The International Energy Agency (IEA) said in a report that to reach net-zero emissions by 2050, the world needs to approve no new oil and gas field developments except those already committed by this year. The Paris-based agency also said that the path to net-zero emissions requires global oil consumption to collapse by 75%. In its first net-zero emission roadmap, the IEA also calls for immediate and massive deployment of all available clean and efficient energy technologies to reduce the use of fossil fuels in the coming decades.
Under the scenario where all upstream spending ends, the global oil supply is expected to fall by 8% annually until 2050. Global crude demand will never regain its historic peak in 2019. Global oil consumption is forecast to fall from around 90 million bpd in 2020 to 24 million bpd in 2050. Under the same IEA’s scenario, gas demand would also plunge by 55% from 2020 to 1,750 Bcm in 2050. As a result, oil prices are forecast to decline to around $35/barrel by 2030 and $25/barrel in 2050.
As upstream spending plummets, low-cost producers are expected to dominate the oil market. OPEC is expected to account for 52% of the global oil supply in 2050, compared to around 37% in recent years. However, that would represent lower revenues for these countries as overall demand is expected to shrink to just 25 million bpd in 2050.
Despite the projected downtrend over the long term, IEA expects oil demand to rebound after last year’s plunge. In March, the agency expects worldwide liquids demand, including biofuels, to increase from 91 million bpd in 2020 to 103.2 million bpd in 2025, higher than the pre-pandemic levels of nearly 100 million bpd in 2019.
Under IEA’s Net-Zero Emission scenario, global sales of conventional passenger cars would need to be banned around 2035. It also requires electric cars to contribute to about 60% of global car sales in 2030. EVs or fuel cell vehicles are also required to account for 85% of heavy-duty truck sales in 2040. As a result, crude processors are projected to see their average crude runs slump 85% from 2020 to 2050.
