IEA predicts 'peak oil' in terms of demand from cars due to rise of EVs, greater efficiency
Wed 14 November 2018 | Back to news list
The latest World Energy Outlook from the International Energy Agency (IEA) forecasts that oil demand for use in cars will peak as a result of growing use of electric vehicles. However, overall demand for oil is projected to continue increasing. The IEA report says that demand for oil used for transport is already falling in some markets and segments, notably buses.
According to the IEA's latest forecasts, oil use for cars will peak in the mid-2020s, but demand for petrochemicals, trucks, planes and ships still keep overall oil demand on a rising trend. Meanwhile, improvements in fuel efficiency in the conventional car fleet reduce potential demand by three times more than the 3 million barrels per day (mb/d) displaced by 300 million electric cars projected to be on the road in 2040.
The report says that demand is already falling in some transport markets and segments. Electric buses, for example, it says will be displacing about 233,000 barrels of oil demand a day by the end of the year. Combined with the displacement from electric cars, and oil demand is 279,000 barrels a day lower than it would otherwise have been. (According to Bloomberg, equivalent to total demand from Greece.)
The Paris-based IEA has cut its longer-term oil price projections compared with last year, partly because of the falling cost of both renewable and conventional sources of energy, the worldwide push to tackle climate change and improve air quality and the boom in US shale oil and gas output. The Agency says it expects the oil price should continue to rise towards $83 a barrel by the mid-2020s.
The IEA estimates that there will be 50 million electric vehicles on the road by 2025 and 300 million by 2040, from around two million now. However, this is expected to cut only 2.5 million barrels per day (bpd), or about 2 percent, off global oil demand by that time.
Power generation is expected to move increasingly away from relying on coal and crude oil, with renewables taking a much larger proportion of the global energy mix.
Bloomberg New Energy Finance expects there will be twice as many electric vehicles on the road as the IEA's forecasts project and that twice as much oil demand will be displaced.
Bloomberg points to the success of Tesla's Model 3 - now more popular than the entry-level luxury offerings of Audi, BMW and Mercedes-Benz combined - and to China's push for electric vehicles. China is now the world's biggest car market and its policies will have a major impact on future global oil demand.
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