The world is rapidly approaching a crucial turning point in its energy consumption, with global demand for key fossil fuels, particularly oil and coal, expected to reach a peak around 2030, according to the International Energy Agency’s (IEA) flagship publication, the World Energy Outlook 2025. This pivotal moment is outlined in the IEA’s more transition-friendly “Stated Policies Scenario” (STEPS), which tracks energy trends based on government policies already adopted or put forward, even if not yet fully enacted into law.
TL;DR
- Global oil and coal demand may peak around 2030, driven by green tech and efficiency gains.
- Electric vehicles and renewable energy sources like solar and wind are key drivers of this shift.
- Natural gas demand is projected to rise until 2035 due to increased LNG export capacity.
- Current policies are insufficient to meet global climate goals, with emissions only slightly decreasing.
That being said, the IEA brought back what it calls a “Current Policies Scenario,” with a vastly different outcome. The so-called CPS, on hiatus for 5 years, projects that fossil-fuel consumption will rise by 13% by 2050. This depends on electric vehicles being adopted more gradually and the assumption that nations won't uphold their commitments to reduce fossil fuel use. In Last year, the International Energy Agency foresaw oil demand either leveling off or decreasing throughout the 2020s, according to its various projections. Fatih Birol, the IEA's Executive Director, informed both Bloomberg and The Wall Street Journal that the CPS must be reinstated due to the numerous ambiguities within the present policy landscape, such as those involving the U.S. Support for petroleum, natural gas, and coal during President Trump's tenure. “The main reason we have two new scenarios is the growing uncertainties in the political, economy and energy context.”
STEPS' observed decrease in fossil fuels is driven by three connected trends. Firstly, the IEA anticipates swift progress in green technologies, forecasting that renewable sources, especially solar and wind, will almost triple their electricity generation capacity by 2035. Global electric vehicle sales and heat pump adoption are still climbing, spearheaded by China and other significant economies. Secondly, efficiency improvements are contributing. More stringent regulations and advanced technologies signify that the globe will achieve more with reduced energy consumption, thereby moderating total demand growth despite an increasing worldwide population and economy. Lastly, fundamental shifts, particularly in China—previously the primary driver of fossil fuel expansion—are transitioning towards a less energy-demanding framework centered on services and advanced manufacturing.
In summation, the intergovernmental organization projects that worldwide oil consumption will reach its zenith at approximately 102 million barrels daily by 2030, followed by a gradual decrease, ultimately reverting to 2024 figures by 2035. Furthermore, STEPS indicates that the peak for coal will occur earlier.
Rationale
The approaching high point in oil consumption is largely due to the rapid shift towards electric vehicles in transportation. According to STEPS, electric vehicle sales worldwide are expected to surge, increasing from over 20% currently to more than 50% by 2035. This substantial adoption of EVs is anticipated to reduce oil demand by 10 million barrels daily by 2035, particularly in key regions like Asia and Europe. Although the IEA anticipates a notable decrease in oil usage for passenger cars, this overall decline is partially counteracted by ongoing growth in demand for petrochemicals and jet fuel, sectors where electrification presents significant hurdles.
Meanwhile, demand for coal is set to peak even earlier, declining globally before 2030 in STEPS. “Coal-fired power is approaching a turning point after decades of growth,” according to the IEA, “with global trends increasingly shaped by developments in Asia.” About half of global coal demand is for electricity generation in China, India, Indonesia, and other Southeast Asian countries, the IEA says, and China is rapidly scaling up renewables and nuclear power. While India is similar, Southeast Asia is projected to continue burning coal steadily, but the IEA sees global coal demand dropping roughly 20% by 2035.
Unlike oil and coal, which are expected to reach their highest points soon, natural gas faces a different future. Demand for natural gas, according to STEPS, will keep rising by approximately 1% each year until 2035, after which it will stabilize. This ongoing rise is supported by plentiful supplies, driven by a significant expansion in liquefied natural gas (LNG) export capabilities. A remarkable 300 billion cubic meters of new capacity is slated to become operational by 2030, boosting global available LNG supply by 50%. The United States is constructing half of this new capacity, with Qatar contributing a 20% increase in supply.
The ‘age of electricity’
The IEA's designation of the “Age of Electricity,”, marked by the global surge in AI-driven data centers, is the foundation for these changes. According to STEPS, electricity consumption is anticipated to grow four times more rapidly than total energy demand up to 2035, though the IEA contends this transition is more significant.
“Electricity is at the heart of modern economies,” the IEA says, noting that electricity demand grows much faster than overall energy use in every one of its forward-looking scenarios. Investors are reacting to this trend, with spending on electricity supply and end-use electrification already accounting for half of today’s global energy investment. Renewables, led by solar and wind, are forecast to meet the majority of this surging demand, with their share in global electricity generation rising from one-third today to over half by 2035.
The IEA cautions that despite an anticipated peak in fossil fuel consumption near 2030, existing government strategies are inadequate for achieving worldwide climate objectives. Under the STEPS scenario, energy-related carbon dioxide emissions, which reached an all-time high of 38 gigatonnes (Gt) in 2024, are only expected to decrease slightly to 35 Gt by the middle of the next decade. This path suggests a global average temperature increase of approximately 2.5 degrees Celsius by 2100. Conversely, the IEA's CPS, which disregards policies not yet legally enacted, forecasts that demand for oil and natural gas will persist in its upward trend until 2050.