Investments in new fossil fuel projects have surpassed global demand.
Fossil fuels could soon become noticeably cheaper and more abundant as the countries speed up the transition to renewable energy towards the end of the decade, as per the International Energy Agency.
The world’s energy watchdog has announced the beginning of a new age in energy, one in which countries have access to more coal, oil, and gas than they require to support their economies. It will result in more affordable costs for households and companies.
According to the annual outlook study published by the Paris-based agency, energy consumers should allow themselves more space from the recent increase in global oil and gas prices brought on by geopolitical disruptions because investments in new fossil fuel projects have surpassed global demand.
Fatih Birol, the executive director of IEA, stated that the report confirms the prediction that global fossil fuel consumption will peak before 2030 and decline as climate policies come into force. However, the IEA also noted that continuing investment in fossil fuel projects will result in declining market prices for petrol and oil.
The price of oil fell below $74 as there were continuous concerns about the weak Chinese market.
According to the IEA, the conflict in the Middle East poses a risk to the ability to produce oil and gas shortly, which disrupts crude and gas exports. However, in the long run, it indicates the underlying market balances ease and expected price declines.
According to the central prediction made by the IEA, global oil prices could plateau around $75 to $80 per barrel by the end of the decade, compared to an average price of over $100 per barrel in 2022 after Russia invades Ukraine.
The IEA predicts that the price of gas imported into the EU will fall from a historic average high of over $70 (£54) per million British thermal units (MBtu) in 2022 to $6.50 (£5) by the end of the decade, after an increase in planned gas projects in recent years.
Following Russia’s invasion of Ukraine, which significantly reduced Russian gas pipeline imports into Europe, investment in LNG exports via ships surged. According to IEA projections, global LNG capacity will increase by about 50 percent by 2030, surpassing global demand in all three of the agency’s modeled scenarios.
The IEA stated that the world’s rising crude oil production from new oil projects in the US, Canada, and South America would outpace the global oil demand growth due to China, the world’s largest oil importer, surprising major oil producers by quickly switching to electric vehicles.
According to the IEA, China, which has driven the expansion of the oil market in recent decades, is now shifting its focus to electricity.
According to the IEA’s forecast, the percentage of new car sales from electric vehicles is currently 20 worldwide. China has already reached this level this year. By 2030, this percentage could grow to 50%. The IEA estimates that this would reduce global oil demand by roughly 6 million barrels per day.
According to Birol, energy consumers will live in a more comfortable financial environment moving forward, but he also cautioned that to compete with less expensive fossil fuels, the price of environmentally friendly options like heat pumps and electric cars will need to drop.
According to IEA predictions, the global demand for clean electricity will continue to grow in the coming years, contributing annually to global electricity consumption, which is equal to Japan’s power demand under current policy scenarios. According to the IEA, if governments set additional regulations that align with the objective of the world to reach net zero emissions, this demand would increase even faster.