The International Energy Agency has dropped its predictions that oil demand growth will peak in a matter of a few years. In the latest edition of its World Energy Outlook, the IEA said oil and gas demand could continue growing until 2050.
The IEA said that the coming years and decades will see a consistent increase in demand for energy across industry, households and, notably, information technology. Investments in data centers this year could reach $580 billion this year, the IEA’s secretary-general said, which exceeds the expected $540 billion in oil and gas industry investment.
As demand for energy grows, so will demand for the traditional sources of that energy. In a departure from its predictions of peak oil demand and peak natural gas demand before 2030, the IEA now expects oil demand to reach 113 million barrels by 2050, under the stated policies scenario that the outlet reintroduced this year after dropping it for five years to focus on aspirational scenarios focused on net zero.
The IEA also emphasized the return of energy security as priority number one for many governments, replacing climate change and emission reduction. “With energy security front and centre for many governments, their responses need to consider the synergies and trade-offs that can arise with other policy goals – on affordability, access, competitiveness and climate change,” Fatih Birol said.
Even with oil and gas demand on the rise over the long term, the IEA hailed what it called the Age of Electricity, estimating that electricity demand will grow much faster than overall energy use under all of the scenarios the IEA included in its forecasting. It then went on to predict that energy generation capacity will be growing in response to the demand surge and that solar PV will be the fastest-growing form of generation capacity. Nuclear, however, will also accelerate, with capacity growing by as much as a third by 2035.
By Irina Slav for Oilprice.com
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