Published: Thu, November 15, 2018
Science | By

Demand for oil, dropping, but crunch possible

Demand for oil, dropping, but crunch possible

"In 1H19, based on our outlook for non-OPEC production and global demand, and assuming flat OPEC production. the implied stock build is now 2 million bpd", the IEA said.

That would be an increase roughly equivalent to twice the current demand for electricity in the United States.

The IEA is also forecasting 560 gigawatts of end-of-life coal plant closures by 2040 under the New Policies Scenario.

The oil market has turned very volatile in recent months, with US President Donald Trump pressing OPEC - and especially cartel kingpin Saudi Arabia - to increase output so as to offset reduced supply from Iran following the reintroduction of tough US sanctions.

Now in its 21st edition, this year's conference was opened by the United Arab Emirate (UAE) president, Sheikh Khalifa Bin Zayed Al Nahyan, with the theme: "Shaping the future of the world's oil and gas industry".

There must be an "unprecedented global political and economic effort" to shift energy towards more sustainable means if climate targets are to be reached, the International Energy Agency (IEA) has warned.

While the countries signed up to the Paris climate agreement are, in aggregate, expected to deliver on its objectives, they are insufficient "to reach an early peak in global emissions".


"The projected emissions trend represents a major collective failure to tackle the environmental consequences of energy use". The analysis finds that higher electrification would lead to a peak in oil demand by 2030, and reduce harmful local air pollutant.

"The share of generation from nuclear plants - the second-largest source of low-carbon electricity today after hydropower - stays at around 10%, but the geography changes as generation in China overtakes the United States and the European Union before 2030", the report read. The share of coal is forecast to fall from about 40 percent today to a quarter in 2040 while renewables would grow to just over 40 percent from a quarter now. In 2003, there were no Chinese companies in the top 15, according to the IEA. The IEA's Renewables 2018 report predicts that, over the next five years, bioenergy will account for 30% of the growth in renewable energy consumption and will become the leading renewable energy producer.

This is transforming the global power mix, with the share of renewables in generation rising to over 40% by 2040, from 25% today, even though coal remains the largest source and gas remains the second-largest.

But of a far starker nature are the agency's warnings surrounding the pace of clean energy adoption, specifically if the world remains committed to limiting global warming to within two degrees. "This means that markets for electricity will, on the one hand, need to provide electricity and, on the other, need to value flexibility more and more to ensure that investments in energy storage and demand-side response are made in a timely manner", Cozzi explains.

While the use of industrial coal is expected to show a small increase to 2040, the IEA projects decline in overall consumption in China, Europe and North America to be compensated by rises in India and Southeast Asia.

However, the report notes that most emissions related to energy infrastructure are "essentially locked-in", with relatively young coal-fired power plants in Asia set to contribute to global Carbon dioxide emissions for decades to come.

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