Oil demand could peak as soon as five years from now.
Predicting the point at which the world reaches peak oil demand has become something of a cottage industry. The estimates range, but tend to fall somewhere around 2030 or later. However, two new predictions – just out this week – put peak oil demand as soon as the 2020s, perhaps around 2023, much faster than almost anybody is predicting, not least oil companies and their investors.
A new report from the Carbon Tracker Initiative says that a combination of technology, policy and “necessity” will translate into a peaking of oil demand in the 2020s. By necessity, Carbon Tracker refers to the need to transition to cleaner energy on environmental grounds and the drive to avoid the geopolitical pitfalls of energy dependence. Moreover, the “emerging market leapfrog” ultimately means that oil demand destruction could happen sooner than many people think.
“The motor of change now lies in the emerging markets, which is where all the growth in energy demand lies,” the Carbon Tracker report argues. “They have less fossil fuel legacy infrastructure, rising energy dependency, and are anxious to seize the opportunities of the renewables age. We believe it highly likely therefore that emerging markets will increasingly source their energy demand growth from renewable sources not from fossil fuels.”
The adoption of renewables at such a blistering rate will only be possible because costs continue to fall. Carbon Tracker argues that the rate of adoption for solar PV, wind, batteries and electric vehicles will follow an “s-curve,” referring to a period of slow growth that suddenly morphs into a steep growth curve after it passes a certain threshold.
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