The International Energy Agency (IEA) has warned that carbon emissions are set to carry on growing in the period up to 2040, despite a slowdown in global oil demand, due to a widening gap between public expectations about a rapid renewables-driven energy transition and the real demands of future energy systems.

In its flagship annual energy outlook publication, the Paris-based organisation said the world’s reliance on fossil fuels remains high, with no peak for oil demand expected in the next two decades.

If governments make no changes to their existing policies, energy demand is set to rise by 1.3% a year to 2040, “resulting in strains across all aspects of energy markets and a continued strong upward march in energy-related emissions”, the agency warned.

Overall energy demand will increases by 1% per year through 2040, with low-carbon sources such as solar photovoltaics supplying more than half of this growth, and natural gas accounting for another third, the agency said.

Yet the agency’s basecase scenario is for demand for crude oil to rise by around 1 million barrels per day on average every year to 2025, up from 97 million barrels per day in 2018.

Oil demand should flatten out in the 2030s, when the rise in emissions begins to slow, but overall emissions do not peak before 2040. according to the agency.

“There is a material slowdown after 2025, but this does not lead to a definitive peak in oil use,” the IEA said, citing increased demand from trucks and the shipping, aviation and petrochemicals sectors.

In addition, shale output from the US is set to stay higher for longer than previously projected, reshaping global markets, trade flows and security.

“The US still accounts for 85% of the increase in global oil production to 2030, and for 30% of the increase in gas.

"By 2025, total US shale output (oil and gas) overtakes total oil and gas production from Russia,” according to the outlook.

The higher US output pushes down the share of Opec and Russia in total oil production, which drops to 47% in 2030, from 55% in the mid-2000s.

“The effects have been striking, with US shale now acting as a strong counterweight to efforts to manage oil markets,” said IEA executive director Fatih Birol.

Whichever pathway the energy system follows, the world is set to rely heavily on oil from the Middle East for years to come, Birol added.

He said that governments and other policy makers need to lead the way to change the emissions outlook.

“Many technologies and fuels have a part to play across all sectors of the economy. For this to happen, we need strong leadership from policy makers, as governments hold the clearest responsibility to act and have the greatest scope to shape the future," he said.

“The world urgently needs to put a laser-like focus on bringing down global emissions. This calls for a grand coalition encompassing governments, investors, companies and everyone else who is committed to tackling climate change,” Birol said.

The IEA highlighted in its third scenario — a path fully aligned with the Paris Agreement aim of holding the rise in global temperatures to well below 2 degrees Celsius and pursuing efforts to limit it to 1.5 degrees Celcius — the need for “rapid and widespread changes across all parts of the energy system”.

In this scenario, sharp emission cuts are achieved thanks to multiple fuels and technologies providing efficient and cost-effective energy services for all, the IEA said.

Environment

Emissions will increase until 2040, says IEA