Fossil fuel demand to start tapering off after 2050: Report

Demand for hydrocarbon fuels is likely to fall dramatically over the next three decades. Once the “peak” demand has been reached, it will begin to trail off up to 2050. A report by two experts at the Center on Global Energy Policy at Columbia University in New York has concluded that the oil exporters have a surprisingly wide range of options to deal with the threat to their treasuries.

Antoine Halff and Robin Mills, well known energy gurus and the authors of the report say, “As the world wakes up to the undeniable threat posed by climate change and global warming — most recently highlighted by the Glasgow Pact after COP26 — “the issue is no longer simply about volatility and cyclicality of the oil market but rather a secular, structural, irreversible decline in global oil consumption, and the choices facing producers to support their hydrocarbon-reliant economies are fraught with risk,” they write.

The plans to diversify regional economies away from oil dependency — with Saudi Arabia’s Vision 2030 the most ambitious — are proof that policymakers recognize that risk. Strategies such as the Saudi and Middle East Green Initiatives are further evidence that the oil producers have moved from skepticism to wholehearted acceptance of the urgent need to tackle climate change.

The energy transition, it appears, is irresistible, but it will not happen overnight, regardless of the calls from the Greta faction and the new anti-oil sentiment in the Western financial community. Oil producers have time to refine policies and techniques to ease them through it and protect the living standards and livelihoods of their citizens.

OPEC+ alliance has been pursuing a “demand defense” since the onset of the pandemic. This involves policies on price and volumes that drive out high cost competitors and ensure optimization of oil resources. It has been remarkably successful. Saudi Arabia and other low-cost producers are taking a progressively bigger slice of the global oil market, even if it is set for long-term decline, the report claims. In addition, producers can invest to develop cleaner energy techniques, such as carbon capture, to make continued oil production more palatable. Likewise, they can pursue more efficient production techniques, reducing flaring and methane emissions, and improving fossil fuel efficiency.

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