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Don't write oil's 'obituary', IEA says in long-term demand forecast

14 November 2017

The agency also pointed to the future development of renewable energy sources, saying that they are expected to capture two-thirds of global investment in power plants through to 2040 as they become the lowest-cost source of new power generation in many countries. Already in 2016, growth in solar PV capacity was larger than for any other form of generation.

"The scenario would see demand grow from 95.4 million barrels per day, in 2016, to reach 111.1 million barrels per day by 2040, with the global economy growing by an average of 3.5 per cent per year during that time".

"The United States will be the undisputed leader of global oil and gas markets for decades to come", IEA Executive Director Fatih Birol said Tuesday in an interview with Bloomberg television.

The agency said renewable sources such as solar and wind are expected to meet 40% of the new demand.

Natural gas use, meanwhile, rises by 45% to 2040 under the New Policies Scenario.

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The dramatic shifts envisioned by the IEA in its World Energy Outlook would transform the USA from an energy importer into a major player in global markets capable of producing 30 million barrels of oil and gas a day by 2025.

The rapid deployment and falling costs of clean-energy technologies is held up in the World Energy Outlook 2017 as one of four large-scale shifts under way in the global energy system.

Oil producers who signed up to a landmark production cut agreement mostly stuck to the deal, with the compliance rate at 96 percent in October, and 87 percent for the year to date, the IEA also said.

"Yet this is precisely what is happening as a result of the USA shale revolution - both for oil and for natural gas", the IEA said.

"This is the equivalent of adding another China and India to today's global demand", the IEA said in its report.

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On the other hand OPEC demand for their oil is up to 33.42 million barrels per day (bpd) of OPEC crude next year, an increase of 360,000 bpd from its previous forecast and the fourth consecutive monthly increase in the projection from its first estimate made in July.

Fuel efficiency and rising vehicle electrification will bring a peak in oil used for passenger vehicles, even with a doubling of the auto fleet to two-billion vehicles.

Greenpeace energy analyst Lauri Myllyvirta said the report is "absurdly pessimistic about renewables", adding that similar forecasts have proven wrong in the past.

The publication also offers insight into a "Sustainable Development Scenario", under which Carbon dioxide emissions reduce in line with the objectives of the Paris Agreement, while also tackling air pollution and achieving universal energy access. OPEC says that the excess in the oil market overhang has fallen considerably and they are on target with their cuts.

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Don't write oil's 'obituary', IEA says in long-term demand forecast