Coal and oil to peak by 2030: IEA’s World Energy Outlook

The energy transition continues apace, with coal and crude oil demand set to peak before the end of the decade, according to a closely-watched report from the International Energy Agency (IEA).

Across all scenarios in the IEA’s latest World Energy Outlook, renewable energy grows faster than coal, gas, and oil.

“Last year, we said the world was moving quickly into the Age of Electricity – and it’s clear today that it has already arrived,” IEA executive director Fatih Birol said.

In the IEA’s main scenario, beginning in the 2030s, renewables account for all demand growth going forward. Oil demand peaks at 102 million barrels per day in 2030, and enters gradual decline.

While offering some measure of optimism, the scenario means the world would remain far off track from its climate targets. Under this Stated Policies (STEPS) Scenario, as the IEA calls it, the world would be on track for 2.5 degrees Celsius of warming. Global emissions drop from a high of 38 gigatonnes reached in the next few years to 30 gigatonnes by mid-century, equivalent to carbon pollution levels from 2005.

Those reductions are not trivial, but faster action is clearly needed to bend that emissions trajectory downwards.

The IEA offers up the Net-Zero Emissions by 2050 scenario as a potential roadmap. In the NZE, everything happens faster. Renewables capacity grows fourfold from current levels by 2035. Energy efficiency increases at an annual rate of 4 percent, double the pace in recent history. In the NZE, annual fossil fuel investment in supply would fall to $350 billion in 2035, down from around $1 trillion currently.

Such action is technically possible, but would require more ambitious policies from governments around the world.

But the NZE also rests on some shaky assumptions. It relies heavily on the widespread use of sustainable aviation fuels, which have shown little evidence that they can be scaled up. The scenario also assumes a significant expansion of nuclear power, a technology that has been bogged down because it is not economically competitive with renewables.

The NZE also assumes the energy sector slashes methane emissions 85 percent by 2035, which would mark a sharp departure from current trends.

The report comes as the world gathers in Belém, Brazil for the COP30 climate talks. The conference began with some encouraging rhetoric about transitioning from fossil fuels, but thus far there are few signs of tangible breakthroughs.

IEA turns back the clock

For the first time in five years, the IEA brought back a much more pessimistic scenario. The agency reintroduced the so-called Current Policies Scenario (CPS) under intense pressure from the Trump administration, which is seeking to slow down renewable energy and has acted aggressively to hook much of the world on buying U.S. oil and gas.

Earlier this year, the U.S. government threatened to withdraw from the IEA unless it changed its forecasting.

“We will do one of two things: we will reform the way the IEA operates or we will withdraw,” U.S. Energy Secretary Chris Wright told Bloomberg in July. “My strong preference is to reform it.”

In response, the IEA has brought back the CPS, a previously-phased out scenario that the agency itself noted illustrates a future in which the energy transition unfolds at a much slower pace, slower than what has actually occurred in reality in recent years.

It is even more pessimistic than a “business-as-usual” scenario. The CPS bakes in assumptions about constraints to grid integration, infrastructure bottlenecks, a lack of institutional capacity or financing, and the absence of continued policy support.

In that sense, it paints an excessively positive future for fossil fuels, a future exceedingly unlikely, according to most experts. 

“The Current Policies Scenario points to continued fossil fuel dependence, persistent market volatility, and structurally high energy prices,” said Maria Pastukhova, the programme lead for energy transition at E3G, a European think tank. “That may suit a few producing countries, but for economies representing around 90% of global GDP, it means declining competitiveness and welfare increasingly exposed to the political will of (mostly authoritarian) petrostates.”

The CPS scenario is associated with global greenhouse gas emissions that remain largely unchanged though mid-century, leading to a catastrophic 3-degrees-Celsius of warming.

The scenario also assumes that crude oil demand continues to grow for decades, rising to 113 million barrels per day in 2050. Even the oil majors are not that optimistic. ExxonMobil forecasts oil demand remaining mostly flat from current levels, hitting 105 million barrels per day in 2050.

Needless to say, many experts do not view the IEA’s fossil fuel friendly scenario as particularly credible.

“Some may wish to turn back the clock, but the direction of the energy system is clear. More than $10 trillion has been invested in clean energy since 2014, and oil demand is on track to peak before 2030 in the IEA’s main scenario,” Laurence Tubiana, CEO of the European Climate Foundation, said in a statement. “The electricity age is well under way. The choice now is between accelerating or paying later to undo the damage: every tonne of carbon we avoid today saves far greater costs tomorrow.”

Despite recent backsliding in the U.S. and in some parts of Europe, there is ample evidence that renewable energy is now impossible to stop. China has turned into a clean energy superpower, scaling up renewable energy at home and exporting cheap solar and EVs to much of the world. Due to the steep drop in production costs for clean tech, charting a course beyond fossil fuels is now an attainable goal for nearly every country on earth.

The results are starting to show. China’s carbon emissions have been flat for the past 18 months, according to recent data from Carbon Brief. Solar and wind generation are up 46 percent and 11 percent year-on-year in the third quarter of 2025, respectively. Oil demand in China for transportation contracted by 5 percent, although it expanded in the petrochemicals sector.

A recent study found that progress in the energy transition is occurring faster in the ten years since the 2015 Paris Climate Agreement than was anticipated at the time.

Against that backdrop, even the IEA’s STEPS scenario could be underestimating the pace of change. The theme of the IEA’s WEO focused on energy security, which translated into an assumed slowdown of the energy transition.

But concerns over energy security can cut the other way. Oil and LNG put importing countries at the mercy of volatile and expensive commodity markets. Renewables offer the opportunity to insulate fragile economies from such turbulence. Home-grown renewable power is now viewed as more secure than fossil fuels in many parts of the globe.

For instance, Pakistan recently negotiated with Qatar to defer a series of LNG cargos for which it had contracted. Pakistan’s solar boom has undercut the need for costly LNG imports. 

That could be a red flag for the global LNG buildout. The IEA pointed to the prospect of a worsening glut of LNG supply. In its central scenario, it noted that global LNG capacity will increase by 50 percent by 2030, but “questions still linger about where all the new LNG will go,” the agency said, adding that while Europe and China will take some of the new capacity, “the upside potential is limited” due to the “continued momentum behind the deployment of renewables, nuclear energy in some countries, and efficiency policies.” There could be as much as 65 billion cubic metres of a supply “overhang” in 2030.

The IEA noted further downside risk for LNG uptake due to the industry’s failure to address methane emissions.

But the hour is late for capital-intensive fossil fuel projects. In the NZE scenario, no new fossil fuel projects are needed, and even in the central scenario, renewables are capturing nearly all of the demand growth going forward.

“Backing renewables is a win-win for people’s wallets and the climate – in fact, all the different futures mapped out by the IEA have renewables growing faster than any other energy source,” said Bill Hare, CEO of Climate Analytics, a global climate policy institute. “Renewables are now unstoppable: solar power and batteries are now so cheap that continuing to invest in fossil fuels is a needless climate and economic risk.”

(Writing by Nick Cunningham; editing by Sophie Davies)