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The world would not need any new long lead-time conventional oil and gas projects or coal mines approved after 2023 as the surge in clean energy deployment could lead to peak fossil fuel demand this decade, the International Energy Agency (IEA) said in its updated Net Zero Roadmap on Tuesday.
The new report, an update on the first such publication from 2021, takes into account the developments in the energy sector in the past two years, including the energy crisis, the Russian invasion of Ukraine, the drive for energy security, and the surge in solar installations and electric vehicle sales.
“The announced manufacturing pipeline for solar PV and batteries is projected to be sufficient to meet the NZE Scenario deployment needs to 2030,” the IEA said in its report.
In a net-zero scenario, demand for oil and gas is set to decline by around 20% by 2030 – “fast enough that no new long lead time conventional oil and gas projects need to be approved for development.”
“Low-emissions electricity rises so rapidly that no new unabated coal plants beyond those under construction at the start of 2023 are built,” the agency added.
“The sharp decline in fossil fuel demand in the NZE Scenario means that no new conventional long lead time oil and gas projects are approved for development after 2023, and that there are no new coal mines or coal mine lifetime extensions,” according to the IEA.
However, the agency noted that investment in existing fossil fuel supply projects is still needed in the NZE Scenario “to ensure that supply does not fall faster than the decline in demand.”
The IEA also warned that an “orderly” energy transition is far from certain, especially if fossil fuel investment falls faster than clean energy expansion catching up, or if low-cost resource holders decide to tap more oil and gas to boost their market share and influence fossil fuel prices by restricting production.
“Governments need to separate climate from geopolitics, given the scale of the challenge at hand,” said IEA Executive Director Fatih Birol.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com