It’s Sinking In That Fossil Fuel Demand Won’t Grow Forever
Climate advocates and fossil fuel producers are increasingly acknowledging that fossil fuel demand will not grow indefinitely, despite differing priorities and language. A global summit in Santa Marta, Colombia, brought together nearly 60 countries to discuss phasing out fossil fuels, though major emitters and producers were absent. Meanwhile, the UAE's decision to leave OPEC reflects a strategic shift as producers adapt to a potentially flattening oil market.
- ▪Nearly 60 countries attended a summit in Santa Marta, Colombia, to discuss phasing out fossil fuels, separate from the UN climate process.
- ▪A report from Ember showed a sustained decline in fossil fuel power generation in OECD countries and a small decline in China and India.
- ▪Major economies like the U.S., China, India, and oil-producing nations like Russia and Saudi Arabia did not attend the summit.
- ▪The UAE announced its departure from OPEC, citing its long-term economic and energy strategy.
- ▪The International Energy Agency projects oil demand will remain flat over the next decade under current policies.
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Climate activists, oil executives, atmospheric scientists, and investors are all trying to make sense of the same picture using completely different language and with vastly different priorities. And this week was a particularly striking example of this split screen. Policymakers and climate advocates gathered at a global summit to phase out fossil fuels. Meanwhile oil and gas producers are trying to maximize their returns in this quickly evolving world. The two groups seemingly have little overlap. But both climate advocates and sophisticated oil producers are now operating from the shared premise that unbounded fossil fuel demand growth will not continue forever. We see the shift happening in the electricity sector already. For oil, it’s slower-moving and obscured by geopolitics.
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