The world is on its way toward cheaper energy as clean technologies grow to meet growing electricity demand, leaving behind an oversupply of oil and gas, according to a new report from the International Energy Agency (IEA).
Under its primary scenario, the IEA, which advocates for green technologies, predicts clean energy will meet "virtually all" growth in energy demand between 2023 and 2035, leading to a peak in demand for all three fossil fuels before 2030.
That translates to oil import prices of about $79 per barrel in 2030, higher than where fossil fuel is currently trading. But under the scenario where the world achieves its net zero emissions and limits global warming, IEA sees oil prices falling to $25 per barrel by 2050.
"Clean electricity is the future, and one of the striking findings of this Outlook is how fast demand for electricity is set to rise," said the report.
Electricity use has grown at twice the pace of overall energy demand over the last decade, with most of that appetite coming from China, according to the IEA's annual World Energy Outlook report.
The research highlights how the rise of electric vehicle mobility, led by China, is “wrong-footing” oil producers.
"EVs currently have a share of around 20% in new car sales worldwide, and this rises towards 50% by 2030 ... by which time EVs displace around 6 million barrels per day of oil demand," said the report.
The report also mentions a large new wave of liquified natural gas projects set to come online, which will produce a surplus of supply until 2040.
"An easing of price levels promises some welcome relief, particularly in fuel-importing countries," said the report.
The IEA warns, however, that cheaper natural gas could slow structural changes toward green energies by diminishing the economic case for consumers to transition.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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