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Are we nearing the peak for fossil fuel usage?

International Energy Agency sees ‘staggering’ surplus of oil by 2030

Total Energies employees walk in the Donges oil refinery in Donges, western France. The world is facing a glut of oil, the IEA said. Photograph: Loic Venance/AFP via Getty Images

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Thu Jun 13 2024 - 06:00

The world faces a “staggering” surplus of oil equating to eight million barrels a day by decade end, undermining the ability of Opec+ to manage crude prices, International Energy Agency predicts.

The findings in its medium-term outlook tally with its previous reports that fossil fuel demand is peaking and no new oil and gasfields are needed to meet demand and maintain energy security.

With continued investment by oil producers, led by the US, a “massive cushion” of extra oil could “upend” the efforts of Opec+ to manage the market – and usher in an era of lower prices, it said. Slowing demand and rising supply “could have substantial implications” for oil companies, warns the Paris-based body, founded in the aftermath of the 1970s oil crisis.

Security of supply remains a major focus for policymakers as geopolitical tensions escalate and oil markets undergo transformation. With wide-ranging sanctions on Russia and attacks on tankers transiting the critical Red Sea shipping corridor upending trade flows, international oil market activity is also being reshaped by an eastward shift in demand to emerging economies in Asia.

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US environmentalist Bill McKibben, who doubles up as an energy analyst, blogged this week: “We’re engaged in the most desperate race in human history – a race between a rapidly unravelling climate, and a rapid buildout of renewable energy.”

The decisive question is how those two curves, of destruction and construction, will cross with the critical time frame being the next half-decade. He highlighted “legitimately good numbers” showing “the world has moved on to the steep part of the S curve, which will sweep us from minimal reliance on renewable energy to ... minimal dependence on fossil fuel”.

Some analysts suggest peak fossil fuel demand will be this year as cheap solar and wind and batteries, combined with rapidly developing technologies such as heat pumps and EVs, have finally caught up with surging demand for energy.

“The question is whether we’ll plateau out at current levels of fossil fuel use for a decade or more, or whether we can make fossil fuel use decline enough to begin to matter to the atmosphere,” McKibben added.

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