, but also undermining the security of the energy system, which was built for a cooler world with less extreme weather events.”

Projections at the mercy of political shifts on green energy

The IEA’s assessment is based on current policies already implemented by governments and could change – for better or for worse – depending on whether governments backtrack or double down on major climate pledges. 

Former US President Donald Trump has already signalled he will try to repeal the Inflation Reduction Act, the largest package of green investment in US history, if re-elected in 2024. UK Prime Minister Rishi Sunak has also made a habit of backtracking on his country’s net-zero pledges, pushing ahead with plans to “max out” the UK’s fossil fuel reserves.

China, the world’s largest consumer of fossil fuels, is also a key factor. The country accounts for half the world’s coal use and has driven two-thirds of the growth in global oil demand over the past decade. China’s commitment to harnessing its green energy dominance to reshape its dependence on fossil fuels is essential to the IEA’s projections.

The fossil fuel industry has different ideas

The IEA assessment is in stark contrast to the views of the fossil fuel industry, which has long insisted that oil and gas will continue to play a major role in the global energy mix. The Organization of the Petroleum Exporting Countries (OPEC), the global oil cartel that supplies 51% of the world’s oil and controls 81% of proven oil reserves, said in its annual report earlier this month that it expects oil demand to increase by 17% by 2045.

The OPEC report called for expectations of what green energy can deliver to be more “pragmatic and realistic”, reflecting language used by the United Arab Emirates presidency ahead of the upcoming Un Climate Conference in Dubai, which will kick off in late November.

OPEC Secretary General and Kuwaiti oil executive Haitham Al Ghais wrote in the foreword of the report: “Calls to stop investments in new oil projects are misguided and could lead to energy and economic chaos.”

The bullish projections of OPEC are shared by American fossil fuel giants ExxonMobil and Chevron, who both announced plans to buy smaller shale producers in the United States a combined total of over $100 billion.

The International Energy Agency (IEA) has a mixed track record in forecasting fossil fuel demand. In 2016, the agency incorrectly predicted that China’s coal demand had peaked, while it had previously underestimated the rapid growth of renewable energy sources such as solar power.