IEA predicts surplus of fossil fuels amid clean energy shift

In a report released by the International Energy Agency (IEA), it was revealed that fossil fuel prices are expected to decrease significantly as the world transitions to clean energy by the end of the decade. The IEA forecasts that global oil prices could stabilize between $75 and $80 per barrel, a notable drop from the average of over $100 per barrel in 2022. This shift is attributed to an oversupply of oil, gas, and coal due to increased investments in fossil fuel projects, which are outpacing demand. The report highlights that the consumption of fossil fuels is projected to peak before 2030, leading to a permanent decline as climate policies take effect. The IEA's executive director, Fatih Birol, noted that while geopolitical tensions, particularly in the Middle East, may cause short-term disruptions, the long-term outlook suggests a more stable market with lower prices. Additionally, the IEA anticipates a significant increase in liquefied natural gas (LNG) capacity, which is expected to grow by nearly 50% by 2030. This expansion is a response to the reduced pipeline imports of Russian gas into Europe following the invasion of Ukraine. The report also indicates that the shift towards electric vehicles, particularly in China, will further reduce global oil demand. As the world adapts to these changes, the IEA emphasizes the need for green alternatives to become more affordable to compete with cheaper fossil fuels. The transition to clean energy is expected to accelerate, adding substantial electricity demand globally, particularly if new policies are implemented to achieve net-zero emissions.