Demand for Oil to Drop as Renewables, Solar Energy Take Center Stage

The International Energy Agency (IEA) has said going forward renewables energy and solar energy will take center stage and not the oil.

In its latest annual World Energy Outlook report released on Tuesday, the agency said COVID-19 response will reshape the future of energy for years to come, and explained that this response may impact the world’s transition to clean energy.

It, therefore, said while the transition to clean energy continues to gain momentum, faster and bolder structural adjustments are necessary to reach net-zero carbon emissions.

“The Covid-19 crisis has caused more disruption than any other event in recent history, leaving scars that will last for years to come,” the Paris-based agency.

“Covid-19 unleased a crisis of exceptional ferocity on countries around the world …The crisis is still unfolding today — and its consequences for the world’s energy future remain highly uncertain.”

Going forward, the agency believes that renewables will take “starring roles,” and solar will take “center stage,” driven by supportive government policies and declining costs.

“I see solar becoming the new king of the world’s electricity markets,” said Fatih Birol, IEA’s executive director. “Based on today’s policy settings, it is on track to set new records for deployment every year after 2022.”

Accordingly, the IEA predicted that the demand for coal will not return to pre-COVOD-19 levels and projected that coal will account for less than 20 percent of global energy by 2040.

It stated that oil will remain “vulnerable to the major economic uncertainties resulting from the pandemic,” with demand expected to start falling after 2030.

Also, due to the negative impact of COVID-19, the agency predicted that global energy demand would fall by 5 percent in 2020 with oil and gas consumption declining by 8 percent and 7 percent, respectively.

It added that natural gas demand could fall by 3 percent this year, the largest decline since it became the main source of fuel in the 1930s.