The International Energy Agency’s (IEA) 2023 World Energy Outlook report predicts that in the current policy context, the demand for fossil fuels, such as coal, oil, and natural gas, is expected to reach its highest point in this decade. This marks the first time the report has made such a projection under current policy conditions. This change is attributed to the rapid growth of clean energy technologies and significant economic and geopolitical shifts that are poised to transform the energy landscape in the coming years.
The 2023 World Energy Outlook envisions an energy system in 2030 where clean technologies will play a much more prominent role than they do today. This includes a tenfold increase in the number of electric cars on the roads globally, solar photovoltaic (PV) generating more electricity than the entire U.S. power system, renewables making up nearly 50% of the global electricity mix (up from around 30% currently), electric heating systems surpassing fossil fuel boilers in sales worldwide, and three times more investment going into new offshore wind projects compared to new coal and gas-fired power plants.
These projections are based solely on the existing policies of governments worldwide. If countries fulfil their national energy and climate commitments on time and in full, the transition to clean energy will progress even more rapidly. However, further, stronger measures will still be required to achieve the goal of limiting global warming to 1.5°C.
The combination of growing support for clean energy technologies and structural economic changes globally has significant implications for fossil fuels. Peaks in global demand for coal, oil, and natural gas are all expected to occur in this decade, a first in a World Energy Outlook scenario based on today’s policies. In this scenario, the share of fossil fuels in the global energy supply, which has remained around 80% for decades, is projected to decline to 73% by 2030, with global energy-related carbon dioxide emissions peaking by 2025.
As things stand, the demand for fossil fuels is expected to remain too high to meet the Paris Agreement’s goal of limiting global temperature rise to 1.5°C. This not only exacerbates climate impacts but also jeopardizes energy system security, which was designed for a cooler world with fewer extreme weather events. Achieving a path consistent with 1.5°C remains challenging but possible. Failing to act could result in significant costs, with global emissions remaining high enough to push average global temperatures up by around 2.4°C this century, well beyond the Paris Agreement’s critical threshold.
The WEO-2023 presents a global strategy for achieving the 2030 targets through five key pillars, which can serve as the foundation for a successful COP28 climate change conference. These pillars include tripling global renewable capacity, doubling the rate of energy efficiency improvements, reducing methane emissions from fossil fuel operations by 75%, establishing innovative financing mechanisms to triple clean energy investments in emerging and developing economies, and implementing measures for an orderly decline in fossil fuel usage, including ending approvals for unabated coal-fired power plants.
The report emphasizes the importance of international cooperation in accelerating clean energy transitions and underlines the need for sustainable solutions to meet rising energy demand in fast-growing economies.
In a time of rising geopolitical tensions in the Middle East and ongoing effects of the global energy crisis, the report addresses energy security challenges. It predicts that pressures on natural gas markets, which have been affected by security and price concerns, will ease in the coming years due to a surge in new liquefied natural gas (LNG) projects.
The report also highlights China’s pivotal role in shaping global energy trends, with its energy demand projected to peak in the mid-2020s, driven by continued growth in clean energy.
Additionally, the report discusses the potential for solar PV growth, suggesting that renewables, particularly solar, will contribute significantly to new power generation capacity. However, the report indicates that there is unrealized potential for solar energy deployment. If the world deploys more solar PV capacity, it could lead to a substantial reduction in coal-fired power generation and carbon emissions in various regions.
