Anas Alhajji, a renowned energy analyst and the author of the report, challenges the notion that oil demand will dwindle as the world transitions towards clean energy, deeming it an exaggerated and wishful expectation. The report highlights that even though China, the world’s foremost investor in renewable energy, and India are gradually incorporating green energy into their electricity generation, the impact on oil demand is projected to be minimal, if any at all.
Although China and India have intentions to augment their energy mix with solar, wind, and other clean sources, their sustained economic growth continually absorbs these additions. Consequently, it is unlikely that oil, and even coal, will be displaced in the near future.
The report’s chart below illustrates that as global energy consumption rises, and despite the increasing share of solar, wind, and other renewables, the demand for oil and gas continues to grow. Historical blips in demand can be attributed to high prices rather than green energy policies.
According to the report, a staggering 82% of the energy consumed in 2022 originated from fossil fuels, despite the massive investments directed towards renewable energy since 2010. In the case of China, the report estimates that achieving carbon neutrality would require a daunting 211 years at the current pace of renewable spending. India faces an even greater challenge, with an estimated timeframe of over 400 years.
In May, the International Energy Agency (IEA) projected a global energy investment of $2.8 trillion for this year, with more than $1.7 trillion allocated to clean energy initiatives. Nevertheless, fossil fuels, including coal, were expected to receive over $1 trillion in investment. The IEA forecasted a 24% increase in clean energy investments between 2021 and 2023, compared to a 15% rise in fossil fuel investments. Overall, the IEA acknowledged that spending on clean energy is “far surpassing expenditure on fossil fuels.”
Nonetheless, the pace of renewable energy adoption is hindered by the ongoing growth in population and the global economy, resulting in minimal progress. Energy Outlook Advisors reports that the majority of countries are unlikely to achieve their net-zero or carbon neutrality targets by 2050.
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