World Energy Evolution—More Green, Less Petroleum

Noticed or not, the changes in world energy happened. At the same time that global petroleum is approaching its peak, clean energy is developing rapidly. The vision of a clean world may not be far off. This article introduces the latest report released by IEA(International Energy Agency) and the great progress that some countries have made in clean energy, revealing the new trend of global energy development and the long journey to a clean planet. The International Energy Agency (IEA) said in its latest report that global oil demand will peak at 105.6 million barrels per day in 2029 and decline from 2030, as electric vehicles spread, energy efficiency increases, and demand for oil-powered power generation declines. Moreover, as non-OPEC countries such as the United States continue to increase production, global oil supply in 2029 will reach around 114 million barrels per day, nearly 8 million barrels per day higher than demand.  IEA said the growth in oil demand was mainly driven by emerging economies in Asia, particularly land transport in India and aviation and chemicals in China. In addition, the IEA also lowered its forecast for global oil demand growth in 2024, expecting it to grow by less than 1 million barrels per day due to weak demand in developed countries, a big difference from OPEC’s forecast for global oil demand growth of 2.25 million barrels per day this year.

Meanwhile, oil prices tumbled after the OPEC+ meeting fell less than expected, just a few weeks ago.

While reducing dependence and the need for oil, clean energy is also speedily developing. In its latest World Energy Investment Report, IEA said that after the global clean energy investment exceeded fossil energy for the first time in 2023, the scale of clean energy investment in 2024 May reach twice that of fossil energy. Total investment in the global energy sector in 2024 is expected to exceed $3 trillion for the first time, of which about $2 trillion will be invested in clean energy technologies, including renewables, electric vehicles, nuclear power, grids, energy storage, low-emission fuels, energy efficiency improvements and heat pumps, while the remaining investment of just over $1 trillion will be invested in fossil fuels such as coal, oil and gas.

According to the latest data from the Federal Energy Regulatory Commission (FERC), from January to April this year, almost all of the new power generation installed in the United States came from renewable energy, of which 7,899 MW was solar, 1,825 MW was wind, only 67 MW was natural gas. Other energy installed capacity was not more than 5 MW. Compared to the same period in 2023, solar additions more than tripled (3,777 MW in the same period in 2023), wind additions decreased slightly (1,977 MW in the same period in 2023), and natural gas additions decreased significantly (5,073 MW in the same period in 2023).

In addition to on-the-ground investment, many countries are also committed to the development of clean energy markets. On June 3, 2024, the European Commission launched a hydrogen market pilot mechanism under the existing framework. EU will collect, process, and provide information on the supply, demand, prices, and flows of renewable and low-carbon hydrocarbons and their derivatives so that European demand can be matched with local and foreign suppliers. The mechanism will operate for five years and become part of the European Hydrogen Bank. Currently, the EU has started the procurement process to find a contractor to develop the IT platform required for the pilot mechanism. The EU plans to sign a contract by the end of the year to ensure the mechanism can be operational by mid-2025.

At the same time, the EU is building a multi-product platform to promote joint purchases of key and strategic raw materials, of which hydrogen is just one part. At present, the EU has established a relatively comprehensive hydrogen market regulatory framework. It also has set market rules and renewable hydrogen targets for industry and transport.

Despite the progress many countries have made to green energy, we still need to be aware of the need for a huge and sustained effort to clean up the world and the continued dependence on oil.

As mentioned earlier, the US’s new power generation installation data is exhilarating. However, in the US, fossil energy is still the main source, with natural gas, coal, and oil accounting for 43.58%, 15.79%, and 2.79% respectively. So dependence on oil will be a long-term state.

The IEA also warned that global energy investment remains uneven, with emerging and developing economies (excluding China) still investing little in clean energy, accounting for only about 15 percent of global clean energy investment, well below the level needed to meet their growing energy demand.

It’s worth noting that international oil prices have continued to rise in the past two weeks amid still high demand and turbulence from geopolitical conflicts. Due to the existing energy structure, oil will remain our main energy source for a long time.

By Le Tianyu