EVs could plateau global oil demand by 2030, forecasts IEA

Global oil demand will hit a plateau around 2030 as the use of more-efficient cars and electric vehicles ends an expansion that dominated the past century, the International Energy Agency predicts.

While the current growth rate of 1 million barrels a day – or about 1 per cent – will hold for the next five years, it will ebb to just 100,000 barrels a day in the 2030s, the agency said. By that time, the use of oil-based fuels in passenger cars will have peaked, the IEA said in its longterm World Energy Outlook.

“Oil demand plateaus post-2030,” said Fatih Birol, executive director of the Parisbased agency, which advises most major economies. “Demand growth is robust to 2025, but growth slows to a crawl thereafter.”

The prospect of “peak demand” has spread in the oil industry in recent years as countries seek to avert catastrophic climate change by diversifying from fossil fuels, and as renewable-energy sources get cheaper. While the IEA sees “no definitive peak,”the stagnation it envisages will have far-reaching consequences.

The warning comes at a particularly delicate moment for Saudi Arabia, the world’s biggest oil exporter, which is selling a stake in its state-run oil company as part of its preparations for a lower-carbon world. The kingdom acknowledged the risk of peak demand in the prospectus for the initial public offering.

PRICE GAINS

The report does offer oil producers some solace. Even as demand growth slows, depleting oil reserves will still need to be replaced. The necessity to find new supplies should cause prices to rise from current levels of about $60 a barrel to reach $90 in 2030 and $103 a barrel in 2040. Global oil demand averaged 96.9 million barrels a day last year and will climb to 105.4 million a day in 2030, the IEA projected. After that, the growth rate of 100,000 barrels a day is about half the level the agency predicted in last year’s report, and is concentrated mostly in the aviation, shipping and plastics sectors. Demand will reach 106.4 million barrels a day in 2040.

The use of more fuel-efficient car engines will knock out 9 million bpd of demand, while the growth of electric cars will displace about 4 million a day.