As concerns over climate change have grown over the past few decades, however, opinions around fossil fuel extraction have shifted enormously. With coal, oil and gas by far the largest contributors to global climate change, and a host of alternative renewable energy sources waiting at our fingertips, a reduction and phase-out of fossil fuels is seen as an urgent and necessary step.
As the world has begun to make efforts to move away from fossil fuels, a new concept of peak fossil fuels has emerged: that we will hopefully start cutting our need for them far before we use up all that is possible to extract from the Earth’s crust. This is the point the IEA now thinks the world will reach at the end of the 2020s.
A surprise result
The IEA’s new projections come from its latest medium-term oil report and are broadly aligned with its “stated policies scenario” (Steps) – a relatively conservative global scenario, which is based on what has already been put in place to achieve climate and other energy goals, rather than assuming all stated goals will be met.
“This is a view of what we think is going to happen based on things that people have said they’re going to do or that we’re confident are going to happen,” says Healy. […]. “We’re doing our best job of trying to say what we think is the likely way things will play out.” For oil demand to decline sooner, additional policy measures and behavioural changes would be needed, the IEA notes.
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Even tracking the current use of oil is a big job. “There’s a big team of statisticians here that do nothing else, essentially,” says Healy.
The five-year projection goes up to 2028 – when the IEA thinks the world will be just on the brink of reaching peak oil demand.
The report marks the first time the IEA has found global oil demand will peak in such a short timeframe. “When we ran the model, and there was a peak in it, it was a bit of a surprise,” says Healy. “It was clearly a very interesting result.”
The key to peaking oil use
To understand what the IEA thinks is now happening with peak oil demand, it’s worth considering that the transport sector is by far the biggest consumer of oil: it accounts for around 60% of the 100 million barrels of oil used globally every day. “There’s nothing else that takes up as much oil as transport,” says Halttunen.
Of that, around 45% of the total, or around 45 million barrels a day, is used in road fuel for vehicles like cars, trucks and vans, says Healy. It’s here where sweeping changes are already beginning to curb oil demand.
Two big factors are driving this: the advent of alternative vehicle fuels – especially electric vehicles – and increased vehicle efficiency.
Electric vehicles have been a huge success story, says Healy, and are already having an impact on gasoline demand – especially in China, Europe and North America. Globally, 14% of all new cars sold in 2022 were electric, up from 9% in 2021 and less than 5% in 2020.
“We expect that to continue to have a really big impact, as more and more electric vehicles are sold and displace the use of internal combustion engines in the fleet,” says Healy.
