Oil demand will continue to rise in the next couple of decades, albeit at a slower pace, even as renewable energy and cleaner fuels make their way into the mainstream, according to the International Energy Agency’s outlook till 2040.
Demand growth for oil is expected to remain robust up until the mid-2020s, but will slow down thereafter as better efficiency and a switch to cleaner fuel bring down oil use for passenger vehicles, according to the IEA’s World Energy Outlook 2017. However, a “powerful impetus” from other sectors such as petrochemicals, road freight transport, aviation and shipping “is enough to keep oil demand on a rising trajectory”, the report said.
The U.S. is expected to become the largest oil exporter in the world, accounting for 80 percent of the increase in global supply by 2025, the report said. This coupled with the near-term downward pressure on prices suggest “consumers are not yet ready to say goodbye to the era of oil”, it added.
The largest growth in demand – almost 30 percent by 2040 – is expected to come from India. That will also make it the biggest consumer in the world. On the flip side, India is also expected to lead the rapid deployment of solar panels, and along with China, help solar energy become the largest source of low-carbon capacity by 2040, IEA said.