According to the head of the energy agency IEA, Fatih Birol, the accelerated expansion of renewable energies is having an impact: The IEA now sees the world at the beginning of the end of the fossil age.
According to the International Energy Agency IEA, the end of the global fossil era is soon approaching. Demand for fossil fuels such as oil, gas and coal is expected to peak before 2030. The new assessments are based on new projections in the IEA’s 2023 annual report, which will be presented next month.
“Historical turning point”
“We are witnessing the beginning of the end of the fossil fuel era and we must prepare for the next era,” IEA chief Fatih Birol told the Financial Times (“FT”) about the forecasts. This shows that climate policy works. The IEA cites the rapid growth of renewable energies such as solar and wind energy as the reason for the decline. The electric car also contributes to this. Birol speaks of a “historical turning point” in this regard.
Nevertheless, the IEA boss calls on political decision-makers to make further efforts to accelerate the energy transition and further reduce emissions.
Old forecast outdated
In its energy outlook a year ago, the IEA had forecast 2030 as a possible turning point. The expansion of renewable energies that has been driven forward globally over the past twelve months has ensured that the old forecast is now outdated from the IEA’s perspective.
Birol particularly emphasizes the role of China in the “FT”. He is observing “structural changes” there and a shift in the economy from heavy industry to less energy-intensive industries and services.
Birol said China has accounted for about one-third of the global growth in natural gas demand and two-thirds of the growth in oil demand over the past decade. That’s likely to change: “Solar, wind and nuclear power will outpace the potential growth of coal in China.”
Expand renewable energies
According to Statista, China is the largest emitter of CO2 in the world and continues to build new coal-fired power plants. According to an IEA forecast, the country is also a world leader in the expansion of renewable energies.
According to this, the installed capacity of renewable energy is expected to increase by 170 gigawatts this year alone. This corresponds to almost half of all capacity added worldwide. In total, China would then have a nominal output of over 1,400 gigawatts or 35.5 percent of the world’s installed capacity.
In this country, renewable energies were already responsible for 46.2 percent of gross electricity consumption last year. And by 2030, the federal government plans for 80 percent of electricity to come from renewable energies.
The proportion is then expected to almost double in less than ten years. The federal government writes that the speed of expansion would have to triple. The EU and USA are also expanding their existing capacities.
Of the Money printing machine to “stranded assets”
Birol also noted in the “FT” that new fossil fuel projects risk becoming so-called “stranded assets”. This refers to investments that are not worthwhile for the investor because their market value drops drastically due to changing conditions. New large-scale fossil fuel projects would not only pose major climate risks, but also major financial risks, said Birol.
At the same time, however, he admitted that some investments in oil and gas supplies would still be necessary to compensate for the possible decline in production from existing fields.
OPEC and oil multinationals warn
These theses do not make the IEA and Birol popular everywhere. The oil cartel OPEC commented in April on the theory that demand would peak soon in 2030.
“If anything will lead to future price fluctuations in oil markets, it will be the IEA’s repeated calls to stop investing in oil, knowing that all data-driven outlooks foresee the need for more of this precious commodity to support global economic growth and to boost prosperity in the coming decades, especially in developing countries,” said OPEC Secretary General Haitham Al Ghais.
Major oil and gas producers are also warning that insufficient investment in oil and gas supplies increases the risk of future energy crises if the IEA forecasts prove to be too optimistic, writes the “FT”.