Miningweb: Javier Blas: The fantasy of peak fossil-fuel demand is meeting reality

Key topicsIEA report predicts fossil fuel demand may rise, not peak soon.Oil, gas, and coal use likely to grow under current policies to 2050.Energy transition lagging; renewables supplement rather than replace fuels..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Javier Blas.For the last few years, climate and energy policymakers have convinced themselves the world was inexorably moving away from fossil fuels. Breaking news: It is not.The consensus was that consumption of oil, natural gas and coal would peak before the end of this decade. There was debate about the speed of the subsequent decline, but the conclusion was the same: The end of the fossil-fuel era was within reach. But that tenet, key to achieving the ambition of net zero by 2050, wasn’t as cast in stone as its backers thought.The annual report being prepared by International Energy Agency, which represents the views of the world’s richest nations, shows the alternative — decades more of robust fossil-fuel use, with oil and gas demand growing over the next 25 years — isn’t just possible but probable. That means more carbon-dioxide emissions that exacerbate the climate crisis. .Read more:.Trump poised to declare national energy emergency to boost oil, gas and AI demand.It would be easy to blame the pro-fossil fuel Trump administration for the shift, but that would be a mistake: It precedes its arrival..The idea that a peak in fossil-fuel demand was approaching got significant traction in large part thanks to the IEA, whose annual World Energy Outlook tries to imagine the future via a series of scenarios. While the exercise is quite useful, it doesn’t come remotely close to making forecasts. They are based on assumptions about economic development, population growth, political will, technological developments and prices. While not a crystal ball, the scenarios do offer important insights.The IEA long published a main scenario based around the policies of the day — called, unsurprisingly, “Current Policy Scenario (CPS).” The model had significant shortcomings: Historically, it undercounted solar and wind power. Thus, in 2020, the IEA discontinued it, in part due to pressure from European nations and green campaigners. That was replaced by a “Stated Policies Scenario (STEPS),” which not only considered current policies but also “policy proposals, even if the specific measures needed to put these proposals into effect have yet to be fully developed.” In short, it mixed policy with political promises. It later introduced another scenario, called “Announced Pledges Scenario (APS)”, which assumed that all the energy and climate policies, plus political aspirations were met in full and on time.1The two new scenarios shifted massively the path for fossil-fuel demand — and carbon dioxide emissions — predicting peak consumption by 2029, and then a decline, slower under the STEPS scenario and faster under the APS model. The decline was so meaningful under the latter that it gave credence to the idea that trillions of dollars worth of fossil-fuel reserves would be left stranded. Western policymakers became convinced that the new scenarios represented something akin to a forecast – and thus that demand would indeed drop. But many others – including your writer – anticipated stronger consumption. In my case, I particularly flagged that coal demand would prove stickier. This year, the IEA is again publishing its “Current Policy Scenario” — in part due to pressure from the Trump administration2— showing that neither oil nor gas demand would peak this decade, contrary to the previous assumption, according to a half a dozen people who have reviewed a draft of the report.3 They all described it under condition of anonymity. The final report can still change. The IEA declined to comment.Under current policies, “oil and natural gas use rise out to 2050,” according to the IEA draft. Coal consumption does peak in the 2030s, but demand in 2050 would be more than 50% higher than previously expected, according to my calculations based on the draft. Peak consumption has become the Holy Grail of the energy debate. But the precise year when demand hits its zenith is far less important than the shape of the consumption curve before and after that peak. Focusing on the path, rather than on the highest point, is crucial to understanding where the world is heading. For oil, the consumption curves under the rescued CPS show continued growth, including even in the 2040s. Its annual growth over the next 25 years is well below the rate seen historically, but “oil remains the largest single fuel” in mid-century, the draft says. Renewables come second, with gas and coal in third and fourth place..By 2050, the IEA pencils in oil consumption at 114 million barrels a day under its CPS — that compares to the about 93 million barrels a day by 2050 seen last year under the STEPS scenario and more than double the 54 million under its APS scenario. In its draft, the IEA said that oil demand would increase mostly in aviation and shipping and as petrochemical feedstocks. While sales of electric vehicles will increase dramatically in China and the European Union, “EV adoption stalls in regions lacking strong policy support,” particularly the US, the draft says..Read more:. The energy transition is powered by — wait for it — coal: Javier Blas.It's important to remember that the IEA will publish other scenarios, showing alternative paths, and that the Current Policy Scenario isn’t a forecast. It’s a snapshot of what the world may look like in 25 years if nothing changes and governments sit on their hands. In the past, the scenario tended to undercount renewables and favor incumbent sources of energy, such as oil, gas and coal; so if history is a guide, it could be off – perhaps significantly.Let’s hope so. The world is far, far, far off in its efforts to keep the rise in global temperatures to 1.5C above pre-industrial averages, as negotiated in the 2015 Paris climate agreement. If I’m right, the world is probably heading toward a disastrous 3C. When the IEA publishes its old-but-new scenario, there will be a battle to control the message. The fossil-fuel industry, with Saudi Arabia at the top, will herald the potential for stronger-than-expected oil, gas and coal demand as vindication. Maybe. But the prospect of more pollution is also a call for action.For now, the world isn’t performing an “energy transition” but an “energy addition,” where renewables top up oil, gas and coal. Regardless of well-intended green aspirations, that will remain the case for years, if not decades, unless governments impose significant changes. Hope isn’t a policy..© 2025 Bloomberg L.P..1 The IEA has published an additional model, called the Net Zero Emissions by 2050 Scenario (NZE Scenario), which is constructed differently to the others. The NZE is a “normative” rather than “exploratory” -- in that it is designed to achieve specific outcomes. Its construction starts with the specific outcome it wants to achieve and builds a path backwards to meet it.2 In its draft report, the IEA says that while "tempting" to call the CPS a "business-as-usual" scenario, that would be misleading, warning that the methodology of the scenario favours incumbent energy sources. The agency justified its publication because "there is a great emphasis in some countries, notably in the United States, on preserving the energy status quo rather than changing it."3 The IEA has said that it would publish the report during the fourth-quarter; historically, it is released in October or November.

Miningweb: Javier Blas: The fantasy of peak fossil-fuel demand is meeting reality

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