The International Energy Agency updates its forecasts for 2030. The peak of fossil fuels within this decade is confirmed, while the gas boom in many markets remains highly uncertain. Renewables will cover 50% of the electricity mix, and one in two new cars will be electric, despite a slowing market
The global energy market is about to enter an unprecedented phase, marked by geopolitical uncertainties but also by an excess supply of fossil fuels. This will lead to two main consequences. First: from 2025, energy prices are expected to drop significantly, freeing up resources for investments in clean technologies. Second: low prices and ample availability (for both fossil fuels and photovoltaics and batteries) will trigger “intense competition” among suppliers.
also read Draghi Report: The Energy Chapter
“In the second half of this decade, the prospect of more abundant—or even surplus—supplies of oil and natural gas, depending on how geopolitical tensions evolve, would lead us into a very different energy world from the one we experienced in recent years during the global energy crisis,” explains Fatih Birol, Executive Director of the International Energy Agency (IEA). An electricity era, as Birol calls it.
This is the scenario outlined in the World Energy Outlook 2024, released on October 16 by the Paris-based agency. The IEA confirms its prediction of a peak in oil consumption by 2030 and foresees that, within a few months, a “breathing space” may emerge with lower energy prices. This window allows policymakers to “focus on increasing investments” in the transition and phasing out fossil fuel subsidies. Birol warns: “This means that government policies and consumer choices will have huge consequences for the future of the energy sector and for addressing climate change.”
Toward an Oversupply of Oil and Gas: What Are the Consequences?
One of the key pillars on which the IEA builds its vision for the global energy market in the coming years is the increase in fossil fuel supply. The underlying data is so solid that it is already reassuring markets, the report notes.
Despite intense tensions due to the wars in Ukraine and the Middle East, the direct involvement of major fossil fuel producers and the choke points of global maritime trade (Hormuz and Suez) has not caused a spike in oil prices. “I can’t say if we will see oil prices at $100 per barrel again, but what I can say is that despite the ongoing conflict in the Middle East, we are still seeing oil prices at $70,” Birol noted.
This is because the pace of investments in new oil and gas projects will lead to a considerable oversupply by the second half of this decade. The IEA estimates that spare capacity for oil in 2030 will reach 8 million barrels per day, while new liquefied natural gas (LNG) export projects will increase global export capacity by 50% over the next six years.
These predictions of an oversupply and excess production capacity refer to the conservative scenario, which is based on current policies and does not foresee significant improvements (Stated Policies Scenario, STEPS).
Global Energy Market: Key Trends for 2030
In the 2024 report on the evolution of the global energy market, the IEA updates its estimates on the penetration of renewables in the global electricity mix and the outlook for fossil fuel trends.
Renewables in the Electricity Mix
According to the World Energy Outlook 2024, renewable energy capacity will grow faster than the increase in demand. The share of fossil fuels in the electricity mix is set to decline. By how much? Wind and solar currently represent 30% of the global mix. By 2035, they will reach over 40% in the conservative scenario (STEPS), and by 2050, they will rise to 60%. In all scenarios, whether more or less ambitious, the IEA believes the share of nuclear energy will remain at today’s level, around 10%. Low-carbon sources, as a whole, will cover more than half of the electricity mix before 2030, the IEA emphasizes. This is despite the IEA increasing its estimate of electricity demand by 6% for 2030 compared to last year.
Global Renewable Capacity
Investments in clean technologies are expected to reach $2 trillion per year, more than double that of fossil fuels. Thanks to this push, prices will continue to fall for almost every technology, while newly installed capacity will accelerate. From today’s 4,250 GW, it will reach 10,000 GW by 2030. This won’t be enough to triple renewables, as promised at COP28 to keep global warming below 1.5°C, but it will be sufficient to continue the gradual phase-out of fossil fuels.
Peak in Fossil Fuels
In every scenario considered, all fossil fuel sources will reach peak demand by 2030. Combined with the oversupply that will materialize, this means a sharp drop in prices. The IEA estimates that the price of oil could stabilize at a plateau of $75-80 per barrel by 2030, while the price of imported gas in Europe could plummet by more than 10 times compared to the peaks of 2022.
Fossil gas will grow but likely not as much as announcements and investments from the last two years suggest: “the prices many suppliers need to recover their investments may not convince developing economies to switch to natural gas on a large scale: something will have to give,” the report notes.
Electric Vehicles
The slowdown in oil demand growth, even in the conservative scenario, is putting major fossil fuel producers under pressure. China has been the engine of the oil market’s growth in recent decades, but that engine is now shifting to electricity, the IEA notes in its section on the electrification of transport. Despite recent hesitations, the Agency expects the penetration of EVs—currently 20% of the car market—to accelerate. By 2030, 1 in 2 cars sold worldwide will be electric, even in the STEPS scenario, and this will eliminate 6 million barrels of oil per day from global demand.
