According to a recent report from the International Energy Agency (IEA), global energy prices are likely to decrease significantly as clean energy technologies grow to meet rising electricity demand. The report highlights that nearly all energy demand growth between 2023 and 2035 could be met by clean energy sources, leading to a peak in fossil fuel demand before 2030.
Clean Energy and Growing Electricity Demand
The report emphasizes that electricity demand has grown at twice the pace of overall energy demand over the past decade, with China playing a key role in this shift. The rise of electric vehicles (EVs) is significantly challenging oil producers. By 2030, EVs are expected to account for nearly 50% of new car sales worldwide, displacing around 6 million barrels of oil demand per day.
Under the IEA’s baseline scenario, oil import prices are projected to be around $79 per barrel by 2030. However, if the world meets its net-zero emissions targets by 2050, oil prices could fall dramatically to $25 per barrel. This drastic price drop is expected as the adoption of electric vehicles and renewable energy reduces the demand for oil and gas, creating an oversupply in the market.
LNG Projects and Price Trends
The IEA also points out that a wave of new liquefied natural gas (LNG) projects is expected to continue until 2040, leading to an oversupply of natural gas. This surplus could further drive down natural gas prices, particularly if global demand does not keep pace with supply. However, the report warns that lower natural gas prices could slow the structural transition toward greener energy, as cheaper fossil fuels reduce the economic incentive for consumers to switch to cleaner alternatives.
Future Outlook
The IEA report suggests that declining energy prices could provide economic relief for fuel-importing countries. However, it also cautions that these lower prices may hinder the progress toward green energy transitions. Policymakers and industry players must balance the benefits of cheaper energy with the need to continue pushing toward sustainable and clean energy solutions.
